Aegon has called on the government to double the tax exemption for employer-arranged pension advice.
A report from Aegon and the CBI in March found 56 per cent of employers think the government should extend the tax exemption for employer-provided pension advice to more than £500.
Now Aegon wants to see that exemption doubled to £1,000. The provider says £500 is unlikely to cover the financial planning needs for most employees.
The employer-arranged pension advice exemption is the amount an employer can spend on pension advice on each employee in a year without the person being charged tax on it as a “benefit in kind”.
Aegon pensions head Kate Smith says: “Under current rules, if the advice costs more than £500, employees are liable to tax as a ‘benefit in kind’ on the excess. Advice typically costs more than this which means employers are less likely to offer this valuable service. Doubling it to £1,000 could remove that barrier and create an incentive for employers to offer further support.
“While many employers are taking positive steps to raise awareness and improve their employees’ engagement with workplace pensions, there is a very real fear among employers that they could stray into regulated advice if they try to promote their pension plans to staff.”
She adds: “Greater clarity of what they can and cannot say would be helpful. It would be great if the regulators could revisit this as part of their joint pension strategy.”