The provider is also removing a policy fee that applies to certain legacy pension contracts when regular contributions are cancelled or reduced ahead of the selected retirement age.
Following the work done by its independent governance committee on workplace pensions, Old Mutual Wealth (OMW) will be reducing its exit charges by an average 2% across all applicable pensions from 1 July 2016.
Older-style pension
It has been estimated that around 3,700 customers aged 55 or over in older-style pension are currently subject to exit fees; usually on contracts taken out more than 17 years ago when the upfront costs were spread across the term of the plan.
OMW said over 85% of its Heritage pension customers will not be subject to any exit charges, nor will any be applied to any pensions purchased from 2000 onwards.
Further, in keeping with the radical changes to the pension and savings market and the introduction of auto-enrolment, the company is also removing fees for changes or cancellations to arrangements involving regular contributions.
The group said roughly 9,400 policyholders could expect their total ongoing charges to reduce by an average of 22%, effective 1 April.
Value for money
Steven Levin, chief executive of OMW’s investment platform, said: “As a modern wealth management business, we are focused on ensuring customers receive good outcomes. The pension market has changed considerably and we want to ensure we are making improvements for those customers in contracts that were set long before the current rules were introduced.
“Where exit fees are still in place, due to the structure of older contracts, we want to ensure customers receive good value for money. We are introducing the cap for all affected pension customers – whether they are individual pension customers or members of occupational pension schemes.”
