This cap gives more power and choice back to consumers

SINCE my appointment, I have seen first-hand the enormous social and financial changes that millions of people are benefiting from thanks to our pension reforms.

From the continued success of automatic enrolment which is helping more than 8.5 million save into a workplace pension, or my recent announcement that all cold calling relating to pensions will be banned, this Government is delivering real change for consumers of all ages and helping them on the path to a better funded and more financially secure retirement.

I am pleased to announce that another such change is coming into effect today, with the introduction of a cap – at 1 per cent – on the fees people can be charged for accessing their hard-earning savings early.

The cap will apply to existing members of pension schemes and early exit charges will be completely banned for new members who join these schemes after today.

Many people have chosen to access their pension early through pension freedoms which entitles anyone aged 55 and over with a defined contribution scheme to access as much of their savings as they want to.

However, many people have simply not received as much as they should have done or expected. Some faced losing around 5 per cent of the pot due to excessive early exit fees.

That is why I am pleased we are cracking down on this unfairness that forced people to pay higher than necessary penalties for accessing their own money. People would not expect this punitive approach in other services and nor should they with pension saving.

Consumers deserved a fairer deal from providers, and for too long too many people have been made to pay unnecessary fees.

This cap on early exit charges gives more power, more choice, and more money back to consumers, giving them a greater say over how they fund retirement.

The steps that have come into effect today will empower savers to take control of their options while also meaning that pension schemes are still able to operate effectively.

This will benefit both consumers and the pensions industry, and is another important signal that Government works with both groups of people to bring about change that benefits the entire financial landscape.

Today again proves current and future pensioners can rely on this Government to deliver positive change that helps them enjoy a more financially secure retirement.