Friends Life had initially planned to offer full pension freedom under new rules introduced in April.
However, the company, which is now owned by Aviva, is in the process of writing to around 1,300 pension holders to tell them they will no longer be able to withdraw some of their pension savings in cash, a BBC report said today.
“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,” said the company’s spokesperson.
Three options
Savers will have three options: to withdraw their entire pension pot and be hit with a huge tax bill, use the money to purchase an annuity, or go down the costly route of transferring their savings to a rival insurer.
The announcement only affects customers who are part of the pre-merger Friends Life business and not other Aviva customers.
The spokeswoman said Friends Life had seen a high number of pension freedom enquiries from customers, with the vast majority requesting full encashment.
Although the firm is currently focusing on those customers asking to take out their whole pension, it said it will offer partial withdrawals in “due course”.
