Under new government proposals announced last month, Brits could be entitled to a £500 tax-free Pensions Advice Allowance which can be withdrawn from pensions to fund financial advice.
Following recommendations from the Financial Advice Market Review (FAMR), the plans were first revealed during the March 2016 budget under the previous Conservative government and could now take effect from as early as April 2017.
Simon Kirby, economic secretary to the Treasury told the media at the end of August: "Pensions and savings decisions are some of the most important a person will make during their lifetime. It is therefore vital that people can access the financial help they need and feel confident choosing the support that works for them in their retirement."
A government consultation has subsequently been launched - due to run until 25th October - and is seeking expert opinion on a variety of proposals including limiting the allowance to £500 per use, allowing multiple uses to enable savers to receive advice at different points during retirement and restricting withdrawal from defined contribution schemes only, therefore excluding defined benefit schemes.
Chris McWilliam, Principal at Aon Employee Benefits agrees that the introduction of the allowance is a good idea. "And in conjunction with the £500 a year of tax free pension advice that employers can now fund, it provides pension scheme members with a reasonable amount of money with which to get personalised advice on their own situation," he said.
"However, a lot of thought needs to be given to adequately protecting consumers whilst giving them flexibility to get advice at key points throughout their life, for example, when they first join the arrangement and when they approach retirement."
According to the consultation paper, the scheme would not be 'mandatory' for pension providers, but asks for feedback on how to encourage defined contribution schemes to offer the allowance.
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