David Cameron: Pension plan charges could be capped
The amount savers are charged to withdraw their money from pension plans could be capped, under plans set out today.
A consultation to look at whether exit charges could be cut or capped for those looking to access their savings early is being launched by the Treasury.
The investigation will also examine measures to make it easier for people to shift their savings from one scheme to another.
The consultation follows George Osborne's radical reforms to retirement saving, which gave savers far greater freedom to choose what to do with their nest eggs.
So far more than 85,000 savers have used the new freedoms, which came into effect in April.
Mr Osborne said in June that he was considering a cap on excess charges amid fears they were deterring some people from taking advantage of the changes and promised the consultation which is now being launched.
Prime Minister David Cameron said: "Our pension reforms were the biggest in a generation and they offer people much greater choice on how to use their hard earned savings.
"The aim has always been to give people more control over their money, not to create a new way of charging people.
"That's why we're launching this consultation because we want to ensure that pension providers are not using exit charges and restrictions as a barrier to switching just when the Government is providing pensioners with greater freedoms."
The consultation covers options to address excessive early exit penalties, including a proposal to impose a legislative cap on these charges for over-55s.
Ministers have also written to the Financial Conduct Authority and The Pensions Regulator asking them to gather information from the industry on the fees and charges customers currently face.
A Downing Street spokeswoman said: "Our reforms have already proved extremely popular and are giving people real flexibility over their pensions savings for the first the time.
"But it is not on that some people are missing out on that freedom because of expensive fees and other barriers that are blocking them from accessing their own money.
"Our message is clear: the industry must sort this out or we will take action to guarantee people that freedom."
The consultation will run for 12 weeks and the Government will set out its response in the autumn.
A spokeswoman for the Association of British Insurers said: "No pensions sold on the market today have early exit fees and nearly nine out of 10 people making use of the pension freedoms will not face an early exit fee.
"Providers will engage constructively with this consultation so all the relevant facts and issues can be fully understood.
"Many people are accessing the pension freedoms successfully, with more than £1.8 billion withdrawn in the first two months. For those few that are encountering problems we have set out an action plan to address these issues, which is with Government and the FCA."