The chancellor says he hopes that pension firms will make it easier for retirement savers to switch funds; however, one important side effect of this is that it will be easier to make QROPS transfers, whether they are in France or other countries inside the EU. Those looking to make the most of the situation though are likely to have to wait around two years before Osborne’s vision becomes law.
News of the developments follow announcement of Financial Conduct Authority investigation into pension exit charges.
Perhaps as a response to the investigation and associated government pressure, a number of providers, including Standard Life and Prudential have agreed to put a cap on exit fees of 5% of the fund value; LV and Royal London have also said that they will be capping fees.
“Only 3% of our customers paid exit fees between April and December 2015,” said a spokesman. “We constantly keep this under review and will only make a deduction to recoup underlying costs when the amount is fair and the company does not profit from the charges.”
The Financial Conduct Authority has said that by its calculations around 670,000 over 55s could be hit with exit charges of more than 5%.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
Are you yet to draw on your pension and have one or more dormant, frozen pension pots from when you were employed or self-employed? If you have had a number of jobs during your career, you could have a series of separate pension plans which, while individually may not add up to much, you are relying on to provide you with an income during your retirement.
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