The Chancellor of the Exchequer, George Osborne, has today (17 June 2015) announced action designed to strengthen people’s rights to access their pensions flexibly and removing any unjustifiable barriers to doing so.
Speaking at Prime Minister’s Questions he said that the Treasury will consult to ensure that people are not charged excessive early exit penalties and are treated fairly when moving their pension to a company that offers them flexible options to access their savings.
The new pension freedoms, which came into effect on 6 April, allow people who have worked hard and saved all their lives to access their savings how and when they want.
So far 60,000 people have taken advantage of pensions flexibilities with many providers offering their customers a range of options.
The government has already strengthened the right to transfer to a new pension scheme but is clear that it wants all individuals to be able to transfer their pension easily, within a reasonable timeframe and at reasonable cost, so that they can take full advantage of the new flexibilities.
In particular, the consultation, due to launch next month, will look at:
- options to address any excessive early exit penalties. These include, if there is evidence of such penalties, the option of imposing a legislative cap on these charges for those aged 55 or over
- making the process for transferring pensions from one scheme to another quicker and smoother, to help people make use of the new freedoms
The Economic Secretary to the Treasury, Harriett Baldwin, has also exchanged letters with Martin Wheatley, CEO of the FCA, confirming that the FCA will, in tandem with the government’s consultation, gather information from providers to understand the scale of the problems facing individuals who want to transfer to a different pension provider.
Image by Images of Money on Flickr. Used under creative commons.