People planning for their retirement are set to benefit from access to £500 worth of financial advice making navigating the golden years a little easier, Economic Secretary to the Treasury, Simon Kirby, announced today.
The Pensions Advice Allowance, which will come into force from April 2017, will allow people nearing retirement to take up to £500 out of their pension pots tax-free to put towards the cost of financial advice.
This means that an individual can receive advice on all the financial products that contribute towards their retirement income, such as multiple pension pots and other assets like ISA savings.
Research has found that when approaching retirement only 22% of people know the value of their pension pot and only 14% of people would be confident planning their retirement goals without financial advice.
Today the government has launched a public consultation on the allowance, which seeks views on specific details including the eligibility age and how best to promote awareness of the allowance.
Economic Secretary to the Treasury, Simon Kirby, said, “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.
“I look forward to the industry engaging with the pensions advice allowance consultation, and taking this opportunity to tell us how the allowance could best meet the needs of both consumers and firms.”
The new allowance goes further than the current provision, which only allows people to get advice on the pension pot from which the advice fee is taken. It will help people with the upfront cost of advice and allow them an opportunity to consider their retirement plans carefully in advance of taking their pension.
For £500, consumers could use an online advice model that provides a personalised retirement plan or put the money towards the cost of face to face advice.
The Pensions Advice Allowance was first announced in Budget 2016 after a recommendation from the Financial Advice Market Review (FAMR), which suggested that high quality financial advice can have a significant impact on retirement incomes if received early.