The new Pension Advice Allowance, first announced at Autumn Statement 2016, will enable people to withdraw £500 on up to three occasions from their pension pots, tax-free, to put towards the cost of pensions and retirement advice.
Following an 8-week consultation, the Economic Secretary to the Treasury, Simon Kirby, has today confirmed that the £500 allowance:
- Can be used a total of three times, only once in a tax year, allowing people to access retirement advice at different stages of their lives, for example when first choosing pension or just prior to retirement
- Will be available at any age, allowing people of all ages to engage with retirement planning
- Can be redeemed against the cost of regulated financial advice, including ‘robo advice’ as well as traditional face-to-face advice
- Will be available to holders of “defined contribution” pensions and hybrid pensions with a defined contribution element, not “defined benefit” or final salary type schemes
Research has found that when approaching retirement only 22% of people know the value of their pension pot and only 14% of people would be confident planning their retirement goals without financial advice.
According to Unbiased, UK savers with a pension pot of £100,000 save an average of £98 more every month and receive an additional income of £3,654 every year of their retirement if they take financial advice.
Economic Secretary to the Treasury, Simon Kirby, said: “Pensions and savings decisions are some of the most important a person will make during their lifetime.”
“This allowance will help people get the vital financial help they need to plan for their retirement.”
For more information, please visit gov.uk/government/news/savers-to-be-able-to-access-1500-tax-free-for-pension-advice