How much is pension advice worth to you?
By Teamspirit on Wednesday, 28 September 2016
The government’s consultation on letting people use up to £500 tax-free of their pension savings to pay for regulated financial advice to help them prepare for retirement has reached its halfway point.
The Treasury hopes that encouraging people to seek advice early will inspire them to become more actively engaged with planning their retirement finances. But does it add up?
While there is overwhelming enthusiasm around the idea of helping people overcome their worries about the costs and benefits of regulated financial advice, some are already questioning the finer details of the government’s plans.
Under the Treasury’s proposal, people will only be able to access money from their pension savings (which would be separate to their 25% tax-free lump sum) until they turned 55.
The government believes this will help people get a head start on thinking about retirement, but observers have noted that cutting people off from the service up to fifteen years before they actually retire may not be that helpful.
Similarly, it has also been pointed out that allowing people to use this facility multiple times could lead to abuse and, potentially, fraud.
The government seems aware of this possibility, and is proposing limiting the number of times people can seek advice using their tax-free savings in order to ensure the system is used by people who really need it rather than by those who simply want the government to subsidise on-going financial advice.
The consultation runs until October 25th, and responses can be sent to the Treasury by post or email.