The Financial Conduct Authority (FCA) has detailed its final rules on capping early exit charges for people eligible to access their pensions from the age of 55.
Exit charges will be capped at 1% of the value of existing contract-based pensions from 31 March 2017, including personal/stakeholder pensions and workplace pensions.
Charges of less than 1% will not be increased in existing pension schemes.
Pension providers will not be able to apply early exit charges for schemes entered into after the cap rules come into force.
Christopher Woolard, executive director of strategy and competition at the FCA, said:
“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.”
Dr Yvonne Braun, director of policy, long-term savings and protection at Association of British Insurers, said:
“The industry is strongly supportive of the pension freedoms and has worked hard to make them a success. More than 8 out of 10 customers are unaffected by early exit charges. Where they do apply, most fees are 2% or less and would have been put in place many years ago.”