Almost a quarter of the enquiries into Fidelity’s call centre over a nine month period concerned access to tax-free cash, with the figure doubling in the run up to the Budget, the fund manager said.
Speculation was rife ahead of the Budget Chancellor George Osborne would hit pensions with mkore radical change, by scrapping the 25 per cent tax free lump sum savers can draw down, and by further restricting the lifetime allowance.
From the beginning of July 2015 to the end of March, Fidelity collated figures from around 2,000 customer calls.
In addition to the pre-Budget rush for tax-free cash in February and March, the fund manager revealed nearly one in five of those telephoning its staff were seeking information about changes to the lifetime allowance.
Richard Parkin, head of pensions at Fidelity International, said it was unsurprising to see a glut of tax-free cash queries, but cautioned it was unclear whether people were taking cash with a long-term view of how it fits into their overall retirement plan.
“Taking cash now may seem straightforward, but it can impact future retirement plans and it’s better that people fully understand this before taking action,” he said,.
“Similarly, we’ve seen a rush of people seeking to contribute more to their pensions in case pension tax relief was reduced or even removed. This underlines the importance of government providing a stable and supportive system of incentives for pensions.
“People cannot plan effectively for retirement if they are doing so against a constantly changing set of rules.”
Earlier today (6 April), FTAdviser reported that pensionsminister Baroness Ros Altmann has admitted constant changes to the UK pension regime have led to widespread financial confusion, amid criticism recent reforms are more to do with politics and HM Treasury’s coffers than savers.
Speaking to FTAdviser, Baroness Altmann said the latest changes to the pension market - including giving people unfettered access to their savings and the introduction of the Lifetime Isa - is the government trying to ensure it is fit for the 21st century.
“Constantly changing the rules and goalposts is not helpful,” she said, suggesting the pension freedoms can form the basis for building good private pensions once they are properly understood.
ruth.gillbe@ft.com
