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UK consumer watchdog claims FAs charging exorbitant fees for pension freedom
| Published: | 16 Jun at 6 PM |
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A report from Britain’s Citizens Advice Bureau is claiming that pension providers and financial firms are demanding up to 10 per cent from clients wishing to draw down from their retirement savings.
According to the highly regarded consumer watchdog charity, not only are financial firms being greedy in setting up their charges, they are also failing to offer the best value products to suit clients’ needs. Charges levied by pension providers can be as high as 10 per cent of the amount taken in what is a relatively simple process.
Around 160,000 UK pension savers over 55 years of age have chosen to use a pension provider company which charges a fee to access pension pot savings, with just under 66,000 holding pots of over £20,000 paying around £1,577. Savers with smaller pots paid even more, around £1,966 on average.
The report revealed that almost three quarters of those qualified to access their pension pots were not researching to find the best deals, with many being given poor value products unsuited to their circumstances and needs. Worse still, a good proportion of those were stuck with their original pension provider following accessing their cash, mostly out of fears that shopping for a better provider would lead to excessively high exit fees.
It seems that financial firms in general are failing to offer attractive products, leaving almost half of those wishing to access their cash forced to switch whatever the cost. Britain’s FCA has announced that exit fees will be capped to 1 per cent of the current value of the fund, but CAP is demanding a reduction to just £50.
For potential expat retirees looking to switch their private or workplace pension pots to a QROPs, there’s plenty of choice across a wide selection of overseas financial jurisdictions. It’s best to do this whilst still resident in the UK, making sure that your chosen provider is FCA UK registered and that the chosen QROPs is currently on the FCA’s authorised list. The process itself isn’t especially complicated,
However, expat retirees should remember that financial firms and IFAs based overseas, even if they are registered as working legally in their host country, are not covered by the FCA in any form. Over the past decade, British pensioners living abroad have fallen victim to a number of scams by illegally-working, commission-hungry scammers posing as genuine financial advisors. Many have lost their life savings as a result, as there’s no way to get restitution for mis-sold products.
According to the highly regarded consumer watchdog charity, not only are financial firms being greedy in setting up their charges, they are also failing to offer the best value products to suit clients’ needs. Charges levied by pension providers can be as high as 10 per cent of the amount taken in what is a relatively simple process.
Around 160,000 UK pension savers over 55 years of age have chosen to use a pension provider company which charges a fee to access pension pot savings, with just under 66,000 holding pots of over £20,000 paying around £1,577. Savers with smaller pots paid even more, around £1,966 on average.
The report revealed that almost three quarters of those qualified to access their pension pots were not researching to find the best deals, with many being given poor value products unsuited to their circumstances and needs. Worse still, a good proportion of those were stuck with their original pension provider following accessing their cash, mostly out of fears that shopping for a better provider would lead to excessively high exit fees.
It seems that financial firms in general are failing to offer attractive products, leaving almost half of those wishing to access their cash forced to switch whatever the cost. Britain’s FCA has announced that exit fees will be capped to 1 per cent of the current value of the fund, but CAP is demanding a reduction to just £50.
For potential expat retirees looking to switch their private or workplace pension pots to a QROPs, there’s plenty of choice across a wide selection of overseas financial jurisdictions. It’s best to do this whilst still resident in the UK, making sure that your chosen provider is FCA UK registered and that the chosen QROPs is currently on the FCA’s authorised list. The process itself isn’t especially complicated,
However, expat retirees should remember that financial firms and IFAs based overseas, even if they are registered as working legally in their host country, are not covered by the FCA in any form. Over the past decade, British pensioners living abroad have fallen victim to a number of scams by illegally-working, commission-hungry scammers posing as genuine financial advisors. Many have lost their life savings as a result, as there’s no way to get restitution for mis-sold products.
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