New government rules will now allow people with small pensions (under £30,000) to transfer their money to other schemes, without paying fees. Previously, they would have to pay advice fees, which could sometimes be over £1,000. This will apply to “guaranteed annuity rate” pensions.
The Telegraph reports –
“Savers with “guaranteed annuity rate” pensions worth less than £30,000 will be given a simple valuation of their pension and will be able to transfer out without receiving advice. The Government estimates that the change will save 12,000 people a year around £900 each. Around 1.5m savers have the “guaranteed annuity rates” in their pensions, which normally means they receive a much higher amount each year than they would with annuities calculated based on current rates… Those with more than £30,000 in one of these pensions must receive advice if they want to use pension freedoms to unlock their cash… The new rules mean all holders will receive a document setting out one figure for the cash value of their pension, as well as information about the benefits they would be giving up by transferring out. The “personalised risk warnings” will be short documents sent by providers to their customers. Those with larger pensions will also receive the documents but will still have to take advice if they decide to transfer out.”