Early exit penalties levied by one of the UK's most prominent pension providers have been cut.
All exit penalties will be limited at 5% for under 55's and early encashment charges of over 5% since the 1st of January 2009 will be refunded. The initiative is expected to cost £69 Million.
This action corrects the disparity between the charges levied at savers in the under 55 & over 55 brackets, with under 55's at a greater disadvantage, being exposed to potentially high fees.
The government's pension freedoms reforms protected over 55's with a cap on penalties of 1%. Pension providers complied with these terms but did not do so for younger savers as the legislation did not apply to them. Experts have been calling for an end to this practice, terming it "discriminatory".
While the change is welcomed, it still pays to be aware of the particulars of your pension provider's exit policy.
According to Paul Feeney, of Old Mutual Wealth:
"Following comprehensive product reviews of our legacy business, we are starting voluntary remediation to customers in certain legacy products within the heritage book.
Our core business philosophy is to do the right thing by our customers, and this product review is part of putting this into action."
Older policies that were taken out in the eighties and nineties sometimes penalised savers up to 40% for transferring to another provider.
Contact Westminster Wealth Management today and one of our skilled advisers can construct a financial plan for you that will enable you to meet your financial goals.
The value of investments and income from them may go down as well as up and you may not get back the original amount invested.
A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
Giant pension firm caps exit penalties for young savers