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People approaching retirement should be given early access to a small part of their pension pot to pay for regulated financial advice, the Financial Advice Market Review (FAMR) has recommended.
The report, out this morning, has called on the government to allow consumers access to their pensions to redeemed against the cost of taking regulated financial advice.
FAMR wants the Treasury to allow direct contribution savers to withdraw about £500 towards the cost of advice five or ten years before they are due to retire.
It said this would “ensure that consumers can access financial advice at a key milestone in their lives and feel confident in making financial decisions as they approach retirement”.
FAMR – a joint HM Treasury and Financial Conduct Authority review of the advice market – was launched in the wake of the government’s pension freedom reforms, which allowed all defined contribution savers unfettered access to their savings from age 55.
It aimed to find ways of closing the ‘advice gap’ brought about by the Retail Distribution Review, which banned the use of commission-based charging and pushed many advisers upmarket to serve more wealthy clients willing to pay the upfront fees.
The government had introduced a free guidance service for those at point of retirement but take-up rates have been low and the Treasury thought it important for savers to be able to access regulated advice if they needed.
FAMR also wants employers to play a bigger role in supporting the financial health of their staff.
It called on the FCA and The Pensions Regulator (TPR) to develop and promote a new factsheet to set out what help employers and trustees can provide on financial matters without being subject to regulation.
It also urged the Treasury to explore ways to increase the existing £150 income tax and National Insurance exemption for employer-arranged advice on pensions.
The post FAMR: Retirees should get early access to pension cash to ‘pay for advice’ appeared first on Retirement Planner.
