The Pension Regulator (TPR) and the Department for Work and Pensions (DWP) have confirmed early exit charges for existing occupational pensions are to be capped at 1% and any new contracts will be capped a 0% and these will be in place for England, Scotland and Wales while Northern Ireland controls its own legislation.
This is a vast improvement on the current situation where average early exit charges can be as much as 5%. This will be regulated by The Pensions Regulator.
Plans have been announced by the Minister for Pensions to create exit charges equality for occupational pensions to ensure people are not unfairly penalised for accessing their savings early.
The cap will be set at 1% for existing occupational pensions and 0% for any new contracts and will bring exit charges for workplace pensions in line with other personal and stakeholder pensions.
There is a government response to the consultation on capping early exit charges for members of occupational pension schemes (published 15 November 2016) and the government will consult on the regulations in early 2017, with the cap set to come into force in October 2017.
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