‘My shrinking pension pot is trapped by 45pc exit penalty’

just 0.75pc a year. Unhappy with his pension’s performance, Mr Cameron wanted to move his cash to Standard Life, a firm he also has savings with.

But he was told by Phoenix, a “closed book” firm that owns Abbey Life policies and doesn’t take on new clients, that leaving would cost him £4,668 – 45pc of his pension pot.

He said: “It’s a lot of money. I was already disappointed to find out the pension hasn’t grown and now they want to halve it.”

Telegraph Money asked Phoenix to waive the fees in light of the policy’s appalling performance. The firm refused, saying: “We have to be fair to all customers with this product.” A spokesman claimed that “strict governance processes” meant it had to “deliver on the promises made to customers”.

Under FCA rules, Phoenix will have to let Mr Cameron leave with a 1pc exit charge on his 55th birthday, in 2024.

Kay Ingram of LEBC, an advice firm, said: “While these charges may have been part of the original contract, it is hard to see how Phoenix can justify charging for a future service that the plan holder no longer requires. If Phoenix is interested in being fair to all policyholders, reviewing these penalties would be a good start.

“Practices like this give pensions a bad name and discourage others from saving. They have no place in the 21st century when technology has enabled administration costs to be cut”.

Under-55s still face sky-high charges to switch pension provider, writes