UK savers planning their retirement were told in February they would be able to withdraw up to £1,500 ($1,893, €1,754) from their pension pots tax free to pay for financial advice from 6 April.
The Pension Advice Allowance (PAA), which was announced in the Autumn Statement in November, will enable people to withdraw £500 on up to three occasions from their pension pots to put towards the cost of pensions and retirement advice.
According to a House of Commons paper published on Tuesday, the provision will now be delayed until after the UK general election.
At 762 pages, this year’s Finance Bill – legislation that ratifies any tax changes announced by the chancellor in the Autumn Statement or Spring Budget – is the longest on record.
Since British prime minister Theresa May called a snap election for 8 June, UK chancellor Philip Hammond has been under pressure to delay or scrap a number of key changes in the bill so that it can be approved by parliament before it is dissolved on 3 May.
The government has also slammed the breaks on a number of key changes announced in the Spring Budget including the proposed cuts to the tax free dividend allowance, which was set to be slashed from £5,000 to £2,000 by April 2018.
The introduction of a ban on pension cold calling has also been pushed back, as has cuts to the Money Purchase Annual Allowance (MPAA).
Clarity needed
Tom Selby, senior analyst at investment platform AJ Bell, told International Adviser: “The general election has thrown the future of a number of key financial services policies in the air, including the introduction of the Pension Advice Allowance.
“The government needs to give urgent clarity to advisers and savers about whether the new advice allowance can be used without the accompanying legislation. As things stands people will be understandably nervous about accessing their pension early to pay for advice because, under the existing rules, this would be an unauthorised payment and could result in a tax charge of at least 55%.
“Without this clarity, I expect very few people to make use of the Pension Advice Allowance.”
Contradictory move
Old Mutual Wealth pension expert Jon Greer said: “The Financial Conduct Authority last week announced that it would be reviewing the non-advised drawdown market because it is concerned about consumers that are at risk of failing to access the necessary help to make an informed decisions.
“And the Financial Advice Market Review, led by Treasury and the FCA, has found that employers want to do more to help their staff manage their finances.
