From April, an individual can claim a £500 allowance from their DC pension scheme for advice.
The government is to introduce an allowance for advice in relation to defined contribution pension savings from April 2017. This will allow individual members of a defined contribution pension scheme to withdraw up to £500 tax-free from their pension schemes on up to three occasions during their lifetime, but only once in a tax year, to pay for retirement advice.
The allowance will be available in addition to the exemption for employer-arranged pensions’ advice to be introduced in Finance Bill 2017.
In summary:
- the allowance will be available at any age
- the allowance will be up to £500 on each occasion
- the allowance will be restricted to three occasions in the person’s lifetime
- the allowance will be restricted to one occasion for each tax year
- the allowance can be withdrawn from defined contribution pension schemes and hybrid pension schemes with a money purchase or cash balance element
- the payment of the allowance can only be made directly from the pension scheme to the adviser
- the adviser must be a regulated financial adviser
- the allowance can be used alongside the proposed tax exemption for employer-arranged pension advice.
Article from ACCA In Practice