The Financial Conduct Authority’s (FCA) has agreed a 1% cap on early exit charges for people taking money out of their pension pots.
Citizens Advice called for a cap on exit charges as people had reported to the charity that, not only did they find fees and charges confusing, they also put them off using the pension freedoms.
In June this year Citizens Advice estimated that 160,000 people have paid to access their pensions since April 2015, with those facing fees have reported an average cost of £1,577 in total.
Gillian Guy, Chief Executive of Citizens Advice, said:
“A cap on pension exit charges will bring some clarity to a very complex market.
"Exit fees and other charges vary hugely across pension providers, confusing people and putting many off using the pension freedoms. While a £50 cap would have been preferable - as that covers the cost to a provider of actually exiting your pension - the 1% cap will mean savers know how much they’ll be charged and it will reduce the costs for many people.
“Exit fees are not the only issue people have been experiencing, many are facing delays in accessing their pot and others are being hit with unclear advice 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.”
Citizens Advice delivers the face to face To book a face to face or telephone Pension Wise session, call 0800 138 8292 or visit a local Citizens Advice to book an appointment.
Related information: FCA introduces cap on early exit pension charges