Industry sees low response to pension reforms

Despite some firms expecting an 'influx of enquiries', Hargreaves Lansdown said that due to the Bank Holiday, the low response levels were "not surprising".

Last week, research from retirement specialists MGM Advantage found that just 1 in 8 (13%) of those aged over 55 are intending to make use of the new freedoms by withdrawing cash from their pension pots above the 25% tax-free allowance.

The majority of enquiries (42.1%) were regarding drawdown, while just 9.8% asked about annuities and 6.6% looking to take the tax free cash only.

8.7% had further taxation queries, and 16.9% asked about taking ad-hoc lump sum withdrawals.

Tom McPhail, Head of Pensions Research at Hargreaves Lansdown, said:

“It will take some time for a clear pattern to emerge in terms of how investors are looking to use the new freedoms. However a couple of things are already immediately apparent. Investors saving with a pension company which doesn’t offer a full range of choices are going to find themselves at a disadvantage and may have to move their money to get what they want.

"Initial demand has been focused on an investment income rather than buying an annuity, though we do expect this balance to swing back to some extent in the weeks to come. Relatively few people are asking to take all their money out; we’ll be tracking the sums involved however in the main we expect it to be at the smaller end of pension pot sizes.

"We remain concerned that the Government has not set in place a consistent industry-wide tracking system to monitor how these new freedoms are used by investors.”