The Financial Conduct Authority’s analysis of pension freedoms data has found that take-up is high, with over 204,581 customers accessing their pension savings – almost 70,000 people a month – compared with fewer than 95,372 during the same period of 2013.
The FCA’s analysis of the pension freedoms data, published today (16 September), indicated that across all firms - particularly among the largest 15 firms in the sample - the most popular options in the early months have been uncrystallised fund pension lump sum (UFPLS) full encashment and income drawdown.
The regulator's figures found that of customers aged 55 or over who have accessed their pension since 6 April, a total of 57,568 went for full encashment via UFPLS.
Partial encashment via drawdown was a close second with 53,543 customers, followed by 43,094 going for small pots payment.
Full encashment via drawdown was used by 17,912 customers, while withdrawal of the tax free lump sum only was favoured by 16,872. Annuities trailed behind, with only 12,418 people choosing them in the three months since the reforms were implemented.
The document stated: “The popularity of these options may reflect pent-up demand from consumers planning to withdraw their savings in full since the reforms were announced in 2014.”
Contrary to worries on the lead up to April, the data suggests that firms are offering a wide range of choices to consumers and that take-up in the early months is not likely to have been reduced by a lack of access to the new products available; despite the need to change pension contracts in many cases.
In addition to asking firms for information on their current offering of options, the FCA asked firms to provide details of any further options being developed to help consumers access their pension savings.
It found that 18 per cent of all firms and 50 per cent of the largest 15 in the sample stated that they were planning to develop further options. The range of products in development includes flexi-access drawdown, partial designation/phased drawdown, UFPLS, third way products, fixed term, with-profits and long-term care annuities
The regulator also asked firms developing new product offerings to indicate the expected timescale for when these options would become available to their customers. Around half of all firms, and around 60 per cent of the largest 15 providers, said new product offerings were expected to reach the market within the next six months.