Pension advice allowance: 'Don't shackle it with age limit'

The Treasury must avoid putting shackles on the new Pensions Advice Allowance that could deter younger savers engaging with their retirement planning, a pensions firm says. Aegon also called on the Government to ensure that there is no limit on the frequency of use.The company believes savers should be allowed to use the allowance to cover the cost of future forms of guidance offered by regulated adviser firms as well as advice.Proposals for the allowance will allow those in pension schemes to deduct up to £500 to pay for advice. This was recommended by the Financial Advice Market Review.A public consultation ends tomorrow, with the Treasury expected to outline the finalised plans.Steven Cameron, pensions director at Aegon, said: “The Pensions Advice Allowance should be kept as flexible as possible. It would be counter-productive to set a minimum age, which might discourage retirement savers from engaging earlier. We support promoting the Pensions Advice Allowance at various ages to ‘nudge’ members to review pensions with the help of an adviser.“We also see no reason to limit the number of times an individual can use the Allowance. With most individuals having more than one pension, it would be very difficult to monitor frequency other than at individual provider or scheme level.“The Financial Advice Market Review will lead to new forms of guidance alongside a tightened definition of ‘advice’. Allowing the Pensions Advice Allowance to be used to pay for both advice and guidance given by a regulated adviser firm is the most effective way to deliver greater support to as many pension savers as possible.”Brian Smyth, head of Ascot Lloyd Benefit Solutions, said: “The £500 Pensions Advice Allowance is likely to pay for two hours of financial advice work in many cases. The return will be improved if the individual comes fully prepared.“The more difficult question is whether disinvesting £500 from your pension is more cost effective than finding that amount of money from other savings.“In many ways it would be more cost effective for employers to pay a fee to an adviser to give a group presentation to a number of staff first and then agree the Pensions Advice Allowance with those who want more information and planning.”He said: “The biggest barrier to pension saving is its poor reputation. The government and the industry need to address this to make the need for advice attractive. Buying a house or saving into an ISA, both of which create wealth, and are readily understood.“Retirement planning needs to be as easy to understand and employers, as a trusted source of employee information, need to play a greater role in driving this education.”

Pension advice allowance: 'Don't shackle it with age limit'

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