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 that Chancellor George Osborne would hit pensions with more 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 that 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 that 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.”
Adviser view
Michael Roberts, chartered financial planner and director at Protect & Invest chartered financial planners, said it is not surprising that Fidelity experienced an increase in calls about tax-free cash in the run up to the budget.
“As a firm, we had a number of enquiries in relation to The Times article in which Steve Webb was quoted as suggesting that pension tax-free cash would be abolished (although he later clarified his view on this).
“Several clients were considering taking extreme action, which would potentially have had serious consequences for their future financial position as a result of the article.
“To me, this demonstrates the need for a more stable legislative environment for pensions, where clients can plan for the long term with greater certainty. It also underlines the potentially dangerous consequences that can be caused for consumers who take action as a result of such articles.”
ruth.gillbe@ft.com
