The UK financial watchdog is set to crackdown on early exit fees, which charge investors who want to cash in their pensions before a set retirement age. The move follows Chancellor George Osborne's pledge to tackle the "rip-off" charges levied on those aged 55 and over who want to make use of the pensions freedom rules he introduced in April 2015.
Last week the Financial Conduct Authority (FCA) announced that so-called "exit charges" will be capped for people with contract-based personal pensions, including workplace pensions. The cap, which will stand at 1% of the value of a member's pension pot, will come into force from 31 March 2017. Meanwhile, providers will also be banned from increasing the exit fees on existing policies if they are already below the proposed 1% cap. On top of that, any new pension scheme set up after the new rule comes into force from next year will be banned from charging an exit fee at all.
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