In August 2015 the Financial Conduct Authority (FCA) and HM Treasury set up the Financial Advice Market Review, tasked with looking for ways in which the market for financial advice in the UK might work better. One of the recommendations in its final report in March 2016 was for HM Treasury to explore options to allow consumers to access a small part of their pension pot before the normal minimum pension age, to redeem against the cost of pre-retirement advice.
On 31 August 2016, HM Treasury published a consultation on introducing a Pensions Advice Allowance to allow individuals to take some tax-free money from their pension pot to pay for regulated financial advice.
The consultation paper sets out the proposed features of the allowance. The intention is that the money can only be taken from a defined contribution (DC) pot and it will be:
HM Treasury is considering whether individuals should be able to use the allowance more than once, but seeks views on how this might work given the various possible risks of fraud it would open up. It is also looking for input on the age from which the Pensions Advice Allowance should be available. HM Treasury’s intention is that the allowance could be operated through facilities that already exist for adviser charging in many schemes. It is not proposing to make the allowance mandatory for providers.
The deadline for responses to the consultation is 25 October 2016. The consultation does not give any indication of an intended implementation date.
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