It is great news that the government has now confirmed that it will be making it possible for DC pension members to take £500 from their pension tax-free to help with the cost of financial advice.
This, following the recommendations in the Financial Advice Market Review (FAMR), is an even stronger indication to incentivise members to take advice to ensure they make the absolute best decisions when taking their pension.
For those with complex circumstances and multiple pensions, £500 is unlikely to be enough to cover the whole cost of advice needed, but it will go towards it and that's a great help.
Following the pension freedoms and with increasing longevity, it is vital that those taking their pension are well informed about the choices available to them and that they seek advice before making decisions around their pension. They will have spent their whole lives building up this pension and for many it will form the basis of their financial security throughout what may be 30 plus years in retirement. So, it is vital that they are well supported in making the absolute best of what they have and to ensure that poor decisions, which may be irreversible, are not made.
The Treasury has confirmed that it will take on board recommendations in the Financial Advice Market Review and introduce a Pensions Advice Allowance which will allow people to take £500 tax free from their DC pension to redeem against the cost of financial advice. The tax-free amount would be in addition to the normal 25% tax free allowance and would also be available before the age of 55.