After an initial dash for cash following the introduction of pension freedoms in April 2015, customers are taking more time to consider their options, according to a Scottish Widows reported published on the 1st June 2015. From the initial surge at the beginning of April until the middle of May, Scottish Widows has seen a 72% drop in full pension encashment requests.
In the last couple of weeks of May, the report tells us full pension encashment requests accounted for 50% of Scottish Widows customer intentions compared to more than 70% in the first few weeks of pension freedoms. With around a fifth of its customers eligible under the new freedoms, the average size of pot being cashed in full was less than £20,000. 85% of requests were for pots less than £30k.
While requests for full encashment have cooled, customer demand remains very high, with an increasing proportion of customers wanting to have detailed conversations about their pension freedom options, including drawdown and partial pension encashment.
Scottish Widows received a call every 10 seconds on average during the week beginning 6th April and has also recorded an unprecedented surge in online engagement with more than 110,000 hits to its digital Retirement Planning site to date. Over the last few weeks, interest in exploring other retirement income options has increased significantly and for the first time, these requests have now over-taken the volume of customers simply looking to cash in their pension.
The complexity of these options has necessitated longer call lengths with some of the most complex options taking over an hour to complete. Commenting on the report, Robert Cochran, Retirement Expert at Scottish Widows, said:
“It’s still too early to draw definitive conclusions about the longer term impact of pension freedoms due to the pent up demand of those who deferred until April 6th to access their money. The watershed for us has been how popular the tools on our Retirement
Planning site have been with our customers to better understand their options and tax implications without rushing in. However, our site activity data also tells us that customers are still looking for more help in making the right decisions given the wide range of options now available to them.”
Sources: www.scottishwidows.co.uk (Published Report Summary: 2015/06/01)