Personal Pensions

HM Treasury written question – answered on 20th February 2017.

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Photo of Gregory Campbell Gregory Campbell Shadow DUP Spokesperson (International Development), Shadow DUP Spokesperson (Cabinet Office)

To ask Mr Chancellor of the Exchequer, if he will bring forward legislative proposals to introduce a cap on early exit charges for people over the age of 55 seeking to transfer their personal pensions.

Photo of Simon Kirby Simon Kirby The Economic Secretary to the Treasury

People who have saved responsibly should be able to access their pensions fairly; they should not face prohibitive charges that block them from exiting their current deal.

That is why the government placed a duty on the Financial Conduct Authority (FCA) to cap excessive early exit charges and the Department for Work and Pensions is taking similar steps for occupational pension schemes.

The FCA rules to discharge this duty will come into effect from 31 March 2017, and as a result early exit charges:

• will be capped at 1% of the value of a member’s benefits being taken, converted or transferred from a scheme;

• cannot be increased in existing schemes that currently have early exit charges set at less than 1% of the member’s benefits under a scheme; and

• cannot apply in schemes entered into after the proposed new rules come into force.

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