£250bn in pension pots could fuel older entrepreneurship

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. Seeking advice is particularly important as recent research found £3.2bn has been accessed by pension holders as a lump sum from pension pots without financial advice since the introduction of Pension Freedoms.

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.”

 Tavener added, “There is a real opportunity here to invest pension wealth in successful businesses with more than £250billion 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.”

A report published by The Forum of Private Business and Clifton Asset Management in 2017, found that over a third (38%) of Forum business owners would consider using their pensions as a business funding source. That same year, the Institute of Directors (IoD) called on the government to make it easier for business owners to invest their pension into their own business.

Ian Cass, managing director of the Forum of Private Business said, “The Forum of Private Business has seen growth in the number of older members starting new businesses, some as individual consultants, but also a significant number are growing their business from a one-person start-up to small businesses employing 5-19 employees.

These entrepreneurs bring a wealth of knowledge and expertise to their new business, and if they receive the appropriate support and finance to develop and grow, they are a significant contributor to the UK economy.”

The over 50s run more successful business

Statistics show that older entrepreneurs are more successful than those starting out younger.

• According to a survey by Age UK, the charity for older people, more than 70 per cent of businesses started by people in their 50s survive for at least five years compared to only 28 per cent of those started by younger people.
• According to research from the Cranfield School of Management, businesses run by owner-managers over 50 drive up revenues at their companies three-and-a-half times faster than GDP growth: 11.5pc compared with 3.1pc. Older entrepreneurs also create jobs at a rate more than seven times faster than the UK economic average.