The government has launched an investigation to ensure more people can take advantage of new pension freedoms introduced in April.
The consultation and online survey will to look at whether exit charges could be cut or capped for people wanting to access their pensions early. It will also ask pensioners and industry experts how to remove other barriers that may be stopping people enjoying the benefits of increased flexibility over their pension pot.
Both George Osborne, the Chancellor of the Exchequer and Iain Duncan-Smith, Secretary of State for Work and Pensions have raised concerns over the lack of companies playing their part to make pension freedoms available to savers.
The consultation is focused on looking at options to address excessive charges for early exit penalties, how the process for transferring pensions from one scheme to another can be made quicker and smoother and how to ensure greater clarity around the circumstances for a person to seek financial advice.
Harriet Baldwin, the Economic Secretary to the Treasury and Ros Altmann, the Minister for Pensions have both written to the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) asking them to gather information on fees and charges. These requests have already been taken on board by TPR and FCA.
The government’s pension freedoms, which came into effect on 6th April, have already provided over 85,000 people the opportunity to use their hard-earned savings how they want, with many providers offering their customers a range of options.
The right to transfer pensions has been strengthened by the new pension scheme that allows people to shop around and get the best deal. The new consultation aims to improve on this by ensuring that everyone has the opportunity to transfer their pension at a reasonable cost and within a reasonable timeframe.
TUC general secretary Frances O’Grady says:
“Action to clamp down on unreasonable fees and charges should not be limited to pet government projects such as its so-called pension freedom.
“We know that £26 billion of pension savings are locked away in legacy pension accounts with high fees and complex charging structures. But the pensions industry and government have failed to act robustly.
“All savers should be confident that their hard-earned savings will give them a decent income in retirement without large amounts being skimmed off in unjustifiable expenses.”
Amie Filcher is an editorial assistant at HRreview.
One of the stumbling blocks to this pension freedom are the pension trusties who can stop any and all applications that people make to obtain their pensions early.