View more on these topics

Kim North: We need a national adviser panel on pension policy

Kim North

After eight weeks of consultation, the Treasury last week decreed that three amounts of £500 can be taken from a pension fund throughout a lifetime to pay for regulated financial advice.

The pension advice allowance can only be used by “defined contribution pensions and hybrid pensions with a defined contribution element, not defined benefit or final salary type schemes”.

Hybrid pension schemes are complex, as you must know about the DB and DC elements of them before any advice is provided. Those with considerable DB benefits in a hybrid scheme can use the pension advice allowance, but it will need to be taken from the possibly small DC element.

It is a shame DB scheme members cannot benefit from the allowance, never mind from the pension freedoms.

Advisers will need to check previous advice sessions – face-to-face or not – to ensure the maximum allowance has not already been redeemed or they could put their client at risk of an unauthorised payment charge.

With the advent of robo-advice, there is a risk people could lose track of whether they have used their three allowances. After all, the majority of pension holders do not even know what funds they are invested in or the charges they pay.

Meanwhile, it is a shame the good guidance services like The Pensions Advisory Service cannot benefit from the allowance, with their services remaining free. Any marketer will tell you that things are valued more when there is a value attached.

I would like to see a national panel of advisers of all different sizes and charging bases to be consulted by those that set policy. Why? Because advice firms in the main are self-owned SMEs, which do not have the luxury of time to prepare detailed responses to wider industry consultations. Less than a handful of advisers responded on the pension advice allowance introduction.

But it is advisers that need to undertake all the procedural checks and administration to make this new initiative work. Will good advisers actively offer this to their clients? I think not. The compound interest effect of taking £1,500 out of pension fund could be considerably damaging to the final value at retirement.

Also, the administration of this allowance could eat up a big part of each £500 segment, simply by needing to contact those providers that are slow at responding. Advice needs to be provided for the instruction in terms of which fund is to be cashed in to secure the money, and then a record created to last a lifetime.

So, do I think the allowance is a good idea? Yes, I do. But many good advisers simply will not partake in it. Please, policymakers, listen to advisers. Only they know whether initiatives like this will be offered or not.

Kim North is managing director at Technology & Technical



Advisers sceptical on value of Govt pensions advice allowance

Advisers have expressed doubts that the Treasury’s new pensions advice allowance will see more individuals taking advantage of full financial planning. The Treasury said last week that instead of being able to take £500 early from a pension to seek advice as was originally planned, consumers will now be allowed to draw £1,500 in three […]

Griffith-Jones-John-FCA-2013 700x450.jpg

FCA chair: Advice and guidance divide has been blurred by technology

Defining advice and guidance has become more difficult as technology has progressed, the FCA’s chairman has said. In a speech to Cambridge’s Judge Business School last night, John Griffith-Jones said understanding what should fall within the regulator’s remit had proved a challenge in recent years, for example where the process for setting Libor rates and […]

Lifetime ISAs – International Evidence

By Fiona Tait, Pensions Specialist Since the announcement in March, the Lifetime ISA (LISA) has attracted controversy. Heralded as a saviour for the self-employed and the young wanting to get on the housing ladder, the new LISA risks adding confusion for savers trying to fully understand the benefits of new workplace pension savings through auto-enrolment. To […]


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. Happy to volunteer we have had far to many pontidicators and not enough real advisers
    Provider reps are not going to take matters forward

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm