Introducing a Pensions Advice Allowance
This consultation seeks views on the government’s plans to allow people to use £500 tax free from their defined contribution pension pot to pay for retirement advice. This was recommended by the Financial Advice Market Review.
The government is committed to ensuring that consumers are supported in making good financial decisions. The pension flexibilities introduced in April 2015 gave savers the ability to access their hard earned pension savings flexibly, as best suits their needs. This means that many consumers have a wider range of options to consider when they reach retirement.
However, the high quality financial advice available in the UK is not always accessible or affordable for individuals with lower levels of wealth. The government therefore announced at Budget 2016 that, as recommended by the Financial Advice Market Review, it would consult on introducing a Pensions Advice Allowance. This would allow people to take £500 tax free from their defined contribution pension to redeem against the cost of financial advice.
This consultation sets out the government’s preferred design for this allowance. It also invites comments on this design and a number of outstanding policy questions.