1% cap on pension exit charges too high, says Citizens Advice
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.”
Notes to editors
- The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
- The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
- To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
- You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
- Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
- Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.