Mace and Jones made its remarks as the government unveiled its much-vaunted pensions bill, which confirms that the retirement age will be raised to 68 by 2046. Surveys by the Office for National Statistics reveal the proportion of the self-employed paying into a pension plan dropped from 64% to 49% between 1998 and 2004. Significantly, the figures suggest that more than half of self-employed women lack private pension provision of any sort.
Mace and Jones pension law specialist Roderick Ramage said he is concerned about the retirement provision of business owners.
ìThis is a serious problem particularly as a pension scheme can be a tax efficient way of directing savings back into a business,í he said. ìBut the bottom line is that business owners are entirely reliant on their own resources for making plans to save for their retirement. But many bosses are failing to apply the same rigour and discipline to organising their personal finances as to the running of their business. As a result entrepreneurs are seriously underestimating how much money they need to fund an early and comfortable retirement. For example many are failing to seek advice on how to protect their finances when they get married. It should not be forgotten that if a marriage breaks down a spouse can claim against their partnerís firmís assets even if they have never even set foot in the business.î
Mr Ramage said one of the mistakes small-business owners make is to assume that they will be able to use their business as a source of retirement finance.
ìPeople think that they can retire comfortably by selling their business,í he said. ìBut the harsh reality is that as retirement approaches, many small-business owners find that their business is not as saleable as they thought. Frequently the problem is that the business owner is the chief asset and without them the business is worth little. It is therefore vital that entrepreneurs plan properly for their retirement and ensure this plan is reviewed when there are changes to the tax regime, pension law and life circumstances ì
Pensions: Business owners failing to provide for retirement
A law firm is warning business owners to beware of failing to put aside enough money to provide for their retirement
