Old Mutual Wealth caps pension exit fees at 1%

Jenna Towler reports...

Old Mutual Wealth is to bring its pension exit fees attached to older style contracts down to 1% for all customers aged over 55.

The Financial Conduct Authority and Department for Work and Pensions are currently running consultations on plans to make a cap of 1% of the value of the pension pot applicable to all over 55s looking to access pension freedom. The cap is due to come into effect in March next year.

Old Mutual Wealth said it backed the move and would implement changes before any official deadlines. Its cap for all applicable personal and occupational pensions will come in during the fourth quarter of the year.

The provider currently has about 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%, it added.

The firm said any contracts affected 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.

However, it added more than 85% of its Heritage pension customers, the former Skandia book, are not subject to any exit charges.

Old Mutual Wealth investment platform chief executive Steven Levin said: “We have relatively few pension contracts 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.”

In March, the provider agreed to cut its pension exit fees following a regulatory investigation.