Financial firms are charging as much as £270 a time to allow people access to their retirement pot under the new pension rules, according to research by consumer body Which?.
The report also discovered that those entering income drawdown, the option taken by the majority of those who don’t want to cash in all their pension pot, can be charged as much as £26,000 in fees over a decade with the most expensive provider. This is £10,000 more than the cheapest.
“We believe giving retirees complete control over their pension savings is the right thing to do, but clearly more needs to be done by the industry to make pension freedom a reality for many people,” Which? said.
Pension freedom began in April 2015, allowing anyone over the age of 55 to access some or all of the money in their pension pot rather than being compelled to buy an annuity. In the first 100 days of the reforms more than 85,000 people cashed in £1.8bn from their retirement savings, according to the Association of British Insurers.
However, there has been mounting criticism about the way pension providers and other financial firms are handling the pension freedoms. Some have barred people from accessing their money, others have insisted people pay for expensive financial advice, and many have imposed hefty charges to allow people access to their cash.
Responding to the criticism, last month George Osborne announced an investigation into the charges.
The Which? research found that people making one-off withdrawals from their pension as though it were a bank account, using a new option called UFPLS, could be charged £270 for the first withdrawal each year. This is the fee charged by Charles Stanley Direct. James Hay charge £100, while Barclays Stockbrokers, Halifax Sharedealing and TD Direct charge a £90 fee, Which? claims.
A spokesman for the consmer group said: “You’d be livid if you were charged hundreds of pounds each time you took money out of your Isa, but that’s what you face if you want to use this option to access your pension.”
