The Association of British Insurers has hit back at Chancellor George Osborne’s plans to tackle”excessive” exit fees and obstacles to to savers transferring pensions.
Osborne announced the plans at Prime Minister’s Questions earlier today, with the FCA set to gather information on potential blocks to savers moving their money.
However, ABI director general Huw Evans says insurers have been working “flat out” to help customers, and criticised the Government’s “rushed” timetable for the pension freedoms reforms.
He says: “We agree that further clarity is needed and have been calling for it for some time. But we reject any suggestions that the industry is putting up unnecessary obstacles to hinder customers exercising their pension options.
“It needs to be remembered that the vast majority of customers eligible for the pension freedoms will not face any early exit fee. Where one is charged it is not a penalty for leaving early, but to cover the costs of setting up the pension, particularly commission.”
Meanwhile, Labour responded by accusing Osborne of “dithering” by opening a consultation on exit fees, rather than intervening in the market.
Shadow pensions minister Lord Bradley says: “Labour has repeatedly called for a cap on fees and charges and we’ll continue to press the Government to act in the interests of savers.”
Hargreaves Lansdown head of pensions research Tom McPhail says the launch of a formal consultation will allow the Government to respond to media criticism, while also drawing some of the heat from the debate.
He says: “There was an inevitability to this, but by allowing for a consultation we can explore it in some more depth and hopefully have some sensible responses.”
Informed Choice planner Martin Bamford says the focus on exit fees is a statement of faith in market forces.
However, he adds that challenges remain for the Government’s stated intention of exploring challenges preventing access to a full suite of freedom options.
He says: “I think there’s still a big issue around how people facilitate pension freedom. Advisers and providers are in many cases running scared of future liabilities and the FCA has tried to clarify things like insistent clients but that doesn’t seem to have helped.
“It does make you wonder why they didn’t make it compulsory for providers to offer a full range of pension freedoms in the first place, and if this doesn’t send a clear enough message then maybe the Government will try that.”