But pension experts say move would be unrealistic

Pension experts at Irwin Mitchell believe the Government’s proposals to remove exit penalties on pension plans are unworkable.

Chancellor George Osborne has pledged to change the law and ban high charges and exit penalties for people using new freedom to access their pension pots early.

Although Government sources have reported the proposed changes could take two years to have effect, the move could save some people thousands of pounds. 

The new freedoms began last April and ended the requirement to use pension savings to buy an annuity, giving the over-55s more flexibility over how they spend their savings.

Latest figures suggest almost 400,000 people have accessed their pensions in this way, releasing £4.7billion but campaigners claim many have been put off by the exorbitant fees levied by firms.

The Treasury said over half a million savers face exit charges of up to five per cent of their pensions, a further 81,000 face charges of five to 10 per cent and 66,000 face even higher penalties.

The precise level of the fee cap will be determined following a consultation by the Financial Conduct Authority.