View more on these topics

Altmann confirms pension exit fee cap on occupational schemes

DWP-Department-for-work-and-pensions-500x320.jpg

Pensions minister Ros Altmann has confirmed the Government will impose a cap on exit penalties levied on members of trust-based schemes.

Yesterday the Treasury announced it will giving the FCA a duty to set a cap on “excessive” charges where customers leave pension products early. However, until now it has not been clear whether the same limit will be placed on trust-based providers.

Altmann tweeted: “Will ensure cap on exit penalties in trust-based pensions alongside FCA cap for contract-based. Want all pension savers helped the same.”

A DWP spokeswoman adds: “The Government  is clear that all consumers, regardless of the type of scheme that they are in, should be protected from excessive early exit fees.”

What is meant by “excessive” is yet to be decided and the regulator will launch a consultation to determine at what level the cap should be set. The FCA found 670,000 consumers aged 55 or over faced some level of early exit charge.

Of these, 358,000 faced charges of up to 2 per cent; 165,000 faced charges of between 2 per cent and 5 per cent; 81,000 faced charges between 5 per cent and 10 per cent; and 66,000 faced charges above 10 per cent.

Osborne’s announcement has met with fierce criticism from some in the industry who warn the move undermines contract law.

Platforms have also come under pressure to scrap their exit fees.

Recommended

Money-Cash-Coins-GBP-Pounds-UK-700x450.jpg
14

Industry hits out at ‘ill-informed’ exit fee cap

Government plans to cap pension exit charges have been slammed by experts, who brand the plans “worrying” and “ill-informed”. Chancellor George Osborne said yesterday he would hand the FCA a new duty to cap “excessive” exit fees. Around 700,000 people face early exit penalties if they move their savings, he said. Osborne added: “The Government […]

George-Osborne-direct-photo-700.jpg
18

Osborne hands FCA duty to cap ‘excessive’ exit fees

Chancellor George Osborne has told the FCA to cap “excessive” pension exit fees. Speaking in the House of Commons, Osborne said while the pension freedoms had been welcomed by savers, the Government remains concerned that roughly 700,000 people face early exit penalties if they move their savings. Osborne said: “The Government isn’t prepared to stand […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Good news for scheme members but have a little sympathy for providers of products who actuarially priced initial terms based on a contractual term of investment, before which a compensatory exit charge would apply on termination. Don’t see how those providers can be prevented from then making a commercial decision to instead increase ongoing product charges for everyone, in which case, little will be achieved on the swings and roundabouts.

  2. If the Chancellor is permitted to propose action on the presumption that exit charges are unilaterally unfair, can we expect to see a flood of Ombudsman complaints upheld if the cap does not make it onto the books?

  3. Whilst the left hand is thinking of doing this, the right hand is apparently contemplating a reintroduction of commission.

  4. Graham Peacock 1st March 2016 at 9:50 pm

    THe Pensions Regulator has just completed a survey of exit fees in trust based schemes…..although most of us dont charge for this! so could have a trust based Cap for imaginary fees…..

Leave a comment