The government has been called to double the tax exemption for pension advice arranged by employers.
In March, a report from CBI and Aegon showed that over half (56%) of employers believe that the government should see the tax exemption for employer-provided pension advice to over £500.
Now, provider Aegon has said that this amount is unlikely to cover the financial planning requirements of employees, urging the government to raise the tax exemption to £1,000.
At present, employees are subject to tax as a ‘benefit’ in kind where the advice costs over £500. However, as highlighted by pension head at Aegon, Kate Smith “Advice typically costs more than this which means employers are less likely to offer this valuable service.”
She went on to state: “Doubling it to £1,000 could remove that barrier and create an incentive for employers to offer further support.
Smith also mentioned that although many employers were implementing steps to promote the importance of later-life saving, many are concerned that this could veer into regulated advice.
“While many employers are taking positive steps to raise awareness and improve their employees’ engagement with workplace pensions, there is a very real fear among employers that they could stray into regulated advice if they try to promote their pension plans to staff.
“Greater clarity of what they can and cannot say would be helpful. It would be great if the regulators could revisit this as part of their joint pension strategy.”
