'Double pension advice tax exemption' plea

Aegon has called for the limit on Income Tax and NI relief on employer-arranged pension advice to be doubled. The plea follows the findings of the Engaging with saving workplace pensions report the CBI published in partnership with Aegon, in March. The report revealed that more than half (56%) of employers believed that the government should extend the tax exemption for employer-provided pensions advice to more than £500. The cost of advice varies depending on the situation but it can be anything between £75 to £350 an hour, with the average cost of advice in the UK being around £150 an hour, according to dutch-owned Aegon.The employer-arranged pension advice exemption is the amount an employer can spend on pension advice per employee in a year, without the individual incurring tax as ‘benefit in kind’. It can be used to provide workplace advice on pensions, and on general financial and tax issues relating to pensions, to help employees make informed decisions on saving for retirement. £500 is “unlikely to meet the financial pension planning needs of most employees”, the firm says. The report also revealed that nearly half (49%) of employers want greater clarity around the regulations for providing pension information in the workplace, so that businesses are able to talk openly to their employees about the value of the pension scheme without stumbling into giving financial advice. Kate Smith, head of pensions at Aegon, said: “While many employers are taking positive steps to raise awareness and improve their employees’ engagement with workplace pensions, there is a very real fear among employers that they could stray into regulated advice if they try to promote their pension plans to staff. “Greater clarity of what they can and cannot say would be helpful. “It would be great if the regulators could revisit this as part of their joint pension strategy. “One way for employers to avoid this concern is to offer access to professional financial advice in the workplace. “Some employers are prepared to pay for this. “However, under current rules, if the advice costs more than £500, employees are liable to tax as a ‘benefit in kind' on the excess. “Advice typically costs more than this which means employers are less likely to offer this valuable service. “Doubling it to £1,000 could remove that barrier and create an incentive for employers to offer further support.”

'Double pension advice tax exemption' plea

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