Trustnet Magazine Issue 34 November 2017 | Page 12

/ PENSIONS ADVICE ALLOWANCE /
beyond that, it only really works
as a contribution towards more
comprehensive advice.”
“It’s better than nothing, but
limiting it to pensions advice
is a challenge,” she adds. “Good
advice should encompass all of
your finances and the current
arrangement could make life
Pension providers are already
under pressure to improve
support for freedom and choice
reforms, tighten up governance
and reinvent default funds for a
new way of retiring. It is unlikely
reconfiguring administration to
support the allowance will be at
the top of many to-do lists.
“If someone has complex
financial affairs, it’s unlikely that
you will get to the root of their
needs in the adviser time covered
by £500”
difficult from a financial adviser’s
perspective.”
The pensions-only focus of the
advice that the allowance can
fund is an issue, but an even bigger
problem may be getting £500 out
of a member’s pension pot in the
first place.
“Schemes and providers are not
required to implement access to
pension savings for the allowance,
so it’s unlikely all of them will,”
says Falvey. Payment has to be
made directly from a pension fund
to the adviser – it is not paid to the
individual.
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“Access will be driven by
consumer demand,” says Tim
Gosling, policy lead: DC for the
Pensions and Lifetime Savings
Association. That has been low
so far, but the allowance has only
been available for six months.
“It is too early to tell what the
demand and response will be – in
18 months, it might be time to
realistically review this,” Gosling
adds. But that risks creating a
vicious circle: providers don’t offer
it because there’s no demand, but
consumers don’t use it because their
provider hasn’t enabled it.
Given the restricted size of the
withdrawals, muted enthusiasm
from providers and narrow focus
of the advice it can fund, does the
Pensions Advice Allowance have
a future?
Harrington believes that, with
some adjustments, it could deliver
greater benefits. “We would like
to see a relaxation in how you can
access it. It would be better if it
could be accessed as a single lump
sum rather than over three separate
tax years. If someone has complex
financial affairs, it’s unlikely
that you’ll get to the root of their
needs in the adviser time covered
by £500.” Clearer signposting in
pre-retirement wake-up packs and
scheme documentation would also
help to raise awareness, he says.
In its present form, the
Pensions Advice Allowance is
a work in progress. However, if
it can offer confused workplace
pension savers a taste of advice
that helps them see the benefit
in buying more, then it will have
achieved a valuable goal. For more
knowledgeable savers familiar with
the advice market, the advantages
may be less pronounced – but “tax
free” is never a bad thing and the
allowance could still make a positive
contribution towards more inclusive
advice. The initiative may be far
from perfect, but it’s a step in the
right direction. 
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