Government Encourages Pre-Retirees To Get Financial Advice
£1,500 made available for individuals to receive tax free pension advice.
For those looking ahead to retirement, an updated government scheme allows them to use funds caught up in their pensions to pay for professional aid.
According to the government such advice is badly needed. Pointing towards to latest research they state that only 22% of those who are yet to retire actually know how large their pension pot will be. The people themselves seem to agree with the government’s assessment with just 14% of those questioned feeling confident enough to make pension pot decisions without professional financial advice.
How The System Will Work
Individuals will be able to take £500 out of their pensions up to a total of 3 times. The money taken out will not be subjected to taxation as long as it is used to pay for financial advice. Simon Kirby, the economic secretary to the Treasury clarifies that only one withdrawal will be allowed in a single tax year.
The scheme will not apply to all pensions. To qualify the pension in question must have a defined contribution element to it. Defined benefit pensions are excluded from this offer.
This figure of £1,500 is viewed by some, including senior analyst at A.J. Bell, Tom Selby as insufficient on its own to cover the expenses associated with detailed pension advice. Being “realistic about what this will achieve”, Mr Selby quotes “the Treasury’s own analysis” that “face-to-face advice costs £150 per hour on average, and can take up to nine hours for pensions”. This means that the average pre-retiree who takes advantage of the scheme will still need to find an extra £850.
More people getting independent financial advice is a good thing as getting detailed information as to how their retirement is shaping up will help them make decisions that can improve their position.
For more help and advice on Pensions please do not hesitate to contact us at Hoskin Financial
THIS BLOG PROVIDES INFORMATION, IT IS NOT ADVICE. ANY OPINIONS ARE GIVEN IN GOOD FAITH AND MAY BE SUBJECT TO CHANGE WITHOUT NOTICE. OPINIONS AND INFORMATION INCLUDED WITHIN THIS EMAIL DO NOT CONSTITUTE ADVICE. (IF YOU REQUIRE PERSONAL ADVICE BASED ON YOUR CIRCUMSTANCES, PLEASE CONTACT US AT HOSKIN FINANCIAL