The two million small business owners in the UK aged over 50 could access more than £250bn from their pension pots to fund growth in their businesses, according to analysis from Clifton Asset Management.
On the eve of the fourth anniversary of Pension Freedoms, the analysis also found that to April 2019, so-called ‘olderpreneurs’ have used Pension Freedoms to access almost £1.5bn (£1.45bn) from their personal pension pots to fund new ventures.
ONS data published in March 2019 showed that the over-50 business owners have set up more businesses than any other age demographic in the last decade – rising by over 700,000 from 1.47 million in September 2008 to almost 2.2 million in December 2018.
Further analysis of ONS data published on 28th March 2019 by Clifton Asset Management, also finds that although 30% of olderpreneurs have no personal pension wealth, the remaining 70% (over 1.5 million) collectively have access to over £250bn in small business finance from their personal pension pots.
From the age of 55 olderpreneurs can use Pension Freedoms to access funds from their pension pots, but Clifton Asset Management points out that while using their tax free allowance to fund a business may be taking the right strategic decision, for larger pension investments, they should seek advice, and consider Pension-led funding (PLF), which has funded over 2,500 businesses.
Adam Tavener, chairman and founder of Clifton Asset Management and Pensionledfunding.com, said: “Study after study has shown that olderpreneurs run more successful businesses, generate greater profits and create more jobs than their younger counterparts. But many have done this with one arm tied behind their backs because of a difficulty to fund growth due to strict lending criteria penalising older business owners or they have the majority of their wealth tied up in property.
“There is a real opportunity here to invest pension wealth in successful businesses with more than £250 billion sitting in the pots of businesses owners aged over 50. Done properly, Pension-led funding provides older entrepreneurs with significant amounts of growth capital by strategically redeploying their pension savings. The benefits of this approach to the UK economy are evident.”