Aegon says rivals ‘may be slow’ with advice allowance

Aegon says rivals ‘may be slow’ with advice allowance

Some pension providers may be slower than others at facilitating the government’s pension advice allowance, Aegon UK’s pensions director has said.

Steven Cameron said that the £500 allowance, which people can take from their savings to pay for advice, “looks very similar” to adviser charging.

As reported in Financial Adviser last month several big name providers have said they do not facilitate adviser charging and have been unable to confirm whether they will offer the allowance.

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But Mr Cameron said Aegon’s systems would allow such a payment to be made.

“We are keen that the pension advice allowance builds on the functionality which many industry players, including Aegon, already have for adviser charging. We offer a ‘one off’ adviser charging facility even on our older products.

“Some providers have not built this functionality for legacy contracts and it is much less common for trust-based schemes or for schemes not run by life companies. In these circumstances, offering the allowance will involve new functionality and may be slower to be introduced.”

Mr Cameron also questioned whether advisers will be able to use adviser charging as a means of being paid for advice on Lifetime Isas or within the secondary annuity market.

Under the Lisa, withdrawals before the age of 60 – other than for a first house deposit or in the event of a terminal illness – will result in a claw back of the government bonus and also attract a 5 per cent exit charge. Aegon has also called for adviser charging to be exempt from these penalties.

Within the secondary annuity market, advisers will be barred from remuneration through commission, but Mr Cameron said it is unclear if adviser charging through a deduction from a product could work here.

“While we don’t currently support allowing penalty-free withdrawals for other life events, we do see a need to allow adviser charging to be deducted penalty free,” he explained.

“This will be particularly important once funds build-up and individuals need advice on investment matters, a time when we would encourage people to seek advice.

“With the government creating new products and markets, it’s important advisers have appropriate ways of being remunerated for the role they play and that individuals continue to be encouraged to seek advice.”

Adviser view

Jonothan McColgan, director of Bath-based Combined Financial Strategies, said: “I don’t think £500 is going to get you very far but it is a start in the right direction.

“It would have been an easier solution to allow adviser charging across all pension products.”