Speaking during a House of Commons debate yesterday, Chancellor George Osborne revealed that 60,000 people had used the new flexibilities in the first few weeks of them being introduced.
“These unprecedented pension freedoms have been widely welcomed,” Osborne said, pointing to the first data produced since the reforms, which indicates that £1bn worth of pension savings had been transferred in the initial weeks.
“This is a sign that the freedoms are a real success,” he said. “But of course we have got to make sure people get the best advice, that the market responds, and that companies up their game in helping customers make use of these freedoms.
“We will be watching these things very carefully,” he added.
This comes after Friends Life apologised to customers after it halted a decision to offer full pension freedoms.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said: “We’re seeing high levels of engagement and very positive feedback from investors.
“The pension freedoms are working well, however, we don’t think that transactions have yet settled down into a ‘normal’ pattern.”
McPhail also said there is evidence that demand for annuities may grow again over time, particularly as investors look for income which is more secure than flexible withdrawals.
