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Osborne eyes pension freedoms charge cap

George-Osborne-19-March-700.jpg

The Government is weighing plans to install a cap on “excessive” pension exit charges, Chancellor George Osborne has announced.

Speaking in place of David Cameron at today’s Prime Minister’s questions, Osborne said the Government had taken note of concerns that savers would not be able to access a full range of freedoms following the launch of the reforms in April.

He said: “There are clearly concerns that some companies are not doing their part to make those freedoms available, and we are investigating how to remove barriers.

“We are considering now a cap on charges and have asked the FCA to investigate. People who have worked hard and saved hard deserve a better deal”

Osborne’s comments come a week after members of the House of Lords hit out at the Government’s failure to intervene on “ridiculously high” drawdown charges.

In a statement, the Treasury said Osborne was seeking to make sure savers are treated fairly when moving savings to a provider offering flexible access options.

In a consultation to be launched next month, the Government will look at how to address any “excessive” early exit fees, including a cap, as well as how to smooth the process of transferring pensions from one provider to another.

City minister Harriet Baldwin has also written to the FCA to demand the regulator gathers information on problems for individuals who want to transfer to a different pension provider.

An FCA spokeswoman said: “It is in the interest of all consumers that the retirement market works well following the pension reforms. We are already monitoring how firms have been implementing the changes and will be gathering further data in the next few weeks.”

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. what a way to encourage firms to participate reduce their ability to charge for it – is it me or is there a basic contradiction here ?

  2. All UK Life/Pension may as well write their business plans in pencil from this point forward…. for a political code which professes to be “market led” and “non intervening”.. they do like to fiddle with things dont they?

  3. All UK Life/Pension Providers that should read.

  4. Why just pensions? If the Chancellor is keen on the State intervenning in markets, there are many more products and services where charges are high – and often hidden. Energy, rail and air teavel, banking, changing an online order, construction, PFI and so on.

  5. Can we put a charge cap on MPs please ?

  6. I guess this simply proves what George Osborne knows… not a lot

  7. Stephen Kadwell 17th June 2015 at 1:50 pm

    I resent paying more for my family flights in school holidays. Can we have that on the radar too please

  8. “City minister Harriet Baldwin has also written to the FCA to demand the regulator gathers information on problems for individuals who want to transfer to a different pension provider.”

    Demand ? Demand !!

    Oh its allright when some airhead in government wants answers from our regulator, but when we ask (in most cases politely) we get told to sod off (I wonder if she will get the same response ?)
    And who will pay for this…. yet another thematic review into charges and benefit analysis !!

    Harriet, love (yes that is a sexist, sarcastic tone !!) let me tell you how it is….. the regulator charges the industry arbitrary fees and levies with no outside independent control, your chancellor runs of with the fine money, (I personally do not know who gave him free rein to do so) which should be used to ease the financial strain on the financial services sector and indeed all companies product providers alike, so as you can plainly see these costs and interim levies have to be passed on the the end user, IE-: the client !!!

    Now…. if you would like to donate the money it would have cost for the FCA to conduct said review, to some worth while charity that would be mighty kind of you, may I suggest some kind of brain charity as it is quite apparent you may benefit !! you are obviously lacking in that department !

  9. Members receive a daily allowance of £300 for turning up at the House of Lords. I think that is “ridiculously high” .

  10. It’s important to note here that there is no mention of ADVICE CAP this is squarely aimed at providers who are in some cases invoking charges for each withdrawal.

    What annoys me is that RDR made good progress when it came to advisers disclosing advice fees however providers are still trying to hide behind complicated transitional charges and fund managers are not fully disclosing their total costs in doing business. Is it no wonder that we get bad flak when half the industry are not playing by the same rulebook on disclosure. This was particularly relevant for the execution only providers who can still receive commission on some transactions I believe.

    When it comes to advice if the government really want advisers to lower our fees then do something about the liability side and the extremely complicated system we are having to deal with when giving advice. E.g. written reports, analysis etc.

  11. Julian Stevens 17th June 2015 at 5:05 pm

    What about the many companies no longer writing new business? The FCA has already botched its proposed closed book review (and spent an unconscionably large amount of OPM on an “independent” investigation into said botch, as a result of which not a single head has rolled).

    What can the powers that be do if the closed book companies refuse to change their policy terms? Fine them? And then what if they refuse to pay? Shut them down? They’re already virtually shut down.

    Were the wider populace to realise it, this whole business of unfettered access to pension funds is a shameful stain on the integrity of this government. A few years down the line, a lot of people who really ought not to be allowed such freedoms are going to regret bitterly having taken advantage of them and blown the money (nett of a far larger tax charge than a regular income would have incurred) on some short term extravagance.

    And how about a cap on excessive regulatory charges?

  12. One issue here is that the changes allow/encourage clients to use their fund in ways that were never envisaged for most of them.

  13. Roger Crockford 18th June 2015 at 1:52 pm

    If our revenue is to be capped by regulations does this mean regulations will also cap our liability!

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