Drawdown charge cap possible: Lord Freud

Drawdown charge cap possible: Lord Freud

The government will introduce caps on drawdown charges if they are necessary, a minister has warned.

Minister for welfare reform Lord Freud was asked last week in parliament whether he agreed with a claim made earlier this year by his colleague Baroness Altmann, the new pensions minister, that a cap on drawdown charges was important.

The Conservative peer said: “We are going to see how the market develops. It has only been going for two months, and if it looks appropriate we will introduce charge caps.

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“We are meeting the industry and working with them to make sure they do produce the right level of charging and we are able to monitor that.”

He said the industry already had transparency in the accumulation phase, adding: “If there is a necessity in the decumulation phase, we will do it”.

The issue had been raised by Labour’s new shadow pensions minister, Lord (Keith) Bradley, who asked Lord Freud whether he agreed with the views Baroness Altmann had expressed before becoming a minister.

Adviser view

Steve Robinson, an adviser with Bristol-based Clarke & Robinson, said: “It worries me when people who are not fully involved in something, arbitrarily make decisions.

“I don’t think the market is mature enough yet to make a decision on a cap.”