Paying off debt a priority in first week of pension freedoms

Pension savers are finding it difficult to use new pension freedoms as some providers are turning down requests for flexible access to pension pots.

Providers have reported "unprecedented" levels of calls from savers wanting to access their pensions. But some require clients to buy an annuity or take all the fund, rather than offering options.

"Many callers say their existing pension company is not ready with flexible drawdown and uncrystallised funds pension lump sum (UFPLS) options," said Tom McPhail, head of pensions research with Hargreaves Lansdown.

Ros Altmann, an independent pensions expert said some customers faced transferring their funds to another provider. "Yes, there is evidence that they are finding it difficult," said Ms Altmann. "But what they should be doing is taking their time to consider options. There is no rush."

Some providers are extending opening hours over the weekend after high call volumes in the first week of pension freedoms.

Providers said many customers planned to pay debt or help children buy houses. One wanted to buy a speedboat, another pay for a wedding.

"We expected our customers to be excited and the significant increase in customer enquiries we have received suggests that this is definitely the case," said Canada Life.

Scottish Widows, part of Lloyds Banking Group, said it received about 12,500 calls this week, three times normal volume. It had also received about 1000 instructions via its website.

"Many people just looking for information on what their options are and what they should do next," it said.

"Of customers who know what they want, it's a mix of people cashing in small pots, partial encashments and moving into flexible drawdown."

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"A large percentage fully encashing have pension pots below £10,000," said Standard Life. "For those with larger pots, a bigger proportion of people are taking tax-free cash or a partial encashment.

Aegon reported 3,000 more calls than normal on Tuesday, the first day of the freedoms.

"Call volumes on April 7 were up 70 per cent compared with the first day of the tax year in 2014, the majority from customers looking for plan valuations and retirement quotes," it said. "We also saw a higher proportion of calls from customers, as opposed to advisers which might be down to it being holiday season." It has additional customer support in place this Saturday and next.

Legal & General said customer calls were up a third on normal levels.

Retirees aged 55 and over accessing defined contribution pension savings are eligible for free guidance. Bookings can be made via www.gov.uk/pensionwise

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