View more on these topics

Scottish Widows scraps exit fees on personal pensions

brokenchain

Scottish Widows has removed early exit fees across its personal pension policies, going one step further than the 1 per cent charge cap that will be introduced by the FCA from 31 March.

The insurer had previously announced that it would remove exit fees across all of its workplace pensions, and has now added personal pensions to this pledge.

The FCA published a policy statement in November setting a cap on early exit charges at 1 per cent of the value of benefits being taken or transferred from existing contract-based personal pensions, including workplace and personal pensions.

In a statement, Scottish Widows says providers must do more to make pensions work for customers.

Scottish Widows retirement expert David Lascelles says: “It’s only fair that people who have saved responsibly and diligently are allowed to access or move their funds without being charged to do so; that’s why we’ve gone one step further than the requirements and removed them altogether. This means our customers can make full use of pension freedoms, if they wish to do so, and not feel restricted in any way.”

Ahead of the exit fee cap, providers including LV= have removed exit charges across all their pension wrappers, while the likes of Prudential have scrapped charges on their workplace offerings.

Standard Life and Aviva opted to cap exit fees rather than remove them entirely.

Recommended

Early exit cap will help the few, not the many

The reverberations of George Osborne’s back of a fag packet assumptions which led to pension freedoms continue to be felt, this time in the form of a cap on early exit charges. Early exit charges were quickly identified as a barrier to those wanting the freedom and choice they were promised, and from 31 March, […]

17

Out of scope: The early exit charges that escape FCA cap

The complexities of the FCA’s cap on early exit charges mean it is likely to only scratch the surface when it comes to tackling punitive pension charges. The regulator has decided to impose a 1 per cent cap on existing contract-based personal pensions, which will come into effect from 31 March. But the cap appears […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Had an interesting conversation with a chap from an old pensions company (NPI) about one of their with-profit pension contracts which had initial units and therefore a sizeable exit charge. I asked if the exit charges were being reduced and was told that they were…However, just over £1,000 of the transfer charge (around 5% of the total plan value) was an MVR…I kid you not, with markets at all time highs and crappy returns for some years, they ‘still’ apply an MVR.

    Now maybe this is correct or maybe it is just side-stepping the exit charge issue, but either way I will be asking the FCA to look at the matter! Anyone else come across this practise?

Leave a comment