Citizens Advice has called for pension exit charges to be capped at £50 and only permitted where providers face genuine administrative costs of exit or transfer.
More than two million consumers could face an exit charge of over £50, including almost 40,000 who could be hit with a charge of more than £5,000, according to analysis by the organisation.
In its response to the government’s pension transfers and early exit charges consultation, the national charity warned that excessive exit or transfer charges and delays in accessing pension pots risks putting savers off exercising their new found freedoms.
Citizens Advice argued that it is in all parties’ interest for exit charges to be seen as reasonable, also calling for a maximum pension transfer time limit to be introduced, following the time limit model introduced in other areas of financial services, such as for switching current accounts or Isa transfers.
It suggested aiming for a 15 day time limit in its consultation response, but also called for a safeguard to ensure this does not put consumers at greater risk of scams.
Gillian Guy, chief executive of Citizens Advice, commented that if people do not feel they have fair access to their pensions, they may choose not to take advantage of the reforms, even if this might be the best option for them.
“Providers must be transparent about costs and any exit charge or transfer fee should reflect the actual cost of a customer’s decision to move their pension savings.
She stated that six months on from the introduction of pension freedoms, many consumers have enjoyed a smooth process when accessing their pension savings.
“But a significant minority have faced challenges such as high charges and delays. The industry must work with government to iron out these difficulties and ensure all consumers are free to make the best pension choices for them.”
ruth.gillbe@ft.com
