'Can I access my pension early to pay for financial advice?'

I have an upcoming meeting with an independent financial adviser (IFA) as I want to explore purchasing a short-term annuity. 

I am aware that there is a pensions advice allowance, is this £500 per pension pot?

Ian from Lincolnshire

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Joanne Padilla, Which? money expert, says…

The pensions advice allowance was introduced in April 2017 and it lets you withdraw up to £500 from your pension savings to put towards the cost of retirement advice. 

You can do this before you retire or reach the minimum age for accessing your pensions (currently 55, rising to 57 in April 2028). Crucially, you won’t pay any tax on the withdrawal.

Unfortunately, the allowance isn’t per pension pot. Instead, this £500 allowance can be used three times, which is designed to allow you to access retirement advice at different stages of your life. 

You can only use the allowance once per tax year. It can only be used by people that have a defined contribution pension: the scheme is not available to those who have a defined benefit or final salary pension.   

You can buy an annuity without paying upfront fees, by using a broker, as they are often paid commissions. Make sure your broker is searching the whole of the market so you’ll get the best deal. 

Be warned that, unlike an independent financial adviser, they won’t necessarily consider your entire financial situation, or give financial advice. Instead they’ll list the most suitable providers, leaving you to make the final decision.

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