Early exit charges for individuals withdrawing money from their pension pot will be capped at 1%, the Financial Conduct Authority (FCA) has confirmed.
For existing occupational pensions, the cap of 1% will apply, while a cap of 0% will apply to new contracts. The Department for Work and Pensions stated that the introduction of such caps will remove ‘unnecessary barriers for those wanting to access their savings’.
Both caps will only affect those aged 55 or over.
Richard Harrington, Minister for Pensions, said: ‘This new cap will protect people’s savings from excessive charges, so more of their money will go towards the comfortable retirement they have saved for.’
Meanwhile, Christopher Woolard, Executive Director of Strategy and Competition at the FCA, commented: ‘People eligible for the Government’s pension reforms should feel able to access them as they wish.
‘The 1% cap on early exit charges for existing pensions and the 0% cap for new contracts will mean that current and future savers will not be deterred by these charges from accessing their pension pots.’
The new rules, which were proposed by the Treasury earlier this year, are set to come into force in March 2017.