Scottish Widows  

Scottish Widows scraps all pension exit fees

Scottish Widows scraps all pension exit fees

Scottish Widows has scrapped exit fees on all its personal pension products, ahead of strict new rules on exit fees due to come in to effect in April.

The move comes 10 months after the life company, which is owned by Lloyds bank, removed exit fees from all  its workplace pensions.

The decision will bring the firm in line with the Financial Conduct Authority's ban on exit fees for new pension products.

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It exceeds the requirement that exit fees on existing products be capped at 1 per cent. 

Scottish Widows said the move would enable customers to "switch to alternative products or providers, or to exercise pension freedoms, free of charge".

All exit charges will be removed before the charge cap deadline of 31 March.

David Lascelles, retirement expert at Scottish Widows, said: "It’s only fair that people who have saved responsibly and diligently are allowed to access or move their funds without being charged to do so; that’s why we’ve gone one step further than the requirements and removed them altogether.

"This means our customers can make full use of pension freedoms, if they wish to do so, and not feel restricted in any way."

Last month, LV also announced it would scrap exit fees on all its pension products. 

Michael McLintock, an IFA and owner of Adelp Financial Solutions, said the decision could "only be a good thing", and urged other providers to follow suit.

Mr McLintock acknowledged that some older pension policies had been priced according to the assumption that members leaving early would have to pay an exit fee.

However, he said the providers had probably "already made the profit by now", meaning there was no excuse to keep charging an exit fee.

He also expressed concern over the trend towards vertical integration and the effect this would have on fees and competition - potentially undermining the drive towards increased flexibility typified by the FCAs exit fee cap.