Advisers attack ‘unfair’ exemption for individual personal pension exit charges

Pensions-savings-retirement-piggy bank

Advisers are hitting out at pension firms’ decision to scrap or cap exit fees for workplace pensions but not individuals.

Last month Money Marketing revealed Standard Life and Prudential’s plans to cap exit fees at 5 per cent.

Other providers also announced fees were to be limited or scrapped entirely.

However, while some firms – including Standard Life – took action for both workplace and individual pension customers, others only acted on corporate schemes.

Scottish Widows and Prudential say they will be looking at individuals’ policies at a later date, Aegon plans to upgrade “the majority” of policies over the next year and Legal & General has no plans to scrap exit penalties for any customers.

Fairey Associates managing director Ed Fairey says: “This is unfair and counter intuitive because generally the corporate is seen to be more protective than the individual.

“Individuals are softer targets and more easily preyed upon. Providers are not undertaking this of their own volition and they are going for the wrong set of pensioners first.”

Syndaxi Financial Planning managing director Rob Reid says: “The FCA and its predecessors referred to the importance of a firm’s culture. The DWP has dragged providers into the removal of exit charges but to ignore individual plans is simply unacceptable when clients did not get clear disclosure at inception as it was not then a requirement.

“To ask them to accept something they never signed up to puts the providers in the same place as the banks were, and still are, with PPI.”