Pension Freedom Day Meltdown For Financial Firms

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The phones have been ringing off the hook as retirement savers flooded call centres with queries about their new pension freedoms.

Flexible access pension rules started on April 6, 2015, allowing anyone aged over 55 years old to draw as much cash as they like from their direct contribution retirement savings.

More than 200,000 calls melted phones at pension providers as retirement savers rushed to find out how they could benefit from the new rules.

According to pension provider trade body, the Association of British Insurers (ABI), 229,932 calls were made.

Because the first day of pension freedom was a bank holiday and offices were closed, that meant pension firms were receiving an average 57,483 calls a day at a rate of more than 7,000 inquiries an hour.

TV advertising pulled

This was an increase of 214% on usual call volumes to pension centres.

The peak was April 7, the first working day for pension freedoms.

As well as the calls, pension firms also received more than 10,000 inquiries by letter and email.

ABI spokesman Rob Yuille said: “It’s no surprise that so many people want to know how the new pension reforms affect them and their retirement savings.

“Many providers stepped up customer service for pension freedom day to meet what they perceived as an overwhelming demand for information.

“Besides their pension providers, customers can also speak to the free Pension Wise service.”

However, Pension Wise had to pull an expensive TV advertising campaign promoting the free service due to a government ban on publishing policies around the election.

The service can still advertise in print and online.

Broadcast media advertising can start again after Election 2015.

Pension advice

“If people want free, independent advice, then they should talk to Pension Wise as providers can only talk about their own products and services,” said the ABI spokesman.

“It’s important everyone understands the implications of taking too much money from their pensions too early.”

The ABI also warned that pension savers drawing cash from their savings also have to consider any tax bill attached to the withdrawal and how to reclaim overpayments from HM Revenue & Customs (HMRC).

“Taking pension cash can be expensive and may result in a loss of benefits as well, so taking advice before making any rash decision is vital,” said the spokesman. “The government has made it clear that those who spend their cash will only have the cash cushion of the state pension to fall back on and no extra benefits will be available in most cases.”

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