The life insurer had previously announced that it was capping its exit fees at 5% on traditional UK pension contracts, for all customers aged 55 or older.
The move follows the Financial Conduct Authority’s (FCA) recommendations, announced in May, to cap exit charges for existing contract-based personal pensions, including workplace personal pensions, at 1% of the value of a member’s pot.
The watchdog is currently in the middle of a consultation on the matter, which closes on 18 August 2016, with a view to implementing the cap by March next year.
“Old Mutual Wealth is supportive of this proposal and is committing to these proposals now, ahead of the implementation deadlines,” said the company in statement.
The Anglo-South African life company revealed that the cap will apply to personal and occupational pensions from the fourth quarter of this year.
“We have relatively few pension contacts that attract an exit fee. The FCA has clearly set out what it expects from providers. We support this direction and, rather than wait until the March 2017 implementation date, will introduce the 1% cap as soon as is practically possible,” said Steven Levin, chief executive of Old Mutual Wealth’s investment platform.
It is expected to affect around 3,400 customers currently on the “older-style” pension contracts – most of which were taken out at least 17 years ago or more .
As a result, the average exit charge on Old Mutual pension products will now be 85 basis points, said the company, while over 85% of Old Mutual Wealth’s Heritage pension customers will not be subject to any exit charges at all.
The FCA’s crusade against exit charges kicked-off following the British chancellor George Osborne’s decision in January to hand the FCA the power to cap excessive early exit charges as part of wider move to improve access to pension savings.
Subsequent analysis by the FCA suggests that capping early the fees would result in increased numbers of eligible consumers accessing the pension freedoms in the next four years, benefitting more than 747,000 people.
“Together with the ban on exit fees in future contracts, we are proposing a 1% cap on exit charges in existing contracts to ensure people can access their pension pots without being deterred by charges.
“This is an important step so people feel able to access their pension savings should they wish to,” said Christopher Woolard, director of strategy and competition at the FCA.