Government outlines strategy to remove pension barriers

The government’s actions to remove ‘unjustifiable barriers’ to people wishing to access their pension fund have been revealed by Harriet Baldwin, economic secretary to the Treasury.

The announcement is part of a response to the Pension Transfer and Early Exit Charges consultation and elaborates on the government’s declaration to limit early exit charges for people seeking to access pension freedoms.

The response states that: the government will introduce a new requirement for trust-based pension schemes to regularly report on their performance in processing transfers; the Pensions Regulator (TPR) will issue new guidance for scheme trustees to ensure transfers are processed quickly and accurately; and Pension Wise will develop new content on the transfer process, which will include information on likely timescales, what customers need to do and greater clarity on whether financial advice is required.

The consultation found that whilst the majority of eligible candidates are able to access their pension under the new freedoms, there are a number who have been unable to gain access due to high exit charges or long transfer times.

It also revealed that for Financial Conduct Authority (FCA) regulated contract based pension schemes, the transfers took an average of 16 days to complete. However, TPR analysis suggested the mean transfer time for trust-based pensions was 39 days, with many consumer survey respondents claiming they had to wait longer for individual transfers.

Baldwin commented: “It is only fair that people who have worked hard and saved their entire lives are able to access their pensions flexibly, without facing any unjustifiable barriers. That’s why we’re taking action to curb excessive exit charges, make transfers easier and ensure people have the information they need to make informed decisions.

“We will continue to work to ensure that our landmark reforms deliver real freedom and choice for people.”

Baroness Ros Altmann, minister for pensions at the Department for Work and Pensions, said: “Encouraging people to save and helping them on their way to a financially secure retirement is a priority for this government and we need to ensure that the right protections are in place for consumers.

“No consumers should have to pay excessive early exit fees, regardless of the type of scheme that they are in. And we will be working to ensure that action is taken to protect members of trust based schemes.”