New regulations next year will mean that pension companies will only be able to charge a maximum of 1% to people accessing their pension cash early. The cap on “exit charges” will come into place in April 2017, and companies who already charge less than 1% will not be able to increase their fees. People signing up for new pension contracts will have no exit fees at all.
The BBC reports –
‘Christopher Woolard, executive director of strategy and competition at the FCA, said: “People eligible for the government’s pension reforms should feel able to access them as they wish. The 1% cap on early exit charges for existing pensions, and the 0% cap for new contracts, will mean that current and future savers will not be deterred by these charges from accessing their pension pots.”… Previously some pension providers were charging fees of up to 10%, after the government announced that anyone over the age of 55 could withdraw as much as they wanted from their pensions, subject to income tax. The “pension freedoms” came into effect in April 2015…. However, some experts believe the 1% cap is still not low enough… “The cap on early exit fees for pensions, including occupational schemes, is a start, but 1% of a £100,000 pension is still a £1,000 charge for accessing your own savings,” said Tom Selby, senior analyst at investment platform AJ Bell.’