Former Treasury select committee chairman Lord McFall is calling on the Government to provide greater subsidies to encourage more people to take financial advice.
Under current rules, pension advice worth £150 a year can be offered as a tax-free benefit to employees who sign up to a corporate scheme. However, if the cost exceeds £150, the whole amount will be taxed. McFall, who is chairing the workplace retirement income commission, wants the Government to provide a greater subsidy.
Speaking at the Money Marketing Investment Summit in Bedfordshire last week, McFall said: “It is a good idea for the taxpayer to subsidise advice to poorer people. The current legislation for advice on pensions allows people to get £150 worth of advice. I think there is room for that in the rest of the financial advice area.
“We have lost the savings culture in the UK. We need to bring that back and bring people into the financial community. The way that society is organised means that those who are financially excluded are socially excluded too.”
Evolve Financial Planning director Jason Witcombe says: “It is a good idea for taxpayers to subsidise advice. I think the way it would work is through the workplace, offered when employees go through life changing events like starting work, getting married and having children.
“Perhaps a tax break for employers who pay for financial advice or offer a scheme where employees can access advice on a subsidised basis would be useful. It is more valuable for employees to get decent advice than it is for employers to pay into a pension for them.”
Skerritt Consultants head of investments Andrew Merricks says: “It is a good idea but it will never happen. The taxpayer is not going to be able to afford to subsidise anything new for a long time.”
Aifa director of policy Andrew Strange said: “In this tough economic period we must do all we can to help people re-engage with their long term financial well-being. Access to independent financial advice is incredibly important in this process and we welcome the comments from Lord McFall.”