Does the 1% cap on early pension exit fees go far enough?

The industry is divided on the FCA's proposed cap

Nicola Brittain
clock • 4 min read

The regulator has proposed a cap of 1% on controversial early exit charges for existing pensions, but the industry is mixed on whether this move goes far enough to help consumers.

The new cap, announced in a consultation paper released on 26 May, will affect personal and stakeholder pensions - both individual and workplace - as well as self-invested personal pensions, for those over the age of 55. The legislation was first announced by the Chancellor in January after a Treasury review into pension freedoms revealed the charges were a barrier to access for many consumers. The regulator estimated about 747,000 people could be affected by the cap and there could be about 37,400 additional early exits in the four years to 2020 under the current proposals. Howeve...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Pensions

Budget 26: What is the pensions industry expecting?

Budget 26: What is the pensions industry expecting?

Industry sets out predictions as speculation grows ahead of Wednesday

Holly Roach
clock 27 October 2026 • 7 min read
Pension reform should be part of UK's wider economic strategy - Pensions UK

Pension reform should be part of UK's wider economic strategy - Pensions UK

Organisation urges action to be taken now

Holly Roach
clock 13 October 2026 • 2 min read
Triple lock has lifted state pension 14% above earnings-only level

Triple lock has lifted state pension 14% above earnings-only level

Chancery Lane analysis illustrates so-called ‘ratchet effect’

Isabel Baxter
clock 05 October 2026 • 2 min read