On 3 February the Government published its response to its consultation on introducing a Pensions Advice Allowance, ie the ability for members to withdraw funds from their pension pot to pay for pensions or retirement advice.
The new allowance will be introduced from April 2017. A member will be able to withdraw up to £500 tax free from a money purchase pension pot to pay for pensions or retirement advice that qualifies as "regulated financial advice". The member will be able to do this up to three times during his/her lifetime (though only once in any one tax year). There will be no obligation on schemes to offer this facility, and schemes wishing to do so will need to check whether their existing rules allow it, or whether a rule amendment is necessary.
A key point is that the advice allowance can only be used to pay for regulated financial advice. Advice in relation to an occupational pension scheme will not necessarily be regulated financial advice. It will often be necessary to look at the underlying scheme investments to determine whether or not the advice is regulated, and advice unrelated to a specific investment is unlikely to be regulated. (Advice in relation to a personal pension scheme is more likely to fall within the definition of regulated financial advice.)
