This decision follows FCA and DWP consultation papers which propose that existing pension exit charges should be capped at 1% of the value of a member’s pot. Old Mutual Wealth is supportive of this proposal and is committing to these proposals now, ahead of the implementation deadlines.
Old Mutual Wealth will introduce the 1% cap for all applicable personal and occupational pensions during Q4 2016.
Old Mutual Wealth currently has around 3,400 customers aged 55 or over in older-style pension contracts that attract exit fees. Following these changes the average exit charge across all applicable pensions will be 0.85%.
Any such contracts were taken out at least 17 years ago when the costs incurred upfront to establish the plan were spread across the term that was selected when it was originally set up.
Over 85% of Old Mutual Wealth’s Heritage pension customers are not subject to any exit charges.
Steven Levin, CEO of Old Mutual Wealth’s investment platform, said:
“We have relatively few pension contacts that attract an exit fee. The FCA has clearly set out what it expects from providers. We support this direction and, rather than wait until the March 2017 implementation date, will introduce the 1% cap as soon as is practically possible.”