UK FCA pension proposes 1% cap on pension exit charge

Pension providers may have to cap exit fees for people who want to take money from their savings at 1% under plans revealed by the Financial Conduct Authority (FCA).

People joining pension schemes after March 2017 should be able to withdraw their cash for free, the FCA added.

Launching a consultation, the FCA said the move was designed to stop people being deterred from accessing their savings.

FCA director of strategy and competition Christopher Woolard said the regulator would be given both the power and duty to cap exit fees by Parliament once the relevant section in the Bank of England and Financial Services Act 2016 comes into force.

“This aims to ensure that consumers can access the government's pension reforms easily and affordably.”
Separately, the Department for Work and Pensions will on Thursday announce its consultation 'Capping early exit charges for members of occupational pension schemes'.

The FCA said more than 200,000 pension policies have been accessed in a period of three months after the government relaxed access rules on pensions.

The government in January said it would limit charges after savers complained they were being blocked from access to their own cash. Since April 2015, people over 55 have been allowed to withdraw as much as they like from their pension pots, which would then become taxable income.