Thousands of pension savers set for exit fee refunds
The investment platform isn’t disclosing how many letters are being sent out but thousands of pension savers are expected to share the £69m which has been earmarked as part of the voluntary remediation programme.
It relates to customers who had bought pension products from Old Mutual more than two decades ago, but who were charged high exit fees when moving to another provider or transferring funds to another product within the firm.
These exit fees were based on a sliding percentage scale, so customers who exited at earlier stages were penalised with higher fees than those who exited closer to their target retirement date.
Just last year, the regulator, the Financial Conduct Authority (FCA), capped pension exit charges to 1% for those aged 55+ with the dawn of pension freedoms.
And in March this year, Old Mutual announced it would cap early encashment charges at 5% for pension customers under 55 going forward. It would also refund all early encashment charges over 5% on pension products applied since January 2009 and to refund certain paid-up charges incurred by former and existing customers since 1 January 2009.
Former and existing customers with these prefixes on heritage products bought up to 1999 are due a refund: DP, EP1, EP2, EP3, EPP, FS1, FS2, FS3, IPP, PP1, PP2, PP3 and SPP.
Old Mutual said there’s no need for customers to contact the firm – if you’re affected, it will write to you by the end of March 2019.
Impacted pension savers will receive simple interest on top of the fee refund, at a rate of 8%, and for most, a cheque will be sent. For some customers, you may need to complete a form before being sent a cheque.
An Old Mutual Wealth spokesperson, said: “Following a comprehensive review of our heritage products, we are offering voluntary remediation payments to customers in certain existing pension products where we have previously applied an early encashment charge or paid-up charge. Our core business philosophy is to provide fair outcomes for our customers.”