Given the constant tinkering in respect of pensions by successive governments in recent years and the sheer complexity of pension options, it is pleasing that a new pension advice allowance will be introduced from April 2017. This will allow individuals to withdraw £500 tax-free from their pension pots to put towards the cost of pensions and retirement advice.
The allowance will be available to holders of defined contribution pensions and hybrid pensions with a defined contribution element, but not defined benefit or final salary schemes. It can be used three times within a lifetime, albeit in different tax years and will be available at any age. The new allowance can be redeemed against the cost of regulated financial advice with the payment made direct from the pension scheme to the adviser.
Many individuals will have little idea of their pension options at different stages of their life, but may be reluctant to seek advice from professionals due to the cost. While the individual ultimately bears the cost, by means of a withdrawal from the pension fund, it is good to see that ordinary savers and investors will be able to take appropriate advice without worrying how they will pay for it.
For more information please get in touch with Karen Clark, or your usual RSM contact.