Chancellor George Osborne has announced moves to strengthen retirees’ rights to access their pensions and remove barriers to doing so.
He told the Commons on 17 June that the Treasury would consult to ensure that people were not charged excessive early exit penalties and were treated fairly when moving a pension to a company offering them flexibility in accessing their savings.
So far, 60,000 people have taken advantage of the much greater freedom in the way they take their pension savings under changes introduced in April this year.
The consultation, due to be launched in July, will look at:
- options to address any excessive early exit penalties including, if there is evidence of such penalties, imposing a legislative cap on charges for those aged 55 or over
- making the process for transferring pensions from one scheme to another quicker and smoother.
Following the announcement, Huw Evans, director general of the Association of British Insurers, said insurers were working “flat out” to help pension savings within the existing regulatory framework.
He added: “We agree that further clarity is needed and have been calling for it for some time. But we reject any suggestions that the industry is putting up unnecessary obstacles to hinder customers exercising their pension options.
“The vast majority of customers eligible for the pension freedoms will not face any early exit fee. Where one is charged it is not a penalty for leaving early, but to cover the costs of setting up the pension, particularly commission.”
The ABI says that nearly nine in ten customers eligible for the pension freedoms will not face early exit fees.
Meanwhile, the Office for National Statistics has developed a simple life expectancy calculator and a person’s chance of living to 100. The calculator has been designed to help people establish how long they will need to make their pension pot last.
The calculator can be found here.