LV has announced it will waive all pension wrapper exit charges by the end of 2016.
According to LV, the move will offer customers the freedom to switch to another product or provider if they wish to do so without incurring a charge.
The removal of exit fees was confirmed by LV Retirement Solutions’ managing director John Perks at the launch of the mutual’s ninth annual State of Retirement report.
The report found that one in 10 pensioners are reliant to some degree on friends and family for financial assistance.
Mr Perks said: “We believe shopping around is critical to good consumer outcomes in retirement – and one of the key reasons stopping people from doing so is excessive exit charges.”
He explained that the firm had committed to the removal of all pension wrapper exit fees by the end of 2017 and was pleased to have beat the target by 12 months.
“As a modern mutual, we remain committed to ensuring our members have access to good value, transparent products that enable them to get the best outcome for their retirement needs.”
Ricky Chan, director and independent financial adviser at Gateshead-based Ifs Wealth & Pension, said LV’s move to remove pension wrapper exit charges is good news for pension savers stuck in legacy products.
He said legacy products either paid high up front commission or had high set-up costs combined with low monthly premiums, hence exit charges were put in place to cover the insurer’s administration costs.
Mr Chan said: “This is clearly a move by LV to make a statement that it is treating clients fairly by doing more than merely complying with the cap of 1 per cent, and is a trend we’ll see more of from other insurers before the end of 2017 (the deadline for capping the exit charges).
“This will certainly remove a financial barrier for pensioners to shop around and make it easier for them to compare products - particularly for clients who do not use an adviser as they may not factor it into their calculations when making a decision.”
ruth.gillbe@ft.com