Employers in the UK are calling for doubling the employer-arranged pension advice to £1,000
Employers in the UK are calling for increasing the employer-arranged pension advice, according to a new survey by a pensions provider. The survey by Aegon found that employers are calling for the allowance to be doubled to £1,000. It was found that employers are calling for help from the government when it comes to providing pension advice to workers. More than half of business polled by the pensions provider (56%), say the government should increase tax exemptions on advice.
The employer-arranged pension advice exemption is the amount an employer can spend on pension advice per employee each year without the individual having to pay tax on the advice as a benefit.
Currently, up to £500 worth of pension advice can be provided to employees without individuals incurring tax as ‘benefit in kind’. The employee is liable for tax on the excess if the value of advice provided exceeds this amount.
Employers are now calling for doubling the allowance to £1,000 as they say the current limit is not enough to help individuals effectively plan their pension.
The cost of financial advice varies from £75 to £350 an hour, with the UK average being £150 an hour.
Head of pensions at Aegon, Kate Smith says that employers play a vital role in the retirement savings of their workforce, but they need a helping hand from the government. She says employers also need greater clarity around the information they can provide to employees, and many fear falling foul of the regulator by getting it wrong. She adds that auto-enrolment has been a great start in getting more people saving for retirement but there should be an effort to try to change people’s mindsets and get them starting to think earlier about their pension. Helping people access advice via the workplace could make all the difference.