Personal Pension  

Insurer refers 70% of callers to ‘second line of defence’

Insurer refers 70% of callers to ‘second line of defence’

As pension freedoms calls ramp up following a slow bank holiday-afflicted start, one provider has revealed it has referred 70 per cent of a huge volume of early pension freedom enquiries to ‘second line of defence’ warnings.

Zurich reported nearly 10x its normal daily level of enquiries on the first working day of the new freedoms on Tuesday (7 April), taking around 3,000 calls.

It said over 90 per cent of callers were asking about withdrawing a single or partial lump sums from their pension pot, while only a small number of customers were looking into drawdown or purchasing an annuity

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Of the callers, just over 400 had taken guidance or planned to access Pension Wise, with approximately 70 per cent triggering personalised risk warnings under the second line of defence rules.

Zurich was one of a number of firms which previously told FTAdviser it was set to issue warnings in a wider range of scenarios than was implied by Financial Conduct Authority guidance on the risk warnings, which was issued without consultation at the end of February.

Over at Scottish Widows a similar volume of 3,000 calls on Tuesday represented three times normal volumes, following a quiet start on Bank Holiday Monday when the reforms formally came into force.

“Calls are mixed, many people are just looking for information on what their options are and what they should do next so we’re directing people to Pension Wise or suggesting they seek financial advice,” stated a spokesman.

“Of those customers who know what they want, it’s a mix of people cashing-in small pots, or partial encashments and people moving into flexible drawdown,” he added.

Fidelity, which was also one of a handful of firms which opened its call centre on Monday, previously revealed it too had received a number of calls from small pot savers in particular seeking to cash in their funds.

Aegon also had close to 3,000 callers on its first day, Tuesday, which was up nearly 42 per cent on levels received on the previous week.

Tommy Young, chief operating officer at the firm, commented that several calls have been from customers expecting to be able to sell their annuities now, referring to plans for a secondary annuities market announced at the Budget.

Mr Young added other callers have been under the impression they will be able to access their retirement savings immediately, just like they do their bank account.

Standard Life also took over 3,000 calls since their phone lines opened on Monday morning, while nearly 1,000 customers ‘settled’ benefits themselves using the firm’s online support facility.

In some cases, customers have chosen full or partial encashment to either pay off debt or to invest in property, while others chose to cash-in their pension due to their poor state of health and some revealed intentions to finance weddings or purchase speedboats.

Jamie Jenkins, the provider’s head of pensions strategy, said that while it is too early to draw any definitive trends, the main focus this week for those with very small pension pots is to understand their options to release cash.