TISA response to capping early exit pension charges
TISA, the investments and savings membership association, has welcomed the Government’s consultation into capping early exit pension charges.
Adrian Boulding, Policy Strategy Director at TISA said:
“TISA believes that pension early exit charges are, in the main, a throwback to product designs predicated on the illusion of retrieving up front commissions slowly and over the term of the contract. In reality, they had been paid out immediately and could not be recouped from the distributor after the first two years, hence the need to go back to the members’ pension pot to reduce the value in the event of an early exit.
“This type of charge has not been featured in products sold by mainstream providers for the last 20-25 years. Consequently, setting the cap at 1% will have little resonance with the customers impacted as they had little understanding of the charges mechanisms in the first place and would see any percentage charge as arbitrary, at best.
“The September Pensions Freedom Data collection paper showed that the leading five SIPP providers charge a set fee averaging £75 to cover the operational costs of setting up benefits. Intuitively, we believe that customers would find it reasonable if there was a fixed charge for undertaking transactions and we would encourage exploration into this alternative approach.
“We strongly believe that the Government should take this opportunity to have a consistent policy on the rules for exit charges on the Lifetime ISA and Pensions to ensure the needless arbitrage between the retirement savings vehicles is avoided.”
Ends….
For further information please contact:
Alistair Kellie – Telephone: 0207 680 6558 /Email: Alistair.Kellie@newgatecomms.com
Sara Neidle – Telephone: 020 7680 6543 / Email: Sara.Neidle@newgatecomms.com
Jessica Hodson Walker – Telephone: 020 7680 6538 / Email: Jessica.HodsonWalker@newgatecomms.com
Email: TISA@newgatecomms.com
Notes for Editors
TISA is a not-for-profit membership association operating within the financial services industry. The focus of our recommendations and actions is improved outcomes for consumers and UK plc with this approach leading to a stronger UK financial services industry.
TISA’s growing membership comprises over 150 firms involved in the supply and distribution of savings and investment products and services. These members represent many different sectors of the financial services industry, including asset managers, insurance companies, fund managers, distributors, building societies, investment managers, third party administrators, consultants and advisers, software providers, financial advisers, pension providers, banks and stockbrokers.
TISA has a successful track record in working cooperatively with government, regulators, HMT, DWP and HMRC to improve the performance of the industry and the outcomes for the public. Effective policy and regulation and the creation of efficient industry infrastructure continues to be the major focus for our members. TISA is unique in that it represents the entire financial services industry, incorporating cross-sector policy, industry and technical expertise. Whilst we maintain a solid partnership with government, the regulators and wider industry, we remain independent and develop neutral views and opinions. This impartiality is reflected in our ability to drive development projects which improve industry performance and consumer outcomes, putting us in the unique position of being able to constantly challenge the status quo to bring about material improvement.
Website: www.tisa.uk.com