The pension exit charge cap – putting votes ahead of consumers’ needs?
Last week saw the announcement that savers withdrawing money from their pension pots could face a maximum exit charge of just 1%, under plans released by the Financial Conduct Authority (FCA). Those joining a pension scheme after March 2017 stand to be even better off with the FCA stating that they should be able to withdraw their cash for free.
This is of course good news and a step in the right direction. Although a little too late for some of the 670,000 savers who have faced charges of up to 10% when trying to access their money under the new pension freedom rules.
However, I have to admit to feeling a little underwhelmed by the news given that the FCA has previously acknowledged that many customers no longer have to pay early exit charges on their pensions. Most disappointing of all is that these announcements do little to help those facing other high charges, particularly on income drawdown products. There is no joined up thinking behind any of the plans.
The cynic in me questions the motivations behind focusing on pension exit charges when consumers face a host of unjustifiable fees across a range of financial products. The truth is that George Osborne's vote winning pension freedom reforms are being hampered by exit charges. So pushing changes to pension exit fees to the front of the queue smacks of trying to win votes for the Government, rather than simply trying to benefit consumers.
Wouldn't it be great if the Government, the FCA and other organisations like them actually tackled the many real frustrations that impact us all? It's also laughable that the same old industry experts wheeled out on to the TV to give their two-penneth worth, while pretending to be on the consumers' side, work for companies that sell other investment products with unfairly high charges.
It's all a game and inevitably the consumer loses.