Are you being denied a right to pensions advice?

Some of the biggest players in the pension market are refusing to provide customers an allowance to which they are entitled or flag that it could help them secure tens of thousands of pounds more in retirement.

A £500 allowance can be drawn tax-free from a defined contribution pension pot up to three times in separate tax years to put towards professional financial advice, giving a saver of any age £1,500 to plan for retirement.

With professionals charging an average of £150 an hour for advice, according to Unbiased, a directory of advisers, the allowance could pay for up to 10 hours of guidance.

But despite being introduced more than a year ago, many providers are still not offering it, or are restricting the pension holders who can access it. Some have told customers they were unaware of the initiative.

Aviva, Standard Life and Scottish Widows, which look after billions of pounds of British pension savers’ retirement money, refuse to offer the allowance across all their pension products. Prudential, one of the biggest pension providers, does not offer it at all, and nor does Old Mutual Wealth, now called Quilter.

In a mystery shopping exercise carried out by advice firm Drewberry, one of its researchers posing as a policyholder was told by an AJ Bell Youinvest representative that they were unsure what the allowance was.

An AJ Bell spokesman confirmed to Telegraph Money that it did not offer the allowance. The only firm Drewberry spoke to that said unequivocally it did offer the allowance was Hargreaves Lansdown.

Pension companies’ refusal to deliver on their customers’ rights could have dire consequences for a saver’s pension fund.

Those who receive financial advice are on average £40,000 better off than those who don’t, according to research by think tank the International Longevity Centre and pension provider Royal London last year.

All of the pension providers that do not offer the allowance told Telegraph Money that it was due to low customer demand and because it was difficult to run such a service.

But with neither the Government nor the industry publicising the valuable allowance, a “catch-22” situation has arisen: pension firms won’t offer it until there is demand, and customers aren’t demanding it because they are unaware of it.

A spokesman for Scottish Widows said the majority of its customers could receive the advice allowance, “but so far we have seen very little demand”. Customers with a policy that doesn’t allow access to the allowance can switch to a newer Scottish Widows one that does without penalty.

Prudential said it “supports the principles of the pension advice allowance” and had “investigated” making it available but had decided against it, citing “minimal demand from consumers” and saying it was “complicated to administer”.

A spokesman for AJ Bell said the advice allowance was “not as simple for providers to offer as you might assume” because “the checks and controls providers have to put around it require resource and development”.

Quilter and Aviva said they offered customers alternatives to the advice allowance. Prudential, Quilter and Aviva pledged to review their position if demand increased.

Tom Conner of Drewberry said: “Pension companies should really be doing better to help their customers, especially as taking advice tends to lead to higher levels of savings.

“Right now, some consumers can access this tax-free allowance and others can’t, it just depends which pension provider they are fortunate, or unfortunate, enough to have their savings with.”

Pension firms are failing customers by denying them access to tax-free advice, writes Laura Miller

Some group personal pensions, unlikely on older policies. Not on individual pensions

Yes

Some newer individual and group self-invested personal pensions Newer group personal pensions and some individual pensions. Customers can switch free of charge to newer policies that do offer the allowance

No

‘I sold at a £15,000 loss’