More retirees are using pensions like bank accounts, research from the July figures at Fidelity Worldwide Investment’s call centres show.
Just over four months into the freedoms and Fidelity Worldwide Investment has put together four key facts from July’s call centre demonstrating what people are doing with them:
- Banking on pensions – the notion of people using pensions like bank accounts may be gaining ground though they’re using them like deposit accounts rather than current accounts. We’re seeing around half of those going into drawdown just taking ad hoc lump sums rather than setting up regular income.
- Annuities continue to remain unappealing – an on-going theme since the 2014 Budget, only four percent of customers have called up on the subject. And of that figure, a quarter wanted to sell it.
- Take up of Pension Wise variable and still low – rising to 20 percent in June, this month only saw 11 percent of our customers use the service before coming to Fidelity; a figure that is in line with May. However, of those who had used the service, over 90 percent felt they had been given enough guidance to make their own choices.
- Retirees still interested in unlocking DB benefits – around every one in 14 calls are from a customer who wants advice on their DB scheme and how they can best use it under the flexibilities.
Richard Parkin, Head of Retirement at Fidelity Worldwide Investment said:
“Since the freedoms became available, there are certain elements that have remained pretty constant such as the falling interest in annuities and the sometimes misplaced desire to cash in DB benefits. Pension Wise take-up amongst our customers remains low but it’s pleasing to see that people who use it appear to find it useful.
“We were always uncertain that people wanted to use their pension savings like they’d use a current account. The increased popularity of ad hoc withdrawals does show that they appreciate the new flexibility. In some ways this is to be expected. Having been freed of the obligation to commit to a lifetime income from an annuity it would be odd if customers simply opted for lifetime income from drawdown.
“We do expect that the use of pension savings to meet ad hoc expenditure will be popular for those transitioning into retirement. These people will generally have other income sources to cover their daily living expenses. It may be that when they are fully retired they will look at converting any remaining pension savings to lifetime income. For now it looks like many are taking advantage of the flexibility that pension freedom offers.”