“With so many issues unresolved due to its rushed timetable, it is not surprising that the Government has had to announce this consultation,” said ABI’s director general, Huw Evans.
“Despite the lack of some crucial detail, insurers are continuing to work flat out to help customers on the basis of laws and regulations so far in place.”
Yesterday Osborne announced that he would look at introducing a cap on pension exit fees following a consultation which will start next month.
However, Evans said further clarity is still needed and “has been calling for some time”.
“We reject any suggestions that the industry is putting up unnecessary obstacles to hinder customers exercising their pension options,” he said.
ABI highlighted that nearly nine in ten customers eligible for the pension freedoms will not face early exit fees. The body also pointed out that the exit fee, which is sometimes included in older pension schemes, reflect expenses already paid by the provider in setting up the policy, and is not a penalty where customers leave the scheme early.
These expenses, ABI said, would normally be paid back by the saver if they had stayed in the scheme until their retirement date as originally intended.
Evans added: “It needs to be remembered that the vast majority of customers eligible for the pension freedoms will not face any early exit fee.
“Where one is charged it is not a penalty for leaving early, but to cover the costs of setting up the pension, particularly commission.”
