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£500 pensions advice allowance – consultation

The Treasury is consulting on plans to introduce a new pensions advice allowance, which would enable people nearing retirement to take up to £500 to put towards the cost of financial advice out of their pension fund, tax-free.

The £500 allowance is intended to enable individuals to receive advice on all financial products that could potentially be part of their retirement income, eg, pension schemes, ISAs, other savings, etc.

The allowance will help with the upfront cost of advice and allow people an opportunity carefully to consider their retirement plans before taking their pension.

 The £500 tax-free amount would be in addition to the tax-free lump sum available when benefits are ultimately taken.

The allowance would be available before the age of 55, and the consultation looks at the exact age from which it should be available, as well as whether to allow multiple uses of the allowance to enable individuals to get advice at different times.

One further possibility is for the proposed £500 tax exemption for employer arranged advice be used in conjunction with the pensions advice allowance, to give people access to up to £1,000 of tax advantaged financial advice.  Both measures are expected to come into force from April 2017.

 

 

Date: 23rd September, 2016
Author: Cathy Corns

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