The FCA, the main industry regulator, will be responsible for setting the level of the cap and plans to consult with the industry in due course.
Tom McPhail, head of retirement policy for Hargreaves Lansdown, welcomed the news and urged investors facing exit fees on their current schemes to wait until details of the new plan are released.
“Hundreds of thousands of pension investors currently face charges and restrictions if they want access to the pension freedoms or to transfer their money to a new pension arrangement,” he said.
“In some cases these penalties can run to hundreds or even thousands of pounds. This kind of financial bondage has no place in the 21st century.
“We hope that all pension investors will now be able to exercise free control over their pension pots. Any exit penalties should be limited to no more than a proportionate administration charge based on the actual costs incurred,” McPhail said.
