The government has put a 1% cap on the amount of fees that pension companies can charge people withdrawing their pension. But that cap only applies to people over 55, not the under 55’s. Some companies are still charging hefty fees, sometimes tens of thousands of pounds, to younger people who want to take their pension and transfer it elsewhere.
The Telegraph reports on a case involving the company Old Mutual Wealth –
“In one case involving the firm, seen by Telegraph Money, a customer faces a £14,000 penalty to move his pension pot, turning £307,000 to £293,000 – an effective exit charge of 4.5pc. He has been a customer for 18 years… If the 1pc cap was being applied, Mark Brown, 43, an executive at a technology firm, would pay just £3,070 to move his pension… A spokesman for Old Mutual Wealth said Mr Brown selected a retirement age of 50 when he began saving into the policy in 1999… When pushed by Telegraph Money, the firm agreed to halve the charge, resulting in a saving of around £7,000. It said this was in respect of poor customer service, not because it is changing its policy towards other customers in similar circumstances.”