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Government targets hassle-free pension transfers

Consultation reveals that exit charges, a lack of clarity and long delays are the biggest barriers to pension scheme transfers

10 February 2016

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Pension scheme users who are being stifled by 'high exit charges and long transfer times' have become the next target in the government's pension freedom initiative.

The pension transfers and early exit charges consultation found that transfers between pension schemes regulated by the Financial Conduct Authority (FCA) took 16 days on average, while trust-based pensions took 39 days.

Another key discovery was that exit charges and a lack of information and clarity was a major barrier for savers who want to transfer their pension.

'It is only fair that people who have worked hard and saved their entire lives are able to access their pensions flexibly, without facing any unjustifiable barriers,' said Harriett Baldwin, economic secretary to the treasury.

Baldwin added that the government will continue to work to 'deliver real freedom and choice for people' through their 'landmark reforms'.

George Osborne announced on 19 January that the FCA has been charged with establishing and enforcing a cap on 'excessive early exit charges for pension savers'.

The consultation also showed that 670,000 savers faced early exit charges. Of these, 358,000 faced charges between zero-two per cent of their savings; 165 were subject to charges of two-five per cent; 81,000 faced charges of five-ten per cent; and 66,000 savers faced charges of more than ten per cent of their savings.

Minister for pensions, Baroness Ros Altman commented: 'Encouraging people to save and helping them on their way to a financially secure retirement is a priority for this government and we need to ensure that the right protections are in place for consumers.

'No consumers should have to pay excessive early exit fees, regardless of the type of scheme that they are in. And we will be working to ensure that action is taken to protect members of trust based schemes.'

 

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Pensions