Nearly half of Financial Planners (49%) who offer retirement advice report that recent pension tax allowance changes have spurred a boom in demand for advice, according to a new study.

The changes include the abolition of the Lifetime Allowance and the increase in the Money Purchase Annual Allowance.

Despite the Finance Act published on 27 November providing some clarity on how the Lifetime Allowance (LTA) is being removed, advice around it continues to be to be fraught with difficulty as the Labour Party initially said it would reinstate the LTA if elected, according to the report from NextWealth.

Steven Cameron, pensions director at Aegon, said he expects advisers to continue to see increased demand as the tax year end approaches.

He 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. This could prove very tax efficient although they need to understand that if already over the previous lifetime allowance, they’re unlikely to accrue any additional tax-free lump sum entitlement.

“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. While there is no immediate need to do so, particularly before the end of the tax year, some may have concerns that an incoming Labour Government could reinstate the allowance, meaning they have a limited timeslot for crystallising without facing a lifetime allowance charge.”

Areas of advice where Aegon expects Planners to see increased demand as a result of the new changes include:

• Supporting those at or above the previous allowance who had registered for protection before 15 March 2023 to consider paying in additional contributions in the 2023/24 tax year without losing protections.
• Looking at the pros and cons of crystallising benefits this tax year or ahead of the Election for those at or above the previous allowance without protection.
• Explaining the new tax-free lump sum allowances applying on lump sums available when benefits are taken and payable on death.

• NextWealth surveyed 200 financial advisers in November.