This year will see the end of extortionate exit and transfer penalties that have prevented pension policyholder either taking benefits (if aged 55 or over) or transferring to another scheme because of, in some cases, up to double digit percentage charges that would have applied.
From 31st March 2017, exit charges will be capped at 1% of the fund value for existing personal and stakeholder pension, including group personal pensions and Sipps. There will be total ban on exit fees with future contracts. This will also apply to occupational workplace pensions from October 2017 but importantly will only apply to those aged 55 and over. People who are under age 55 in these schemes will not benefit from the cap and may remain snookered from under-going pre-retirement consolidation.
Schemes will be unable to increase exit charges to 1% where these are currently below this level.
Although the cap will be welcome, it still represents a significant sum if applied. After all, 1% of a fund value of £100,000 is still £1,000! However, it also fair to say that a significant majority of schemes do not apply any penalties.
Might be worth dusting off that old pension paperwork to see if you may take advantage of the new rules but seek advice where appropriate.