500 GBP Advice Allowance From Your Pension Fund

£500 Advice Allowance From Your Pension Fund.

HM Treasury has published a consultation document on the subject of allowing people to be able to withdraw up to £500 from their company investment linked pensions known as defined contribution schemes to fund pre-retirement advice.

The amount is likely to not be taxable and is designed to give people the opportunity to be in a more informed position as they approach retirement.

• Defined Benefit – Salary Related – Final Salary – Career Average Salary schemes will not be included as there is little or no retirement decision to be made as usually they offer guaranteed, inflation proofed pension income and tax free lump sums at retirement.

• Private Pension Plans already have the ability for your financial adviser to be paid from the pension fund.

The move to include defined contribution, company pension schemes is a much needed one given the plethora of choices at retirement:

• Should I take a lump sum?
• Should I buy an annuity?
• What sort of annuity?
• Should I use flexible drawdown?
• How long will my pension fund last?
• What are the ongoing investments risks?

All questions that most people approaching retirement face.

We welcome the move by the Treasury as any retirement decision affects the rest of your life and professional advice should be sought in such a complex area of our lives.  Many people perhaps cannot afford to pay up front fees for financial advice and it makes sense to allow a little flexibility to be able to access advice.