Have the pension reforms lived up to eggs-pectations?
It was widely reported that this Easter anyone over the age of 55 would be considering their nest eggs, rather than chocolate ones, in the wake of the new pension reforms which came into force on Monday.
It was anticipated by some that 1 in 8 people were going to withdraw all of their savings from their pot immediately and that 1 in 5 were going to spend the funds on a holiday. Various pension providers also opened on the Bank Holiday Monday to deal with the anticipated rush. So, now that the biggest pension reforms for a century are in force, how have the estimated 540,000 people that have the option to take their savings from their pension pots as a lump sum actually acted?
The great dash for cash did not materialise on Monday as early reports suggested that there was a slow and cautious response with few people opting to take all their money out. It therefore appeared that the Easter over-indulgence did not extend into the purchase of holidays and sports cars via the new pension 'freedoms'.
However, reports this morning indicate that pension companies were inundated with enquiries yesterday. The numbers of people who have actually opted to take advantage of the new freedoms has not yet been reported though. It also appears that some of the telephone calls were made by members of the younger generations confused about whether they could take advantage of the gold rush (or perhaps wishfully thinking their retirement dreams were going to come sooner than hoped).
It is of course early days, (and very sunny ones at that) and therefore only time (and the return of more typical British weather perhaps prompting thoughts of cruise deals) will tell whether the new reforms will live up to all the anticipation and egg-citement.
One prediction does still seem set to occur though. The new spring-like reforms have brought further regulations, and with a flood of new products onto the market expected to follow shortly, it does appear that it is a question of when and not if the associated investment advice will come under scrutiny. The FCA, as we have previously blogged, will certainly be monitoring pension advice very closely indeed.