“Government must act to allow people to switch pension providers without being stung” – Which? response to Government launching consultation into pension exit penalties

Which? executive director, Richard Lloyd, said: 

“The Government must act to allow people to switch pension providers without being stung by excessive fees if they will not offer the new freedoms.   

“The Government must also work with the regulator to ensure products offer value for money, and consider what further reforms are needed to make the market truly work for consumers, including a charge cap on default drawdown products.”​

Background: 

1. Our ‘Better Pensions’ campaign is calling on the Government, pension providers and regulators to protect people when they take money out of their pension by:

  • Establishing a Government-backed provider to ensure everyone can access a good value, low cost product;
  • Introducing a charge cap for default drawdown products; and
  • Safeguarding savings in schemes that go bust.  

2. Previous Which? research calculated that someone with the typical pension pot of £36,000, drawing down £2,000 a year, would be around £10,300 better off if there was a cap of 0.5% than with charges at 2.75%. A 0.75% cap would mean that they have a total of around £8,800 more over their retirement and a 1% cap would give them around £7,500 more.

 

Statement