Government vows to remove pension freedom 'barriers'
The Government has vowed to improve the process for savers who want to access their pension pots under the new freedoms, after criticism of high exit charges and long transfer times.
Economic Secretary to the Treasury Harriet Baldwin today (10 February 2016) published the Government’s response to the Pension Transfer and Early Exit Charges consultation.
The consultation found that “a small but significant number” have been “effectively prevented from accessing the pension freedoms because of high exit charges or long transfer times”.
While transfers for FCA-regulated contract-based pension schemes took an average of 16 days, the average transfer time for trust-based pensions was 39 days, the consultation found. Many of those surveyed said they had to wait “significantly longer” for individual transfers.
The government has said it will remove “unjustifiable barriers” to enable people to access their pensions how and when they wish.
The actions include:
- The Government will introduce a new requirement for trust-based pension schemes to regularly report on their performance in processing transfers.
- The Pensions Regulator (TPR) will issue new guidance for scheme trustees to ensure transfers are processed quickly and accurately.
- Pension Wise will develop new content on the transfer process, which will include information on likely timescales, what customers need to do and greater clarity on whether financial advice is required.
Today’s response follows the Chancellor George Osborne’s announcement last month that the Government will cap early exit charges for people who wish to access their pensions.
Harriett Baldwin said that the Government was taking action to “curb excessive exit charges, make transfers easier and ensure people have the information they need to make informed decisions”.
She said: “It is only fair that people who have worked hard and saved their entire lives are able to access their pensions flexibly, without facing any unjustifiable barriers.”
The Government said that the pension reforms, which came into effect on 6 April 2015, have seen over £3.5 billion “flexibly accessed” through nearly 400,000 payments.