Scottish Widows has reported that pension encashment requests have dropped off steeply since the initial surge from April until the middle of May.
The company said there had been a 72% drop in full pension encashment requests in recent weeks.

In the last two weeks, full pension encashment requests accounted for 50% of customer intentions compared to more than 70% in the first few weeks of pension freedoms, it revealed.

With around a fifth of its customers eligible under the new freedoms, the average size of pot being cashed in full was less than £20,000.

Some 85% of requests were for pots less than £30k.

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While requests for full encashment have cooled, customer demand remained high, the company reported, with an increasing proportion of customers wanting to have detailed conversations about their pension freedoms options, including drawdown and partial pension encashment.

Customers going to Pension Wise in advance of contacting the provider has risen, with 3% in the first week rising to a third within a month of 6 April.

The provider received a call every 10 seconds on average during the week beginning 6 April and has also recorded a surge in online engagement with more than 110,000 hits to its digital Retirement Planning site to date.

Robert Cochran, retirement expert at Scottish Widows, said: “Although our data has shown an increase in Pension Wise awareness, there is still work to do in closing the knowledge gap and encouraging people to use the service to become better equipped to make the right decisions for their financial future.”

The lack of understanding was highlighted by recent research from Scottish Widows that found 79% of 50-59 year-olds were unaware of Pension Wise and a further 38% unsure where to go for guidance.

The study of 5,000 UK adults carried out in March revealed two thirds (64%) of 50-59 year-olds felt the changes have not affected when they plan to take their retirement income and 33% felt the reforms won’t make a difference to how people save.

Mr Cochran added: “It’s still too early to draw definitive conclusions about the longer term impact of pension freedoms due to the pent up demand of those who deferred until 6 April to access their money.”