Tax-free pensions advice allowance introduced

Individuals will be able to withdraw up to £1,500 from their pension pot tax-free to pay for financial advice from April 2017.

The Pension Advice Allowance will allow savers to withdraw up to £500 on 3 occasions in different tax years.

The allowance will be available to holders of defined contribution pensions and hybrid pensions schemes.

It can be used to pay for regulated financial advice, such as face-to-face or ‘robo advice’.

People of all ages starting their retirement planning can access the allowance.

Research by Unbiased found that individuals with a pension pot of £100,000 save on average £98 more per month when they take retirement advice, and receive an additional income of £3,654 per year in retirement.

Steven Cameron, pensions director at Aegon, said:

“We’re pleased the Treasury has decided against setting any minimum age before an individual can use the Pension Advice Allowance. Allowing it to be used up to 3 times is also a step in the right direction as people can benefit from advice on different aspects of their retirement planning at different ages or in different circumstances.”

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