The Association of British Insurers says its members reported over 200,000 calls from people seeking advice within the first four days of the new pension freedoms coming into force.

The reforms mean that anyone over 55 with a defined contribution pension can opt to release a lump sum from their pension pot. The rules are predicted to affect around 320,000 people every year.

Kitchen remodelling and speedboats

It has been reported by a number pension firms that people have been looking to spend their lump sums on new kitchens, holidays and even speedboats.

A separate survey from silversurfers.com found that 4% were planning to use the money to finance a major home renovation with 1%wanting a new kitchen.

A recent report from YouGov and investment company Tilney Bestinvest found that around a third of people planned to exhaust all their savings within a decade, while 16% wanted to spend some of it on a holiday.

One in 10 say they are going to buy a car, while 23% would transfer it to an ISA. 11% are going to pay off their mortgage and 8% will clear other debts.

Boost in calls

ABI says that from the Tuesday to Friday after the reform launch, it’s members handled 229,932 phone calls asking about the options now available to pension holders.

This was equal to over 57,000 calls a day - a rise of 214% compared to average volumes. On top of this, there were over 10,000 written and email requests every day, more than double the average.

The Government-backed Pension Wise service has also been offering free advice on the matter.

It says that insurers have been taking steps to meet the increase in demand and have also been recommending that people speak with an impartial advice service before taking any action.

For further information, please contact your local Strutt & Parker office.