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Labour calls for price cap to stop 'rip off' drawdown charges

Labour has called for a price cap on drawdown products to protect savers from 'rip off' charges under the pension freedoms.

 
Labour calls for price cap to stop 'rip off' drawdown charges

Labour has called for a price cap on drawdown products to protect savers from being ripped off when the new pension freedoms kick in next year.

According to The Guardian, shadow pensions minister Gregg McClymont wants strict price controls on new drawdown products created in response to the Budget pension shake-up.

In his Budget chancellor George Osborne announced retirees would be able to withdraw unlimited amounts of their pension fund post retirement at their marginal rate of income tax, rather than pay a possible 55% tax charge. 

A number of pension providers are due to launch a host of products to fit within the new rules.

A 0.75% cap on all default fund charges for pension schemes will also apply from April 2015, but will not apply to charges on drawdown products.

Labour is calling for a cap on drawdown product charges of no more than 0.75% but possibly 0.5% to protect the anticipated 320,000 people expected to use a drawdown product from next year, reported The Guardian.

McClymont said: 'Labour welcomed the new pension flexibilities announced in the Budget, but we are concerned that the government has not thought through the risks of rip-off charges being taken from the savings of hardworking people.'

5 comments so far. Why not have your say?

Rob Walker

Nov 24, 2014 at 19:39

A few names of 'rip-off' merchants would be useful.

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john_r

Nov 24, 2014 at 20:15

My own list includes Ed Milliband and Ed Balls at the top candidates.

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Tortoise

Nov 24, 2014 at 20:24

This sounds like another Labour attempt to create a scare for political purposes

when this is not really a problem. Would suggest those who are looking at this do some research and move their funds to a company that has this in hand at a sensible price. A name? I use AXA Wealth. No, I am not one of their commission earning agents. I have been advised that the costs for moving into the new regime will be less than £1k.

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snoekie

Nov 25, 2014 at 00:43

Promises, promises.

Will they they bring in legislation to outlaw rip-of pensions, the like of which they wrought on pension funds and SIPP savers, with horrendous penalties on the perpetrators, and back dated?

NO, I thought not.

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James Park

Nov 25, 2014 at 10:34

Why should there be any drawdown charges at all? The pension companies are making enough money out of our savings as it is. Don't these people realise how they are alienating the very people who are providing them with a living.

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