Government consults on pension exit charges
A consultation on draft regulations regarding the cap on early exit charges for occupational pension schemes and restrictions on member-borne commission payments has been launched by the Department for Work and Pensions (DWP).
These regulations would restrict early exit charges for members of workplace pension schemes to enable eligible members over the age of 55 to take advantage of the pension freedoms. The proposed cap is 1% of the value of the member’s benefits being taken, converted or transferred for existing members of occupational pension schemes.
The cap is in line with the Financial Conduct Authority (FCA) cap on early exit charges for personal and stakeholder pensions, which came into force on 31 March 2017.
The draft regulations that are the subject of the current consultation also aim to prohibit charges that are imposed on members of some occupational pension schemes to recoup the cost of commission payments to advisers in relation to agreements entered into before 6 April 2016.
The closing date for responses to the consultation is 31 May 2017.