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Closed-book giant Phoenix: ‘No evidence’ exit fees blocking pension freedoms

Exit sign

Closed-book provider Phoenix Life says it does not consider exit charges a problem and finds “no evidence” penalties are stopping customers using the pension freedoms.

The stance comes a day after Scottish Widows announced plans to scrap all exit fees on workplace pensions and Money Marketing revealed Standard Life and Prudential have capped penalties.

Phoenix declined to comment on its plans for exit fees ahead of its Independence Governance Committee’s annual statement.

But a spokeswoman says: “We do not believe we have an issue with exit charges, either in respect of pension freedoms or workplace schemes.

“To date we have seen no evidence that any customer incurring an exit charges is deterred from taking advantage of pension freedoms before their selected retirement date.

“Our IGC will be publishing their report shortly and we will work with the FCA on their consultation.”

Phoenix says 20 per cent of its policies have an exit penalties, with an average charge of 1 per cent.

In January George Osborne tasked the FCA with capping “excessive” exit fees, the regulator is now consulting on what level it should be set at.

Wingate Financial Planning financial planning director Alistair Cunningham says: “Phoenix by their nature are a legacy provider and their old policies will have initial charges. They have much more to lose than Standard Life or Scottish Widows.

“They’ve got nothing to gain from being the first to blink and it will cost them a lot of money – of a proportion of their business book they have a lot more contracts with initial unit and penalties.”

Rowley Turton director Scott Gallacher says: “They will almost certainly have massive amounts of exit charges, with things like initial units with very high annual management charges and exit penalties. Part of their business was to buy up insurers and wind up the administration on the basis we’ll get all these fees back over the years. If you’re suddenly saying you can rip all that up firms like Phoenix are in trouble.

He adds: “Making these kinds of retrospective changes sets a dangerous precedents. I am slightly concerned that these kinds of moves mean people don’t see the UK as a place to do financial services business.”



Standard Life and Pru to cap exit fees

Standard Life has introduced a 5 per cent cap on exit penalties for thousands of individual and workplace pension customers, Money Marketing can reveal. The insurer made the change in January ahead of Chancellor George Osborne announcing the FCA’s new duty to impose a cap on “excessive” exit fees. In addition, Money Marketing can also […]

Pensions-savings-retirement-piggy bank

Scottish Widows to scrap all workplace pension exit fees

Scottish Widows is removing exit fees across all of its workplace pensions ahead of Government moves to cap penalties when customers leave policies early. In January George Osborne handed the FCA a duty to cap “excessive” exit fees. The level of the cap has not yet been set but Scottish Widows says it will scrap […]

Providers to slash exit fees and extend loyalty payments after FCA governance crackdown

Royal London is extending loyalty bonus structures for thousands of customers with legacy policies while another provider is set to cut exit fees following recommendations by new Independent Governance Committees, Money Marketing can reveal. PTL director Richard Butcher – who sits on the IGCs of Standard Life, Old Mutual Wealth and a governance advisory arrangement […]


Show of strength: Osborne talks tough but how will exit fees cap work in practice?

Chancellor George Osborne’s pledge to set a cap on “excessive” early exit fees for pensions has sparked a wider debate on how firms charge customers for leaving products. The Chancellor’s intervention focuses on people being “blocked” from the new pension freedoms but there are calls for the principle to be applied across financial services. However, […]


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

  1. Of course Phoenix doesn’t find exit fees a problem – why should it. BY the time their administration even answers a simple letter or phone call the respondent may well have died of old age or just lost the will to live.

  2. Well they would say that wouldn’t they?

  3. Richard Wright 2nd March 2016 at 6:10 pm

    For god sake the clients are locked into per performing funds , no adviser can recommend a Transfer as it just does not stack up with the huge fees so therefore it does affect freedoms !!!

  4. Ha Ha you couldn’t make it up. Example; a Client within 7 months of NRD would like to take advantage of Pension freedoms. Phoenix say yes fine to transfer and by the way there is a 35% MVR penalty. Imagine this happening in the 25th year of a 25 year mortgage! Baroness Altmann are you listening, George Osborne, are you going to legislate against the Treating Clients Unfairly (TCU), David Cameron, have you taken your eye off the pension ball with your focus on Brexit? Protectyed Tax Free Cash also needs a further period of transfer protection

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