A raft of platforms will struggle to be ready in time to offer savers access to the new higher maximum income withdrawal limit set out in the Budget.
In his Budget speech last week, Chancellor George Osborne revealed explosive reforms to pension flexibility which will see people over the age of 55 able to access their entire pension pot as cash from next April.
Ahead of the reforms being introduced, Osborne also set out a series of interim measures which come into force today.
These include reducing the flexible drawdown minimum income requirement from £20,000 to £12,000 and increasing the maximum income a person in income drawdown can take from 120 per cent of GAD to 150 per cent.
The overall trivial commutation limit has also increased from £18,000 to £30,000, while the triviality limit on small pension pots has risen from £2,000 to £10,000, with individuals allowed to take up to three separate pots as cash.
Having been given just a week’s notice ahead of the changes, Platforms that support standard and/or flexible drawdown have scrambled to be ready in time.
Since the changes came into effect, Aviva has amended the platform’s flexible drawdown limit but is not expecting its platforms systems to be able to offer capped drawdown at 150 per cent of GAD until early next week.
It is currently contacting clients with applications which are being processed to ask if they want to make use of the new limit when it becomes available.
Nucleus says it can now support the changes to flexible drawdown but is still working on the changes to capped drawdown rates.
Axa Elevate says it expects to make the system changes in early April.
Standard Life says it will be able to offer capped drawdown at the new rate but its quotation system for prospective new clients will not be updated in time.
Ascentric says from 27 March it will support the new flexible drawdown minimum income requirement for all clients and the 150 per cent of GAD income drawdown rate for new clients. Existing clients will be able to access the new GAD limit from mid-April.
Aegon and Hargreaves Lansdown say new clients will be able to access capped drawdown at 150 per cent of GAD but note existing clients will stay on the 120 per cent rate cap until their next policy anniversary.
Mackenzie Taylor Wealth Management director Ken Taylor says: “To be fair, the companies have had zero time. But it does raise questions about those platforms that cannot tweak their technology fast enough.”