Government tax relief to help employees access financial advice
Pension Wise, the Money Advice Service and TPAS (The Pension Advisory Service) are due to be consolidated into one targeted financial education service, according to the Spring Budget announcement – but this should not mean that employees are held back from the help they need around their pension choices.
As an initial aid to employees, from April 2017, the tax and national insurance relief for employer-arranged pension advice will increase from £150 to £500.
Furthermore, the government is going to consult on introducing a Pension Advice Allowance, which will allow individuals to withdraw £500 tax free before the age of 55 from their DC pension to redeem against the cost of financial advice.
Jonathan Watts-Lay, director of financial education provider WEALTH at work comments: “We welcome any incentive which gives more employees access to financial advice, particularly when considering retirement income.
“Since the pension changes, we are already seeing an upturn in companies sourcing advisory services for their employees, so this financial incentive is a great helping hand towards the cost of providing it.
“Having the ability to pay for advice is so important as so many people go it alone and make poorly thought out decisions. The benefit in improved retirement income can more than out-weigh this cost, so taking fully regulated advice could save money in the long run whilst also providing added consumer protection.”
WEALTH at work is blogging about the key areas of employer consideration when helping employees through retirement in Reward's financial education hub.
The hub examines the changes in pensions and looks at how you can help your employees with financial education across all their savings. CLICK HERE to access the hub
For further information about WEALTH at work, please CLICK HERE