The new Pension Advice Allowance, first announced at Autumn
Statement 2016, will enable people to withdraw £500 up to three
occasions from their pension pots tax-free to put towards the
cost of pensions and retirement advice from April 2017.
Following an 8 week consultation, the Economic Secretary to the
Treasury, , has today confirmed that the
£500 allowance:
- can be used a total of three times, only once in a tax year,
allowing people to access retirement advice at different stages
of their lives, for example when first choosing pension or just
prior to retirement
- will be available at any age, allowing people of all ages to
engage with retirement planning
- can be redeemed against the cost of regulated financial
advice, including ‘robo advice’ as well as traditional
face-to-face advice
- will be available to holders of “defined contribution”
pensions and hybrid pensions with a defined contribution element,
not “defined benefit” or final salary type schemes
Pension providers will be able to offer the allowance to their
members from April 2017.
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.
According to Unbiased, UK savers with a pension pot of £100,000
save an average of £98 more every month and receive an additional
income of £3,654 every year of their retirement if they take
financial advice.
Economic Secretary to the Treasury, , said:
Pensions and savings decisions are some of the most important a
person will make during their lifetime.
This allowance will help people get the vital financial help
they need to plan for their retirement.
The government has published a response to the
consultation on introducing a Pensions Advice Allowance and HMRC
will now conduct a 3 week technical consultation on the draft
regulations.
