Employers are calling for help from the government when it comes to providing pension advice to workers, a new survey by a pensions provider has revealed.
Over half (56%) of businesses Aegon polled 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’.
If the value of advice provided exceeds this, the employee is liable for tax on the excess.
Employers are calling for the allowance to be doubled to £1,000. 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. More than half of those surveyed want to see the tax exemption increased.
Kate Smith, head of pensions at Aegon, says: “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.
Ms Smith adds: “Auto-enrolment has been a great start in getting more people saving for retirement but we need 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.”