Up to 1.3 million people could miss out on £236m of potential tax savings if pension advice vouchers do not see greater take-up before April 2018, VouchedFor has warned.
The adviser directory said the new scheme has received relatively little attention since its introduction in November of last year.
The pension advice vouchers allow people to sacrifice up to £500 taxable salary per year in return for a tax-free payment from their employer, which reimburses them for any fees paid for pension advice.
It works like other salary sacrifice schemes, such as childcare vouchers or cycle to work, which allow employees to swap taxable salary for a non-taxable benefit in kind.
VouchedFor said this could save advised clients up to £310 a year in tax and national insurance. If more employers do not take notice of the scheme before the end of this tax year, however, it warned, 1.3 million clients could miss out on an average saving of £187 in the 2017/18 tax year.
The adviser directory introduced pension advice vouchers in December 2017, which it said has been the only pension advice salary sacrifice scheme to launch in the wake of the legislation.
“Access to good financial advice is so important right now but very few employers yet offer this benefit,” said VouchedFor’s managing director Adam Price, who wants to see clarification of “confusion” around the rules.
He explained: “First, it should be clear this legislation is entirely separate to the pension advice allowance – enabling people to fund £500 advice from their pension up to three times in a lifetime.
“Second, advisers need to be clear on which fees are eligible – fees that cover advice on general financial and tax issues related to pension saving or income are eligible. If fees have already been taken from the pension fund, they are not eligible.
He added: “Of course, advisers should only be doing that where the advice relates exclusively to that particular pension arrangement, rather than more generic tax and planning issues.”
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