Tax-free access to pension advice
The Treasury has confirmed details of the new Pension Advice Allowance, which will take effect from April 2017, and which will enable people to withdraw ?500, on up to three occasions, from their pension pots tax-free to put towards the cost of pensions and retirement advice.
Following an eight-week consultation period, the Economic Secretary to the Treasury, Simon Kirby, confirmed that the ?500 allowance:
– can be used a total of three times, only once in a tax year, allowing people to access retirement advice at different stages of their lives, for example when first choosing pension or just prior to retirement;
– will be available at any age, allowing people of all ages to engage with retirement planning;
– can be redeemed against the cost of regulated financial advice, including ‘robo advice’ as well as traditional face-to-face advice; and
– will be available to holders of ‘defined contribution’ pensions and hybrid pensions with a defined contribution element, not ‘defined benefit’ or final salary type schemes.
According to recent research, UK savers with a pension pot of ?100,000 save an average of ?98 more every month and receive an additional income of ?3,654 every year of their retirement if they take financial advice.
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