The Treasury has announced that next month it will be launching a consultation on whether to cap pension exit penalties https://www.gov.uk/government/news/chancellor-presses-industry-on-pension-freedoms.

This announcement comes just days after the government said it was too early to intervene http://www.bbc.co.uk/news/business-33079656. Tom McPhail, Head of Pensions Research at Hargreaves Lansdown: “The government appears to be losing patience with those elements of the pensions industry which are failing to measure up to the promises of freedom. Every pension investor over the age of 55 should be able to access their retirement savings with the minimum of cost and administrative inconvenience.

It is not acceptable to charge punitive exit penalties or to insist that investors pay for a financial adviser. Any pension providers or schemes which can’t or won’t deliver should let their customers leave so that they can benefit from the freedoms elsewhere.” In the past 2 months Hargreaves Lansdown has handled 67,000 phone calls from retiring investors.

Tom McPhail: “One further option for the government might be to use the rules around providing auto-enrolment schemes as a mechanism to force pension providers to deliver a better service to their customers. Electronic transfers also provide a mechanism to significantly reduce pension transfer times, unfortunately they have not yet been universally adopted by the pensions industry.”