The Employer Funded Pension Advice initiative reflects the Government’s desire to make financial advice more accessible to everyone, enabling pension holders to make informed choices about their pension savings.
An employer can cover the first £500 of pension advice provided to an employee – including former and prospective employees – in a particular tax year. The employer can pay the adviser or employee benefits consultant for their advice directly, or an employee can be reimbursed for advice they’ve funded without the payment being treated as a benefit in kind.
Any cost above £500 can then be met by the employee or continued to be covered by the employer. However, any additional cost covered by the employer above £500 will be treated as a benefit in kind and attract Income Tax and National Insurance.
We see employers offering to cover the first £500, and then any further cost can be met by the employee.
Advice can cover all of the employee’s pension arrangements and is not restricted to the workplace pension offered by the employer. It can assist with general financial and taxation issues relating to those pensions.
The Income Tax and National Insurance exemption applies where the advice is made available generally, or to specific employees of qualifying age, or on the grounds of ill-health.
Full details of the conditions can be found at www.gov.uk/hmrc