There is mounting pressure on pension companies to reduce the “exit fees” that some are charging when people cash in their pensions, or transfer them to other pension schemes. From the start of April 2017, a limit of 1% has been imposed, but only on people aged 55 or more who are withdrawing their fund. That means that high charges may still be levied on people under 55 who want to access their cash.
The Telegraph reports –
“However, some of the biggest providers in Britain have not capped fees for under 55s. Even professional money managers are getting caught out, as highlighted by one case seen by Telegraph Money… Old Mutual Wealth told a customer, who is a fund manager, it would cost them nearly 3pc of the value of their £456,000 policy if they decided to move. That meant the customer, who did not want to be named, faced paying £13,000 to move their pension because they were 50, five years too young for the 1pc cap to protect them… If they wait five years, Old Mutual will be forced to slash the penalty to £4,560. The customer was not even trying to take their money to a rival firm, and instead was switching to a different product offered by Old Mutual.”