While call centres were generally quiet over the Easter long weekend, Tuesday saw an upsurge in customer calls with most life companies expecting the elevated rate to continue for some time.
“Yesterday we were running at double the number of queries we’d normally get for a day after a bank holiday,” said Darragh Leeson, spokesman for Prudential.
“Our projections are that for the month of April we’ll probably run at 50% up over what we’d expect in a normal month. For the remainder of the year we’d expect to see an uplift of about 30% in call volumes than we would have seen last year,” he said.
Under the new UK pension reforms, which came into effect on 6 April, anyone over 55 can now access all or part of their defined contribution (DC) pension plans, subject to a variety of tax rates. Under the previous system savers could only take 25% tax free and were steered into buying an annuity with the remainder.
Income drawdown favoured
The major queries coming from callers were about income drawdown.
“In terms of our DC clients, 25% wanted to take their tax free cash only while 75% wanted to cash out completely or take a specific amount of money,” Fidelity Worldwide Investment said in a statement.
“Customers looking to withdraw their pots in full were not fully aware of the tax implications and most proceeded after the tax implications had been explained,” it said.
“Most of the customers that have called Fidelity’s Retirement Service are members of the company pension schemes we manage wanting to take cash,” Richard Parkin, head of retirement for Fidelity Worldwide Investment.
Standard Life said the main requests from customers it had received so far this week also related to taking cash from their pension; either full encashment or simply the tax free element.
“Those customers who decide to fully encash are generally those with smaller pots. Given these options were only available from Monday for many (unlike drawdown or annuity purchase), this is entirely as expected,” it said in a statement.
