Less than 6 per cent of defined contribution members have accessed their pension pots through Fidelity, according to Maike Currie, associate director at Fidelity Personal Investing.
Ms Currie said: “Despite all these concerns not many people have gone out and spent their entire pension.”
She added that half of those taking all the money as cash have pots that are less than £10,000, and then 60 per cent are DIY investors, and alongside this 30 per cent are DC members accessing their pots.
Ms Currie also said that there have been three main trends since the inception of the pension freedoms.
These have been enquiries about transferring defined benefit schemes into defined contribution schemes. “That is not a decision you should make lightly, these pensions are called gold plated pensions for a reason. They are the Rolls Royce of pensions.
“The second thing is that there has been a lot of enquiries about the lifetime allowance and the third things has been around tax free cash.”
Ms Currie added that Fidelity has seen that around 4 - 5 per cent is a sensible level of income that you can take from your pension pot without running it down completely.
Elsewhere, Richard Parkin, head of retirement at Fidelity, outlined a few key points that Fidelity have submitted as responses to the pensions green paper on tax.
Fidelity has suggested all contributions made by individuals are made from net pay and receive a flat-rate 25 per cent government payment, and additionally that employer contributions for the individual remain free of tax and National Insurance for the employee remain as they are today.
Alongside this, Fidelity called for employer contributions that are fully tax-deductible and exempt from National Insurance for the employer and total contributions are limited to £20,000 a year increasing with wage inflation.
Fidelity added that the lifetime allowance would be abolished and that benefits can be taken as today with 25 per cent tax-free and the remainder subject to income tax as and when it’s taken.
Finally, the firm suggested that an additional annual allowance of £10,000 to a TEE arrangement for those wanting to save more.
ruth.gillbe@ft.com
