What is the Pensions Advice Allowance?

Following a period of consultation in 2016/17, the government introduced, with effect from 6 April 2017, a Pensions Advice Allowance which allows certain pension scheme members to access a set amount of money from their pension pot tax-free to pay for holistic retirement advice. At the member’s request, a pension scheme can thus reduce the value of the member’s pension pot by the amount of the advice fee and transfer the funds directly to the member’s adviser.

This was recommended by the Financial Advice Market Review, which had identified an advice gap for those who need retirement planning advice but do not have the means to pay for it from their net-of-tax income or savings.

The Pensions Advice Allowance is available in addition to a number of other existing advice allowances and methods of payment for advice. This includes adviser charging, which does not allow money from pensions to be used to fund holistic retirement advice. For further information, see Other types of pensions advice measures below.

The government aims to help those planning