The pension advice allowance was launched back in April 2017 and allows savers to pay for pension advice by accessing their pension savings in three instalments of up to £500 each. The allowance was one of the key initiatives of the Financial Advice Market Review that was conducted by JM Treasury and the Financial Conduct Authority and was designed to help more people get access to pay for financial advice who may not have been able to afford it from their disposable income.
However, in recent weeks, growing numbers of industry experts have been calling for the allowance to be reformed. The Personal Investment Management and Financial Advice Association (Pimfa) said in its response to the current Work and Pensions select committee inquiry on pension costs and transparency the allowance should be increased or consolidated into a £1500 lump sum.
Simon Harrington, the senior policy adviser at Pimfa, told FT Adviser that greater take-up of advice could only be achieved if people understood its "implicit value", therefore initiatives such as the advice allowance were a way to achieve this.
Tom McPhail, head of retirement policy at Hargreaves Lansdown also called again for a change to auto enrolment that would allow people to take more charge of their pension pots. He said that under the current system, people were at risk of losing their pensions, particularly when they changed employers.
He told FT Adviser: "It is vital that people know what they have and where it is. When people auto enrol, another pension pot is set up for them automatically and it is very easy for people to lose track of where their money is."
"When people start a working under a new employer, they should be able to ask their new employer to put money into one of their existing pension pots."