Introduced in April, the pension advice allowance gives savers the opportunity to take £500 ($661, €558) tax free from their retirement funds to help pay for financial advice.
It was launched in response to a regulatory review that found the high cost was putting people with smaller pots off getting advice.
According to the Financial Times, most leading pensions providers in the UK are not offering the tax break to their customers and have not upgraded their systems to be able to cope with the change.
Some insurers cited a lack of demand, saying that the initiative had not “taken off” with customers and advisers.
Not a requirement
Companies are not obliged to offer the financial advice allowance and some do offer their customers access to HM Revenue & Custom’s adviser charging facility, which enables them to pay for advice costs directly from their pension pots.
Typically, however, this advice is linked to a providers’ own products and does not cover competitors or wider retirement planning.
Providers that are making the pension advice allowance available to customers include Standard Life, Hargreaves Lansdown and LV=.
