Some of Britain’s biggest pension companies are still refusing to let retirees withdraw cash from their retirement pots, two months after the freedoms were introduced.
On 6 April, people aged 55 and over were given access to their pension savings, allowing them to spend as they wish without facing huge charges. While the changes posed challenges for providers, most said savers would be able to take out cash lump sums on time. However, frustrated readers say they are still unable to do this.
Paul Dennison, 71, asked Friends Life if he could withdraw the full sum from his two pensions, together totalling £9,466. “I sent the application forms ahead of the changes, but I’ve been waiting ever since for payment without any communication about what the problem is, or when I might expect the cash.”
He adds: “I’ve experienced huge delays, poor access to customer services, wait times by phone typically over 30 minutes, and ineffective complaints procedures. There will be plenty of older, vulnerable people who are facing horrendous problems accessing their money.”
After The Observer intervened, Friends Life apologised and said it was processing his payment, along with compensation for his trouble. It says that while it will not allow savers to use their pension like a bank account to make regular withdrawals, savers should not face problems taking the full amount in cash out of their pot.
Few pension firms offer complete access to all the freedoms, says Malcolm McLean, senior consultant at actuary Barnett Waddingham. “Many insurers have struggled with the timescale, and it isn’t mandatory under the new rules for providers to offer the full range of freedoms,” he says.
Often the only option is to switch to a rival that will allow withdrawals. “That’s all very well, but in some cases it costs to transfer out,” McLean says. Insurance giant Phoenix is also among those that will not allow savers to use their pension as a bank account. Some older insurance companies are unable to offer customers the option to withdraw chunks of cash because of the cost and time involved, McLean says.
Tom McPhail, pensions expert at Hargreaves Lansdown, says: “The government could bring pressure to bear on providers that aren’t offering these freedoms, to offer a low-cost exit mechanism for customers aged 55 and over.”
