More than four-fifths (84%) of consumers aged 55-years-old and over do not experience an exit charge when accessing their pension savings, according to data collected and analysed by the Financial Conduct Authority (FCA).
Its findings also revealed that 204,581 pension policies were accessed in the three months following the introduction of April’s pension reforms. This compares to 95,372 in the same period in 2013.
Further findings include:
- 71,455 consumers have accessed some form of income drawdown option.
- 120,688 consumers have accessed some form of cash withdrawal.
- Annuity sales reached 12,418 in the three months since the pension flexibilities were launched, compared to 89,896 in the corresponding period in 2013.
- The average pension transfer time is 16 days.
- More than 3.4 million consumers (84%) eligible to access their pension pots are not charged a fee on exit. Around 358,000 (9%) face a charge of up to 2%, 165,000 (4%) face a charge of 2-5% and 147,000 (3-4%) face a charge of more than 5%.
The findings follow a request for data sent by the FCA to all pension and retirement income providers in July 2015, seeking information on consumer access to the pension freedoms, pension transfer procedures, exit charges, financial advice requirements and the treatment of insistent customers.
Nathan Long, head of corporate pension research at Hargreaves Lansdown, said: “Pensions are changing rapidly as retirement becomes far more personal as opposed to a one-size-fits-all journey.
“The full suite of retirement options should be on offer to satisfy individual’s wide-ranging needs. For example, offering access to only the tax-free lump sum will be attractive for staff wishing to access their pension while still continuing to work.
“Not all providers are adapting at the same pace, although the majority of pension providers say they will be improving what they offer in the next six months.
“Employers should talk with their provider now to see if their changes will still suit the workforce.”