Some of Britain’s major pension providers have said a proposed cap on exit fees will not have a material impact on their businesses.
Today (15 November) the Financial Conduct Authority announced a ban on early exit charges of more than 1 per cent on existing personal and occupational pensions.
The rules will take effect from 31 March 2017 and firms will not be able to apply an early exit charge at all to personal pension contracts entered into after that date.
Most companies said they still had a small number of customers who would face an early exit fee but they all said they were addressing the issue in different ways.
A spokeswoman for Zurich said: “Zurich has around 250,000 customers aged over 55 with pre-retirement pension plans.
“Of those customers, around 12 per cent (around 30,000 customers) would currently incur an exit charge above 1 per cent.
“Where they do apply, most are 2 per cent or less and would have been put in place many years ago.”
Meanwhile a spokesman for Aegon UK said the company is already moving customers away from “older-style policies” into modern pensions without exit charges.
He said a “small minority” of its customers have an exit charge and would benefit from the cap.
Scottish Widows has said it intends to remove all exit charges across individual and workplace pensions by the 31 March 2017.
A spokeswoman for Aviva said: “The vast majority of Aviva’s pensions do not carry early termination charges. We are working towards the proposed 1 per cent cap on contract-based pensions.
“As Aviva had already introduced a 5 per cent cap on the small proportion of pension policies (both individual and workplace) carrying charges above 5 per cent, we have an established process in place for managing this implementation within the timeframe required.”
A spokesman for Prudential said: “The vast majority of Prudential’s personal pension customers already do not face an early exit charge when accessing their fund.
“In addition, working with our independent governance committee, we have already removed all exit charges for members of the workplace pension schemes that come under the IGC’s remit.”
A Standard Life spokeswoman said: “The FCA has today announced its final rules on the proposals it had already made back in May of this year.
“We have relatively few customers with exit charges and the average is already less than the 1 per cent cap, and we will cap them where they do exceed this level.
“As such, the impact is relatively small. We have not sold pensions with exit charges for many years, so the ban on new products has no impact.”
