Which scenario indicates an early encashment charge on an RAC transfer?

• A. The RAC was terminated within five years
• B. The RAC was invested in a Property Fund
• C. The member was under age 60 at the time of transfer
• D. The member paid regular contributions to the RAC

Answer: (A)

Early encashment charges are penalties applied when you cash in or transfer out of a RAC within a short initial period. The most common trigger is ending the RAC within the first five years, when the provider may levy an early encashment charge to cover costs or preserve guarantees you were given. The other scenarios don’t inherently involve a penalty: investing in a Property Fund doesn’t by itself trigger a charge, being under age 60 at transfer isn’t a penalty, and making regular contributions isn’t related to encashment charges. So, terminating the RAC within five years is the situation that indicates an early encashment charge.