UK watchdog seeks data on charges for cashing in pension pots
By Huw Jones
LONDON (Reuters) - Britain's financial regulator will ask pension and insurance companies to spell out how much they charge people to cash in their pension pots, it said on Wednesday.
MPs are concerned that people are at risk of being ripped off if they decide to take out their pension money, under a change last April aimed at giving consumers more choice.
"This data collection exercise will help us establish whether there is a significant variation between firms for similar products and services, and the extent to which the charges that consumers face may be complex and difficult to understand," the Financial Conduct Authority (FCA) said in a statement.
"We will also analyse whether higher charges are concentrated among particular pension pot sizes."
The FCA also said the launch of its market review into "retirement outcomes" had been delayed by three months until the second quarter of 2016.
The watchdog has said it was concerned about the sale of enhanced annuities, which offer a higher annual rate to pensioners with medical conditions that shorten their life expectancy.
Those who stuck with their existing standard annuity provider, rather than shopping around for an enhanced annuity, lost out by between 100 pounds ($151) and 175 pounds a year, it has said.
The three-month delay would mean better "sequencing" with other FCA work, and wider initiatives such as the government's review of financial market advice and of exit charges and pension transfers.
"It will also allow us to use a longer data set for our review, providing us with a more robust picture of how the market looks following early reactions to the pension reforms," the FCA said.
The watchdog will publish a summary of the data next summer and feed it into the retirement outcomes review.
Previous figures compiled by the FCA have shown around 16 percent of those eligible for pensions freedom would be liable to exit charges if they cash in their pots.
(Additional reporting by Carolyn Cohn; Editing by David Holmes)
