The UK government has confirmed it will implement a cap on pension early-exit charges by the end of March next year.
This follows chancellor George Osborne’s plans for the cap announced last month, which also stated that the Financial Conduct Authority (FCA) would take up the task.
In response to a consultation about fees charged by providers for people wanting to access their pensions, the government will introduce legislation in the Bank of England and Financial Services Bill to amend the Financial Services and Markets Act 2000 (FSMA).
According to the Treasury, this amendment will allow the FCA to require relevant firms to limit charges imposed in relation to contract-based schemes.
Harriett Baldwin, economic secretary to the treasury, said: "It is only fair that people who have worked hard and saved their entire lives are able to access their pensions flexibly, without facing any unjustifiable barriers."
Trust-based schemes are also due to fall under similar requirements.
"In parallel with the FCA process, the government will consider how existing powers to limit pension charges can be used to implement a comparable cap on early exit fees in trust-based schemes," said the report.
The Pensions Regulator (TPR) will work alongside the FCA as they develop the design and level of the cap.
TPR will also issue further guidance for trustees on standards through its defined contribution code, including how transfers can be processed promptly and accurately without exposing savers to a greater risk of pension scams.
The consultation found that for FCA-regulated contract-based schemes, transfers took 16 days on average. However, the mean transfer time for trust-based pensions was 39 days.