Citizens Advice has today said a ban on excessive exit fees for new pensions is welcome but that a 1% cap on current pensions could mean many still face high charges to access their retirement savings.
The national charity was responding to the FCA’s announcement to ban exit charges on new pension contracts. Instead of the 1% cap, Citizens Advice has recommended a £50 limit on exit fees.
Gillian Guy, chief executive of Citizens Advice said:
“Sky-high exit charges can be a barrier to people making the pension choice which is right for them.
“The FCA’s decision to abolish exit charges for new pensions is really good news for those consumers which will help them make the most of the pension freedoms.
“But a 1% cap on current schemes is too high, this means someone with an average pension pot of £30,000 could face a £300 exit fee if they move to another provider. A standard £50 fee to cover the administrative costs would be much more reasonable.
“Exit fees are not the only problems people are experiencing, some face delays in accessing their pot and others are being hit with charges to transfer their pension. It is important the government now looks at how it can tackle these other barriers to ensure people can plan for a financially secure retirement.”