On Tuesday chancellor George Osborne announced plans to introduce legislation to give the FCA the power and responsibility for capping early exit charges in response to the rising tide of complaints from the public, and to newspaper campaigns that have been run in the UK, claiming the fees were excessive.
“The government isn’t prepared to stand by and see people either ripped off or blocked from accessing their own money by excessive charges,” Osborne said in a statement.
In her first response to the news on Wednesday Altmann tweeted “We will ensure cap on exit penalties in trust-based pensions alongside FCA cap for contract-based. Want all pension savers helped the same.”
According to the Pensions Regulator, the main regulator of work-based pension schemes, occupational pension schemes are required to be trust-based schemes while work-based personal pension schemes are commonly known as contract-based schemes.
It is already current government policy that pension scheme members receive broadly similar levels of consumer protection regardless of the type of scheme that an employer chooses.
Savers put off
The government said that following the introduction of the pension reforms in April last year, which granted greater freedoms for savers aged over 55 to access their savings, nearly 700,000 people who are now eligible faced some sort of early exit charge.
FCA investigations have shown that 670,000 consumers aged 55 or over faced an early exit charge, the Treasury said in a statement.
Of these, 358,000 faced charges between 0-2%; 165,000 faced charges between 2-5%; 81,000 faced charges between 5-10%; and 66,000 faced charges above 10%.
“FCA data collected through the consultation showed that nearly 700,000 (16%) customers in contract-based schemes who are able to flexibly access their pension could face some sort of early exit charge, including a significant minority who faced charges that were high enough that the government consider that they effectively put them off accessing their pension flexibly,” the Treasury said.
