“The recommendations within today’s FAMR contain essential building blocks which – if carefully considered and adopted - could help increase the affordability and accessibility of advice and guidance to people at all stages of their lives. Of particular interest is the push to explore options to allow consumers – who do not already have this option* - to access a small part of their pension pot to redeem against the cost of pre-retirement advice. Quality financial advice at this point is likely to repay the investment in it several times over and hence prove a good use of accumulating funds.
“With the nudge due to take place five to ten years prior to normal minimum pension age (currently age 55), this means that we could see a situation when those aged 45 are able to access advice as they work to build up their retirement provision. While this is good news, it does raise some questions as to the cost and scope of this option.
“With people’s finances typically interlinked, it will be interesting to see how they define ‘pre-retirement’ advice as theoretically this could cover debt, mortgages, savings and investments. For many people who use an IFA, this is an ongoing process so it will be interesting to see if this is recognised and people who use this scheme have the opportunity to pay for more than one session – perhaps at age 45 then age 55.
“In addition, they have suggested that it should be ‘comparable to the tax exemption for employer-arranged pension’s advice*’ which they have recommended should be improved from the existing £150 income tax and National Insurance exemption. We do however need this level (which has not been reviewed since 2004) to be increased to an amount that will allow for a holistic financial review and recommendations to be made
“We look forward to seeing how these recommendations are taken forward as – if we can step up to the challenge - they provide an excellent opportunity to improve outcomes for consumers.”
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