Steven Cameron, Pensions Director at Aegon said: “We’re pleased to see the Treasury advancing the Pensions Advice Allowance which will allow individuals to take up to £500 from their pension to cover professional advice, making this more affordable to more individuals approaching retirement. In today’s pension world, individuals have complete freedom over how to draw their pension benefits, but choosing what’s best can be daunting without access to advice.
“Some more modern ‘personal pension’ plans already allow individuals to instruct their provider to pay their adviser an ‘Adviser Charge’ to cover advice, but this must relate only to that particular pension. The new Pensions Advice Allowance can be used to cover advice on all of an individual’s pensions and other retirement savings.
“The Treasury is keen to make the Pensions Advice Allowance available as widely as possible. We support it being promoted by providers, employers and Pension Wise. We agree that it would be too complex to offer within ‘defined benefit’ schemes but those who also have a defined contribution plan may be able to take their pensions Advice Allowance from this, while seeking advice on all of their pensions.
“Those already offering Adviser Charging will be able to use existing functionality, ensuring the Pensions Advice Allowance can be made available quickly. Trust-based schemes may be slower to offer this but should be encouraged to do so.
“We support the Treasury’s plans to make the Pensions Advice Allowance available before age 55 so that people can seek advice well ahead of actually moving into retirement. This will allow them to plan ahead for the retirement they aspire to, including reviewing adequacy of contributions and which investment funds are best for them. Individuals often benefit from seeking advice at various stages ahead of and into retirement, so they should be allowed to use a Pensions Advice Allowance more than once.
“The plan is that the Pensions Advice Allowance can be used only to pay for ‘regulated’ advice and not for other forms of guidance. Another strand of the Financial Advice Market Review is to develop new forms of guidance. We’d ask the Treasury to keep an open mind, perhaps allowing the Pensions Advice Allowance to be used to cover new forms of guidance where offered by regulated firms.”
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