Queen's Speech 2016: Bill to cap exit fees on trust-based schemes
The new pensions bill will cap early exit fees charged by trust-based occupational schemes in a bid to remove "unreasonable barriers" to accessing pension freedoms.
The new measures - announced as part of the Queen's Speech - will bring the rules on contract and trust based schemes into line and ensure excessive charges do not prevent occupational scheme members from taking advantage of pension freedoms.
The move has been broadly welcomed by those in the industry.
Aegon pensions director Steven Cameron said: "We support applying equivalent rules to contract and trust-based pensions. The announcement is consistent with plans already in place for contract-based schemes. It's now important the cap is set at an appropriate level."
The Pensions Regulator said the announcement was confirmation that pension savers will be protected from excessive early exit charges, adding: "Government recognises for the cap to be effective it needs to apply across the whole of the pensions market. We will work with the Department of Work and Pensions (DWP) and the Financial Conduct Authority (FCA) to achieve this."
Punter Southall Aspire managing director Alan Morahan said: "Early exit fees create a barrier to pension scheme members which is completely at odds with the principal of pension freedoms. We fully support any cap enabling members to move from one arrangement to another without a penal charge."
Scottish Widows head of industry development Peter Glancy said: "These fees are largely associated with older style products, typically sold before 2001, and reflect expenses already paid by a provider in setting up the policy, which would normally be paid back if the saver stayed in the scheme to their retirement date.
"But with pension freedoms enabling people to access their money earlier than they had originally expected, we believe these fees place an unnecessary barrier on those wishing to take their money or move to a more modern product either with us or another provider," he added.
Citizens Advice also previously welcomed the Treasury's plans to legislate to cap pension early exit charges levied on savers using pension freedoms.
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