The UK government has announced an end to prohibitive charges faced by people looking to access their pension pot early.

The plans will cap excessive early exit charges for those eligible to access pension freedoms, which came into effect on April 6, 2015, allowing individuals to access their savings how and when they want.

Speaking at Treasury Oral questions in the House of Commons, the Chancellor George Osborne said: “The pension freedoms we’ve introduced have been widely welcomed, but we know that nearly 700,000 people who are eligible face some sort of early exit charge.

“The government isn’t prepared to stand by and see people either ripped off or blocked from accessing their own money by excessive charges.

“We’ve listened to the concerns and the newspaper campaigns that have been run and today we’re announcing that we will change the law to place a duty on the Financial Conduct Authority [FCA] to cap excessive early exit charges for pension savers.”

FCA data collected through a consultation in 2015 showed that nearly 700,000 (16%) individuals in contract-based schemes who are able to flexibly access their pension could face some sort of early exit charge.

The government said the independent FCA will be responsible for setting the level of the cap and will consult fully on this in due course.

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