Pensions minister Steve Webb may step in to make switching cash from an onshore pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) cheaper.
Many retirement savers who have built up a cash pile in a workplace pension will have to wait until December to see if the minister takes action.
Webb has announced that he is considering the move but will not make a final decision until a government review of pension provider transfer fees is completed.
He has hinted that if providers try to make exit costs from their schemes too high, he will come down on the side of consumers.
The minister’s comments come as pension providers are overwhelmed with calls to help lines demanding information about how they can cash in their pensions from April 2015, when new early access pension rules come into force.
Transfer fees
However, although the new pension rules have received a lot of publicity, some older contracts have clauses in their terms and conditions that allow firms to levy fees of between 5% and 15% on any money transferred or withdrawn.
Webb has said that the number of providers threatening to charge the transfer fees were ‘in the minority’.
The Department of Work and Pensions says that the government cannot force pension providers to change their rules, but was negotiating with them to relax their terms and conditions to bring them in line with newer schemes that charge much less.
Meanwhile, The Treasury is still considering whether expats and international workers with UK pension funds will be allowed to switch their cash to a QROPS.
Cash conundrum
The conundrum is nothing about switching cash to a QROPS has been written into the draft easy access pension bill before Parliament, but the bill is meant to allow retirement savers to take cash from a registered pension scheme.
Under pension law, QROPS are considered registered pensions, so the new rules should apply to them as much as any other registered scheme.
“We are aware of the circumstances and are considering whether QROPS will be included in the new rules at some stage,” said a Treasury spokesman. “However, at this time, we can’t say when any announcement will come, but it will be before the rules come into force in April.”
Unfortunately, the lack of information for expats wanting to shift their pension cash leaves them in limbo about what to do with their retirement funds.
