The company claimed that the allowance, while ‘admirable’ in its aim of offering pension savers a new way of paying for advice on retirement planning has “failed to take off with either advisers or pension customers who continue to use the similar Adviser Charging approach designed by the FCA”.
It has been made allowable in legislation from April 2017.
Aegon said it is time for the Treasury and FCA to collaborate for the benefit of pension savers by bringing the best of adviser charging and the pensions advice allowance together.
Steven Cameron, pensions director at Aegon, said: “The Treasury designed the pensions advice allowance as a variant on adviser charging which the FCA introduced in 2014 as part of the Retail Distribution Review. The key difference is it can be used to fund advice on broader retirement planning whereas HMRC rules mean adviser charging can only be used for advice on the pension from which it is deducted.
“However, it falls short of adviser charging as the pensions advice allowance is limited to a maximum of £500 and can be used no more than 3 times, restricting its availability to fund typical initial advice costs and making it impractical for ongoing advice. We believe this is why the pension advice allowance has failed to take off.
“With state pension age continuing to rise, ready access to advice on private pensions has never been more important and we believe the Treasury, FCA and HMRC should work together to combining the best of adviser charging and the pension advice allowance. Allowing adviser charging to fund advice on broader retirement planning would be a major step forward for pension savers.”