The amount of retirees going into drawdown has increased by a third month-on-month, according to the latest figures from Fidelity International.
Data from the firm’s call centres showed that the biggest theme for October was drawdown, with 21 per cent of calls, up from 15 per cent in September.
Those seeking to get hold of tax free cash fell from 24 per cent in September to 18 per cent last month; representing the first time that drawdown has overtaken tax free cash requests since pension freedoms began in April.
Other key themes related to the best use of defined benefit pension pots - up to 12 per cent from 6 per cent month-on-month - while shopping around for self-invested personal pensions remained fairly stable from September to October at 15 per cent and 13 per cent respectively.
Richard Parkin, head of retirement at Fidelity International, commented that the nature of the pension freedoms and how people use them will continue to change and evolve as we go on.
“The first few months saw pent up demand for cash withdrawals and now we are seeing an emerging theme of people trying to get the best deal.
“With access to the freedoms not entirely uniform, this is to be expected as consumers try and work around restrictions that they weren’t entirely expecting.”
Various providers have reported increasing inflows into their drawdown products. Yesterday, Royal London reported drawdown sales up 67 per cent to £966m over the nine months to the end of September.
Royal London chief executive Phil Loney said: “Clearly a lot more advisers are recommending income drawdown for their clients and we have seen advisers choosing to transfer their clients into our flexible personal pension arrangement in anticipation of exercising freedoms at some point in the future.”
Last month, BlackRock revealed that more than a quarter of the assets flowing into its bundled defined contribution business since 6 April have been designated for drawdown.
Paul Bucksey, head of the firm’s DC business, said there has been a dramatic shift in investor behaviour six months into the new pension freedoms. “For those with substantial retirement savings and investments, our flexi-access drawdown product is proving very popular.”
peter.walker@ft.com
