New data has revealed that providers have not been communicating pension freedoms all that freely to their customers due to concerns about huge outflows, as the market braces for a major shake up now the new rules are finally in force.
According to research by PricewaterhouseCoopers, only 36 per cent 50-75 year-olds have been contacted by their pension provider prior to the at-retirement reforms, which were implemented yesterday (6 April).
The professional services firm surveyed over 1,200 people during March and found this figure falls to 26 per cent in the low-wealth, small pension pot demographic. It was still only 48 per cent in the high-wealth, large-pension category.
The survey also showed that 45 per cent of respondents are planning on approaching their pension provider for additional guidance. The poll found that those who have received information from their providers see little variation in quality across different formats of information, such as face-to-face conversations and email communication.
Jonathan Howe, head of insurance at PwC, said that insurer fears about huge inflows of customer requests for cash come April 6 appear to be well-founded, as nearly half of respondents named their providers as a source of information they intend to tap.
“With less than 40 per cent of people believing they’ve been contacted by their insurer regarding the new pension rules, insurers need to do much more than they have to date in providing information to their customers.”
FTAdviser asked all the major pension providers what their approach had been.
Gareth Evans, head of corporate affairs at Royal London, stated that they have not proactively contacted all customers who could exercise pension freedoms.
“Currently we are contacting only those nearing retirement with the six-month warm up pack or the six-week retirement option pack.”
John Perks, managing director of LV Retirement Solutions, commented that the majority of their business is advised and they remain committed to working closely with advisers through this transitional period.
“To support advisers with blending we have brought a new proposition, ‘retirement account’ to the market which will enable advisers to tailor a number of product solutions in a single application. We have also increased staff numbers so we can ensure we offer a great service to advisers and their clients during this time of change.
“We expect that the number of retirees seeking advice to steadily rise as more people look at how they could best structure their retirement income to achieve the flexibility they require.”
A spokeswoman for Standard Life said that over the last five months they have been highlighting to all defined contribution customers approaching retirement their understanding of the new pensions flexibility.
“These customers have been sent an addendum to the mandatory retirement packs (at both 36 and 10 weeks pre-retirement date) which cover all their options and from February we have been signposting customers to Pension Wise in our retirement packs,” she added.
Mr Howe added that this pressure on providers is even more stark when they consider the large numbers of low-wealth, small pension pot-holders who have made or received no contact so far and will be looking to their pension provider and advisers, as a main source of information.