Half of firms offering retirement advice have seen an increase in demand because of changes to the lifetime allowance.
The research, commissioned by Aegon, found advisers face a challenge in offering personalised recommendations to clients affected by the changes of the LTA.
Chancellor Jeremy Hunt confirmed in the Autumn Statement that the lifetime allowance will be abolished from April 6, 2024 despite concerns from the industry that more time was needed.
Savers will have their lifetime pensions tax-free cash capped at £268,275 under the Finance Act published on November 27, 2023.
Previous plans to tax beneficiaries who took death benefits as income were scrapped which have offered relief to some.
However, Steven Cameron, pensions director at Aegon said pressure continues to pile on advisers as advice around the LTA remains difficult.
Cameron said: “Some clients will want to discuss if the removal of the allowance means it makes sense to pay further contributions into their pension this tax year.
“Others may want advice on the pros and cons of crystallising their pots now, particularly if already above the lifetime allowance and without any protections.”
Cameron pointed out clients may have growing concerns about their pension pots as the Labour Party previously said it plans to reinstate the LTA if elected meaning they have a limited timeslot.
Stuart Ritchie, managing partner at GSB Capital said it was "no surprise" that firms were seeing an increase in demand.
He said: “The continued tinkering with allowances plus the added complexities following the abolition of the lifetime allowance mean that there can be huge financial benefits in receiving personalised advice especially if you are approaching retirement or able to contribute significant sums to your pension plan."
However, Alastair Black head of savings policy at Abrdn warned that the demand for extra help is likely to go beyond the end of this tax year depending on the circumstances and needs of the client.
He said: “For those wanting to take benefits the rules on tax free cash and death benefit allowances are complex and some could benefit from taking action now, while some may benefit from waiting until next tax year.”
alina.khan@ft.com
