Friends Life has apologised to 1,300 customers who have not been able to flexibly access their pension because its systems have not been updated to allow partial withdrawals.
But the provider has not said when its systems will allow them to access income drawdown or uncrystallised funds pension lump sums (UFPLS).
The provider, which is currently being merged with Aviva, says it is working on delivering partial withdrawals but is unable to give a timescale for when this can be expected. Members wanting to access flexibilities face having to transfer to another provider to be able to do so.
Intermediaries have responded to the news with a mixture of dismay and resignation.
A spokesperson for Friends Life says: “We apologise to those Friends Life customers who wish to partially withdraw their savings through the new pension freedoms, as we are not offering this service at the moment. We have seen a high number of pension freedom enquiries from Friends Life customers, the vast majority requesting full encashment and this continues to be our focus. We are planning to offer partial withdrawals in due course. This matter affects customers in the pre-merger Friends Life business, and not other Aviva customers.”
Chase de Vere principal corporate consultant Sean McSweeney says: “Unless you were on the new generation platform, you couldn’t use Friends for auto-enrolment anyway, so a lot of people have already switched schemes. This is a potential problem, but it is more likely to impact ex-employees than current ones.”
Towers Watson senior consultant Stephen Green says: “To be fair to Friends they are going through this complex merger with Aviva and one of the problems with pension freedoms is sorting out issues with legacy systems, which can be pretty complicated.
“That said, they needed to be clearer in saying what they would and wouldn’t be able to offer.
“If people can’t access their pensions through Friends Life then their other option is to transfer to another arrangement, but there are going to be costs and fees for doing that.”