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Half of business owners have no pension plan

Almost half (46 per cent) of UK business owners – or 1.3 million people – have no private pension savings to support them in retirement, research finds.

Almost half (46 per cent) of UK business owners – or 1.3 million people – have no private pension savings to support them in retirement, research finds.

Of those who have failed to make any private pension provision, more than half (54 per cent) say this is because they simply could not afford to set money aside, according to research from Prudential.

Nearly one in five (18 per cent) say they don’t have a pension because they will never retire, and 9 per cent claim they have sufficient funds in a company pension from previous employment.  

Nearly one third (29 per cent) of business owners, or 792,000 people, say they will be entirely reliant on the state pension when they come to retire, compared with just 16 per cent of people across all employment types retiring this year in the UK.  

Other self-employed workers will supplement their retirement incomes with money from a mix of alternative sources: 48 per cent will draw on other savings and investments, 25 per cent will use equity from their properties, 25 per cent plan to use their partners’ pensions, and 19 per cent plan to use funds from the eventual sale of their businesses.  

Of those business owners who don’t have a pension, the majority of respondents (63 per cent) don't plan to start one in the future.  

Only 13 per cent say they are planning to start a pension and just under a quarter (24 per cent) are undecided.  

Stan Russell, retirement expert at Prudential says that it is sometimes hard for self-employed workers to distinguish between their business and personal finances.

'Often, investing in the business takes priority over saving for retirement – an issue that is particularly prevalent now, given the tough economic conditions facing UK businesses.

'Unfortunately, the long-term implications of not saving for retirement are that many retirees will have a real income shock and reduced living standards when they finally retire. And while a number of business owners say they don’t need a pension because they’ll never stop working, this optimistic approach won’t always be realistic – for example because of health issues later in life.'  

See also: Employment law for business owners

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