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Small business owners fear they will outlive their retirement funds

Many small business owners expect to retire beyond 70 and have a pension pot of under £500,000

45% of the UK’s small business owners are expecting to outlive their retirement funds, according to the Pensions and Small Business – Ticking Time Bomb or Hidden Treasure report from the Forum of Private Business and Clifton Asset Management.

The survey of 1,200 small business decision makers found that 42% expect to retire at or after 70 and 50% think they will have a pension pot of less than £500,000 to fund their retirement – a sum that would only pay out £25,000 per year.

63% of those surveyed said they believe their homes will help fund their retirement, despite prices-to-income ratio being close to an all-time high. At around £578,000 – more than double the national average – just London house prices are thought to be buoyant.

The report also found that Pension-led funding is still viewed with concern amongst business owners: while 30% had accessed business funding in the past and 59% think they will sell their business to fund their retirement, only 38% said they would consider using their pension now as a source of finance.

Ian Cass, of The Forum of Private Business, said: “With many pension pots not providing sufficient income for retirement, there’s a perception of ‘irrelevance’ or dead money by many pension-owning small businesses.

“Even though they don’t currently deliver adequate returns for many, we would encourage them to consider the risks and rewards of leveraging them in a smarter way in order to develop the value of their businesses.”

Adam Tavener, founder of Clifton Asset Management, added: “There’s a lack of education being proffered by the advisory community and a lack of innovation among financial services providers. A knowledge-based approach is essential to drive good decisions for small business owners to make the most of their pensions and fulfil their business and retirement expectations.”

Henry Williams
Henry Williams

Henry has been writing for since 2015, covering everything from business finance and web builders to tax and red tape. He’s also contributed to many of our industry-renowned annual indexes, including Startups 100 and Young Guns, and created a number of the site’s popular how to guides. Before joining the team, he reviewed films for a culture website, and still harbours ambitions of being a screenwriter.


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