1 in 6 six pensioners hit by £5,000 fee when cashing pension in
We blorted on about what to expect from the new freedoms around pensions, but as ever, there's a catch. We spoke about the charges and tax consequences, and thanks to new figures, we see that 1 in 6 people over 55 will be hit by exit charges of (up to) £5,000 if they want to utilise new pension freedoms.
Around 700,000 people are going to have to pay if they want to get at their savings, and over 100,000 of these will pay more than £1,000, with 13,000 of them having to cough-up as much as £5,000. A lot of pensioners who have worked hard to have these savings could be charged even if they stay with the same pension firm, but want to switch to a more suitable, flexible product.
While it was a nice idea to let those with pensions use them like a bank account, it seems the financial institutions are imposing very steep penalties for those who want to. What a surprise eh? Finance companies acting like thundering arseholes!
Official data from the Financial Conduct Authority shows that around 670,000 over-55s are looking at charges before they can take their money. The FCA published this data, saying that they want pension firms to publish explicit details of all exit fees.
These exit fees are not the same as annual management charges, which pensioners will also have to pay for if they withdraw some money from their savings.
The FCA's findings show that 204,500 pension policies have been accessed in the months following the reforms. However, with many pensions being started in the days before transparency about charges, many people will be finding out that fees could really hammer away at their money. There's also the small matter of a lot of pension scams knocking about. It is thought that there's been over 10,000 people who have reported these scams to regulators.
160 potential frauds are being looked at by the FCA, and they've launched full investigations into five, which now involve the police.