Capping Early Exit Fees
It is right that savers should not face artificial barriers to unlocking the full benefits of freedom and choice. However, while individual savers should not face prohibitive charges for accessing their benefits early, we have highlighted the need for this to be balanced in certain circumstances against considerations of proportionality and fairness for the membership as a whole.
Surveys of our membership have revealed that only a very small minority of our members (5%) operate some form of exit charge, with the majority of these applying a charge for multiple UFPLS withdrawals. As such, the Association is pleased that the proposals to cap early exit fees in the DWP and FCA consultations have been designed to capture those fees which explicitly penalise those looking to access their benefits before the scheme’s normal retirement age and do not prohibit schemes from recouping administrative costs in a way that is fair for the membership as a whole.