Treasury clueless on advice allowance uptake

Treasury clueless on advice allowance uptake

Months after being launched neither providers nor the government appear to have data on how popular a key measure introduced following the Financial Advice Market Review has been.

The pension advice allowance was launched four months ago to allow savers to pay for pension advice by accessing up to £1,500 of their retirement savings.

It was a central initiative of the Financial Advice Market Review - orchestrated by the Financial Conduct Authority and HM Treasury - designed to help more people who may not be able to afford to pay for advice from their disposable income.

But it seems no-one is keeping track of whether the programme is actually working.

A spokesperson for HM Revenue & Customs said the tax body had not collated data on how many times the pension advice allowance had been used.

This was because there had been no reporting requirement included in the rules to avoid putting more burdens on business.

But providers have also been unable to offer solid figures on the measure’s usage beyond statements saying take-up has been low.

A spokesman for Legal & General said: “While we are supportive of the pension advice allowance, we have had very little request for this from customers since its introduction in April this year.

“This is something that we can see increasing over time but at this early stage we do not have enough evidence to say whether it is yet making a significant difference, to the level of pension savers seeking advice, across the marketplace.”

Standard Life and Aviva also said it had seen “little demand” since it was introduced.

Both companies said they did not have figures on how many times it had been used and did not respond when asked whether this was because they weren’t collating them.

Scottish Widows and Aegon also said they had not seen demand and did not provide figures.

HM Treasury originally intended to allow the tax-free withdrawal of a single £500 payment but increased this to three withdrawals of £500 after a consultation period.

In May HM Treasury stated it is the responsibility of providers to market the allowance, but none of those said they had any firm plans to do so.

HM Treasury was asked how it would establish if the allowance had been a success, whether it would deem its first months successful and whether the allowance would remain available if usage remained low, but it did not respond.

But a spokesman for HM Treasury said: "We want to help people understand their pensions so they can plan for a comfortable retirement.

"That’s why, on 6 April this year, we introduced the pensions advice allowance so people can withdraw up to £500 tax free from their defined contribution pension pot to pay for pensions and retirement advice.

"Providers now have the tools they need to help consumers use this allowance and support them to make the best financial decisions for later in life."