Pension providers are shunning a government to fund financial advice for retirement savers put forward by Chancellor Phillip Hammond in his spring budget.
He offers every UK pension saver the chance to draw £500 towards consulting a professional adviser across three separate tax years.
The total pension advice allowance adds up to £1,500 and is treated as a tax-free withdrawal from a pension.
Expats can also access the tax break when seeking advice about their UK finances.
Although the allowance has been open since April, most mainstream pension providers are no offering the tax break and few financial advisers recommend taking the money to clients because their advice fee comes to more than £500.
No obligation
The tax break rules also allow an employer to top-up the money with another £500, but retirement savers cannot access this amount without their pension provider taking part in the scheme.
Aviva, Aegon, Fidelity, Legal & General, Prudential and Royal London are not offering the allowance.
Pension providers do not have to offer the facility.
Most say the reason behind their action is that they have had no demand from customers, and some, such The Prudential, are lining up their own paid-advice services.
Providers are also complaining that keeping track of the service is difficult and costly.
Aegon explained the company supported the principle but demand had ‘failed to take off’.
Who offers the £500 allowance
Standard Life, LV= and Hargreaves Lansdown do offer the tax break, with Scottish Widows proposing to join them later in the year.
“With more people saving, and more choice about how to use those savings, the need to offer people support in making the choices that are right for them has become more pressing,” says the government.
“However, the high quality financial advice available in the UK is not always accessible or affordable for individuals with lower levels of wealth and the government wants to ensure that those who want or need to are able to access financial advice to help them make these decisions.”
Official figures show only one in five retirement savers know how much their pension is worth and one in seven would feel more confident planning their finances with the help of an adviser.
