Pension providers handled more than 200,000 calls from customers in the first week following the introduction of new pension freedoms on 6 April.
Members of the Association of British Insurers (ABI) reported that between 7 and 10 April, they received 229,932 phone calls from customers interested in finding out more about their pension options under the reforms. The figure was more than double the average that would normally be expected during the period.
More than 10,000 written and email requests were received each day, also more than double the average.
Rob Yuille, the ABI’s manager for retirement policy, said: “Unsurprisingly many customers, recognising the importance of the reforms, are contacting their pension provider to understand how the changes may affect them. Insurers have taken steps to meet this demand, and will continue to explain to customers their options.”
The reforms mean that from the age of 55, people with defined contribution pension savings now have much broader options over the way they access their pension pot, including taking it as a lump sum, using it to buy an annuity or leaving it invested and draw an income from it.
Feedback from providers underlines that tax is among the key issues pension savers need to consider if they want to take cash from their pension pots.
The ABI said that savers turning their entire pension pot into cash could face a sizeable tax bill, reducing the amount of money available to them. Customers who wanted to release several lump sums should expect to see emergency tax imposed on these payments, which they would then need to reclaim from HM Revenue & Customs.
It also highlighted that customers with a valuable guarantee in their pension, such as a guaranteed annuity rate, are required by the government to take financial advice before they can transfer or take cash, if the safeguarded benefits are worth £30,000 or more. This is to ensure they are aware of the value of this option before deciding whether to give it up.