Consultation launched on capping early exit charges, to remove an obstacle to accessing the new pension freedoms.
In occupational pension schemes, the obligation to comply with the cap will rest either on the scheme’s trustees / managers or on service providers, depending on whether the cap derives from the scheme’s rules or from contractual arrangements entered into with third parties.
The DWP paper also raises the issue of what it terms the ‘water-bed effect’, that is, the concern that other charges or fees may be increased in consequence of the cap and warns that trustees / managers must be vigilant to ensure that excessive charges are genuinely capped, rather than simply displaced.
The DWP aims to implement the exit caps in 2017, once the relevant primary and secondary regulatory changes have been made.
The DWP consultation paper can be found here and the FCA consultation paper can be found here.
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