You are here: Home - Retirement - Retirement planning - News -

Call for £50 cap on ‘excessive’ pension exit charges

Written by:
Citizens Advice has called for “excessive” pension exit charges to be capped at £50.

The charity said high fees were “stifling” the pension freedom rules, which were introduced in April this year and gave all savers aged 55 or over full access to their pension.

It said fees should only be “permitted where providers face genuine administrative costs of exit or transfer”.

Citizens Advice made the comments in its response to the government’s consultation on punitive early exit charges imposed on people cashing in their pension pots.

Analysis by the charity found that more than two million consumers could face an exit charge of over £50, including almost 40,000 who could be hit with a charge of more than £5,000.

The charity said the pension freedom agenda “will be hindered if people do not feel that they have fair access to their pensions”.

It has also called for a maximum pension transfer time limit to be introduced, following the time limit model introduced in other areas of financial services such as switching current accounts or ISA transfers.

In its consultation response it suggests aiming for a 15 day time limit but also calls for safeguards to ensure this does not put consumers at greater risk of scams.

Gillian Guy, chief executive of Citizens Advice, said: “Excessive exit charges risk stifling the pension freedoms.

“If people do not feel they have fair access to their pensions they may choose not to take advantage of pension reforms, even if this might be the best option for them. Providers must be transparent about costs and any exit charge or transfer fee should reflect the actual cost of a customer’s decision to move their pension savings.

“Six months on from the introduction of pension freedoms many consumers have enjoyed a smooth process when accessing their pension savings. But a significant minority have faced challenges such as high charges and delays. The industry must work with government to iron out these difficulties and ensure all consumers are free to make the best pension choices for them.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

5,000 Lloyds current account holders to receive £200 bonus

Lloyds Bank will randomly select 5,000 current account customers to receive a bonus £200 payment to help with...
5,000 Lloyds current account holders to receive £200 bonus

NS&I to delay phasing out of Premium Bonds prize warrants

National Savings and Investments (NS&I) is postponing the phasing out of Premium Bonds prize warrants unti...
NS&I to delay phasing out of Premium Bonds prize warrants

Self-employed grant applicants urged to file tax return early

The self-employed who are eligible for the third round of government grants are urged to file their tax return...
Self-employed grant applicants urged to file tax return early

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week

Read previous post:
emerging markets
BLOG: In emerging markets, the smart money is on the ‘good’ money

There’s no denying that it has been a tough time recently for emerging markets. However, with Good Money Week -...