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Pensions Advice Allowance

A new Pensions Advice Allowance will come into force from April 2017. The allowance will allow those nearing retirement to take up to £1,500 out of their pension pots tax-free to put towards the cost of financial advice. The advice provided can relate directly to the pension as well as to other financial products that help build retirement income such as multiple pension pots and other assets like ISA savings.The new Pension Advice Allowance, first announced at Autumn Statement 2016, will enable people to withdraw £500 up to three occasions from their pension pots tax-free to put towards the cost of pensions and retirement advice from April 2017.The new allowance will not be taxed on withdrawal from the pension pot, regardless of the individual’s income. The payment of the allowance must be made direct from the pension scheme to the adviser and will only be available for regulated financial advice. The allowance can be used alongside the tax exemption for employer arranged pensions advice.A response to a recent consultation on the introduction of the allowance has been published by HM Treasury. The response to the consultation confirms that the allowance will be available at any age and that individuals will be permitted three uses of the allowance in their lifetime, no more than once per tax year. HMRC is expected to publish full guidance on the new allowance in the spring.Economic Secretary to the Treasury, Simon Kirby, said:’Pensions and savings decisions are some of the most important a person will make during their lifetime. This allowance will help people get the vital financial help they need to plan for their retirement.’