A scheme allowing savers to claim salary sacrifice on up to £500 spent on financial advice has been launched by VouchedFor.
Pension advice vouchers will allow employees to spend up to £500 of their pre-tax earnings on advice, meaning they could save as much as £310 on fees each year, depending on their rate of income tax.
Advisers will need to be members of VouchedFor and will be able to initiate the process by entering their client's email address into the system and inviting them to collect their voucher to pass on to their employer.
The launch was made possible by legislation included in November’s Finance Act, which permits employers to fund or reimburse the first £500 per year on pension advice for an employee, as a tax-exempt benefit eligible for salary sacrifice.
Adam Price, chief executive of VouchedFor and Hatch Financial Planning, said: “With pension advice vouchers, VouchedFor, Hatch and thousands of advisers across the UK working in unison, we can make financial advice more appealing, affordable and accessible to employees everywhere."
A survey by VouchedFor found 74 per cent of independent financial advisers were aware of the new legislation, but a mere 10 per cent have so far acted on it to some extent to help their clients.
The firm believes adoption has been low due to the administration work involved for both employers and advisers in verifying employees' requests.
According to Mr Price the system he has launched will do much of the work for the users, without the need to connect advisers and employers directly.
Mr Price said: “Pension advice vouchers removes the hassle of advisers and employers having to verify reimbursement requests with one another.
“It takes IFAs just seconds to log in to VouchedFor, invite their clients to claim a voucher, and verify that the advice falls within HMRC's eligibility criteria."
Employers will not be forced to participate in the scheme but Mr Price said experience had shown there was a widespread interest in workplace savings schemes.
Robert Forbes, Chartered financial planner at Stadden Forbes Wealth Management, was not so sure.
He said: "The issue with that will be how many HR departments are going to be able to easily deal with that. It will be interesting to see the take up rates in six months’ time.
“It makes perfect sense. If it is hassle free then fine.”
He said another way would be to take the money out of the pension, which would effectively be tax free as well.
He said: "I can’t see where there is much difference. Perhaps it will work with pension pots where adviser charging isn’t suitable."
Advisers have been able to deduct charges from pension funds as long as they were used for advice on that scheme, however this would not apply to more "holistic" forms of advice, Mr Price said.
There is also a new £500 advice allowance which allows clients to withdraw the funds to pay for advice, however that is restricted to three times over a lifetime, he added.
carmen.reichman@ft.com
