Pension Minister Guy Opperman addressed the Work and Pensions committee asking the government to investigate the amount of cash savers can take from their pension pot tio pay for retirement advice as the amount is too low and he wants to improve retirement advice outcomes.
Savers currently can withdraw £500 on three occasions a total of £1,500 to pay for pre-retirement advice, which is now under review by HM Treasury.
Mr Opperman is working with the HM Treasury and the Financial Conduct Authority to provide a better solution as the amount available is too low to deliver an effective advice outcome for the individual.
From April 2017, following a recommendation in the Financial Advice Market Review, pension members can take £500 a year tax free up to 3 times to pay for generic financial advice.
Mr Opperman said: “the Treasury is evaluating the effectiveness of the advice allowance as major providers were seeing little or no interest in the measure and low demand for cash to pay for advice in this way.
The Treasury will later this year report back on its findings.
Guess who owns PensionAdviceAllowance.com? Yes, it is us but £500 is simply not enough to offer a valuable financial planning review for most consumers so we have not lanuched the website just yet. Most pre-retirement reviews take chargeable time of between £800 and £1,500 and therefore, any increase in the Pension Advice Allowance will make it more feasible to both us and consumers to secure unbiased, quality financial planning advice before retirement.