The announcement has provoked positive reactions from several commentators.

Richard Lloyd, executive director of Which?, said the government “must act to allow people to switch pension providers without being stung by excessive fees.

“The government must also work with regulators to ensure products offer value for money, and consider what further reforms are needed to make the market truly work for consumers, including a charge cap on default drawdown products.”

Jamie Smith-Thompson, managing director of Portal Financial, said the news was welcome, but noted that pension exit fees also serve to protect consumers.

“Charges can encourage consumers to think twice about transferring to strip their funds, or prompt them to seek advice,” said Smith-Thompson.

“Pension exit fees are clearly an issue, however, especially as it has become apparent that some providers are not allowing pensioners access to the freedoms. We certainly welcome a cap on the punitive charges, such as those approaching 20%.

“It is not a requirement for all consumers to seek financial advice before emptying their fund or transferring away, which means many people will be able to make that decision by themselves without necessarily knowing about certain implications, such as tax or how it may affect their benefits. A sensible charge can encourage people to think twice and be really sure they are doing the right thing, and hopefully even prompt them to seek advice so they don’t have any surprises.”