Employers have said that they support the proposed Pensions Advice Allowance and would encourage their employees to utilise this, the Pension Policy Institute has found.

In its newly published report sponsored by LV= and titled At-retirement financial advice in the workplace, the PPI, with Bdifferent, conducted qualitative research exploring two new initiatives proposed by HM Treasury.

These are the introduction of a Pensions Advice Allowance which will enable DC savers to withdraw up to £500 from their pension funds without facing a tax penalty, provided the sum is used to purchase pre-retirement advice. The second initiative is increasing the tax exemption around employer-arranged pension advice from £150 to £500.

Although employers noted that their staff are not overly interested in pensions, they found that employees become increasingly more engaged as they near retirement. This indicated that employees would value employer-provided financial advice before they leave the workforce.

The £500 tax exemption proposal was of most interest to those employers who already offer access to advice to their employees. Nonetheless, this may be more difficult for smaller employers where there is not an assigned person for financial advice and administration in the workplace.

PPI senior policy researcher Melissa Echalier said: “While it has been argued that employees are not interested in pensions, this research supports the view that they become increasingly interested as they approach retirement. The provision of at-retirement financial advice in the workplace could be one of the routes to increasing take-up of financial advice.”

LV= head of policy Philip Brown added: “It is encouraging that employers are open to helping their employees get access to financial advice at retirement. We called for an increase to the advice tax allowance for employers in our response to the Financial Advice Market Review as this change, alongside the introduction of the Pension Advice Allowance, will make it far easier for consumers to get affordable professional advice. This is a real opportunity to increase access to regulated financial advice through the workplace and help many more people get the best outcome in retirement.”

Bdifferent founding director Teresa Roux commented: “While employers are generally supportive of the Pensions Advice Allowance, the research highlights the different attitudes of employers based on culture and size of scheme and some of the challenges for implementation.”

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