Equity release broker Age Partnership is to offer members of pension schemes access to their cash for a flat fee of 1.25 per cent.
As part of the Government’s pension reforms people aged 55 and over will be able to take their entire private pension pot as cash. However, pension schemes and providers do not have to offer access to the new flexibilities themselves but must allow members to transfer to a scheme that does.
Age Partnership head of retirement strategy James Dean, the former chief executive of Aegon Direct, says the firm is in talks with pension schemes wary of offering freedoms but keen to give members access to an alternative.
He says: “We have developed a low cost, straightforward service for all-comers, irrespective of fund size, that allows them to exercise their new pension freedoms whatever their individual needs may be.”
Members moving their savings through Age Partnership will be charged 1.25 per cent even if they take the full amount as cash. They will then potentially be subject to additional income tax if the withdrawal pushes them into a higher than normal tax band.
Protect and Invest Chartered Financial Planners director Michael Roberts says: “It’s not ideal for people to pay to access their own money – that would be for the scheme to offer the flexibilities themselves – but no-one’s going to offer the service for free.”
Evolve Financial Planning director Jason Witcombe says the lack of a market makes it hard to say whether Age Partnership’s offering is good or poor value.
He says: “1.25 per cent sounds cheap if it’s £20,000, but expensive if you’ve got £500,000. If there’s one provider they can offer what they want, but it should come down as more enter the market.”
The majority of occupational schemes are still undecided about whether to offer member access to the freedoms within the scheme, according to a survey of 80 schemes by actuaries Xafinity.
In addition, just 5 per cent of schemes are planning to let members withdraw pensions as a lump sum, while only 2 per cent will offer full flexibilities including drawdown.