“The Government must take action to make sure everyone who wants to take advantage of the freedoms can” – Which? response to Government consultation on pension exit penalties

“If the pension reforms are to be a genuine success, the Government must take action to make sure everyone who wants to take advantage of the freedoms can. People should be able to switch without being stung by excessive exit fees if their provider doesn’t offer the full flexibilities. The Government should also consider what other reforms are needed to further protect savers, 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.