Citizens Advice calls for standard £50 pension exit charge

The suggestion comes after its research found seven in 10 people who have accessed their pension since the freedoms didn’t shop around for different products, with 15% of those saying they wanted to avoid exit charges.

A quarter of consumers (24%) who stayed with their pension provider did so because they thought the product they were offered delivered the best value - despite not looking at options with other providers.

Over a third (36%) said they trusted their existing pension provider, one in three (30%) had a product which met their needs, and 29% said they stayed because it was the easiest way to access their savings.

Consumers who buy annuities are more likely to shop around with over half (57%) checking products with other providers. This compares to two in five (39%) who bought a drawdown product and just 14% for those taking cash.

Gillian Guy, chief executive of Citizens Advice, said: “Picking a pension product is one of the biggest financial decisions people will ever make, so it’s worrying that so many aren’t shopping around.

“More and more consumers are choosing drawdown products but our research shows they aren’t checking whether they’re getting the best deal. The Government and industry needs to work together to make it easier for consumers to compare drawdown products and choose the one which best meets their needs.

“The threat of excessive charges can also put people off making the right pension choices for them. A standard £50 exit fee across all types of pensions will mean consumers can make the most of the pension freedoms.”