LV= has removed all exit charges on its pension wrappers.
The provider becomes the latest to take action on exit fees after pledging to remove them by the end of 2016 in July.
Both Prudential and Scottish Widows scrapped exit penalties for their workplace pension customers in March, while Aviva introduced a 5 per cent cap on exit fees for all individual and workplace pension customers the same month.
LV= retirement solutions managing director John Perks says: “Shopping around at retirement is vital to ensure consumers get a good deal, but excessive exit charges can prevent people from doing so…As a modern mutual, we are committed to ensuring our members have access to good value, transparent products that enable them to get the best outcome for their needs in retirement.”
Back in 2011, LV= placed an exit charge on its new flexible drawdown products to make sure “costs are covered” when customers withdrew their money quickly.
Pre-RDR, LV= customers could pay advisers commission of up to 6 per cent of the pensions funds they had invested. LV= would fund the payment up front and would take back that amount, plus interest, over a period of up to five years. If a customer transferred out before then, whatever remained was deducted from the transfer value as an exit charge.
LV= dropped its enhanced annuity offering last month, but will continue to focus on secure drawdown products.
The FCA’s 1 per cent cap on existing contract-based personal pensions will come into effect from 31 March next year.