The government is to consult on introducing a Pension Advice Allowance, permitting people before the age of 55 to withdraw up to £500 tax free from their defined contribution pension to redeem against the cost of financial advice.
In the Budget documents published today, the government said “this means that a basic rate taxpayer could save £100 on the cost of financial advice”.
Furthermore, it said it will consult on introducing a single clear definition of financial advice to remove regulatory uncertainty and ensure that firms can offer consumers the help they need.
It said it will also increase the existing £150 income tax and National Insurance relief for employer-arranged pension advice to £500.
Aon Employee Benefits DC proposition leader Debbie Falvey said: “It’s good news that the Chancellor has agreed to implement the Financial Advice Market Review (FAMR) recommendations on the provision and funding methods for financial advice.
"The raft of changes already in play, pension freedoms, LTA and AA limit changes have massively increased the demand for financial advice - and that was before today’s announcements. The Pension Advice allowance will be a useful way to remove one to the key barriers to seeking advice - people don’t want to write the cheque."
She added that simplifying the rules on advice and regulatory uncertainty will be important in encouraging the development of advice services, "whether that be robo advice or more traditional offers”.