Old Mutual Wealth has become the latest provider to introduce a 5 per cent cap on exit penalties and scrap fees for customers who stop contributing.
Ahead of the first report produced by the independent governance committee, the firm says it is reducing exit fees on legacy contracts and capping them at 5 per cent for around 3,700 customers aged 55 and over.
Following the changes the average exit charge will fall by around 2 percentage points, to 3 per cent. For customers in affected products aged 55 or over, the average is 2 per cent.
In addition, paid-up charges have been removed, benefitting around 9,400 policyholders with an average cut in fees of 22 per cent, Old Mutual says.
Money Marketing previously revealed other providers’ plans to cap and scrap exit fees.
Old Mutual Wealth investment platforms chief executive Steven Levin says: “As a modern wealth management business, we are focused on ensuring customers receive good outcomes. The pension market has changed considerably and we want to ensure we are making improvements for those customers in contracts that were set long before the current rules were introduced.
“Where exit fees are still in place, due to the structure of older contracts, we want to ensure customers receive good value for money. We are introducing the cap for all affected pension customers – whether they are individual pension customers or members of occupational pension schemes.”
IGC chair Richard Butcher says: “Old Mutual Wealth has been transparent and supportive of the work done by the IGC. I am delighted that they have decided to take a proactive and positive approach to the Committee’s findings to enhance the value-for-money they provide to their occupational pension customers.”