The Treasury is launching an immediate consultation and online survey to look at whether exit charges could be cut or capped for those looking to access their pensions early, and to ask pensioners and industry experts how to remove other barriers that may be stopping people enjoying the benefits of increased flexibility over their pension pot.
Both the Chancellor of the Exchequer, George Osborne, and Secretary of State for Work and Pensions, Iain Duncan-Smith have raised concerns in recent weeks that some companies are failing to play their part in making pension freedoms available to savers.
The consultation will look at how best to remove barriers and in particular will investigate:
- options to address excessive charges for early exit penalties. This includes the option to impose a legislative cap on these charges for those 55 or over if there is sufficient evidence
- how the process for transferring pensions from one scheme to another can be made quicker and smoother
- how we can ensure that there is greater clarity around the circumstances in which someone should seek financial advice
The Economic Secretary to the Treasury, Harriett Baldwin, and the Minister for Pensions, Ros Altmann, have also written to the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) asking them to gather information from the industry on the fees and charges customers currently face. TPR and FCA have already begun this important work.
The governments pension freedoms, which came into effect on 6 April, have already given over 85,000 people the opportunity to use their hard-earned savings how they want, with many providers offering their customers a range of options.
The government has also strengthened the right to transfer to a new pension scheme to enable people to shop around for the best deal. Todays consultation looks at what more could be done to ensure that everyone has the opportunity to transfer their pension at a reasonable cost and within a reasonable timeframe.
The consultation will run for 12 weeks and a response will be published in the Autumn. The online survey will run alongside the consultation for 12 weeks and will form part of the governments response.
Anyone wishing to talk through their pensions options should visit Pension Wise for free and impartial guidance.