Pension Freedom Reforms to Fuel Rise of ‘Later-Life Entrepreneurs’
More than 500,000 retirees plan to put off retirement in favour of starting a business, using the new pension reforms to fund their start-up
One in 10 people set to retire in the next 18 months intend to start a business or go into consultancy, following new pension freedom reforms which mean over 55s can access their pension in lump sums.
The new reforms enable anyone over the age of 55 to use their accrued pension fund in any way they wish, including taking their entire pension fund out in a single amount.
The research from AXA Wealth, which featured 1,500 UK residents, found that the average retiree’s pension fund was £550,000 and, of the one in 10 planning to go into business, 47% expect to use a quarter of their fund to obtain a tax-free cash injection to launch a company.
As a result of the new reforms, industries including is healthcare, transport and travel, professional services, manufacturing, IT, education, HR, arts and culture, retail and catering, and legal are all expected to see an increase in small business investment.
The research also highlighted how the pension reform will impact certain UK regions. The South West is expected to witness a rise in the number of restaurants and small tea shops with22 new businesses already planned, while the Midlands is likely to see a growth in manufacturing with 25 new production facilities currently under development.
For many retirees the pension reforms will give them the ability to follow their dreams of starting a business with 35% of respondents confirming that this is their top motivator. Other incentives underlined in the survey include monetising on a hobby (25%) and utilising skills and expertise acquired over a lifetime of work (19%).
Adrian Lowcock, head of investing at AXA Wealth, commented on the research;
“We’re seeing a revolution when it comes to retirement spending. The widespread concern that pensioners will blow their whole pension on a supercar feels exaggerated.
“Instead we are seeing a diverse approach; with the over 55s taking to the freedom and opportunities created by the pension reforms – in this case fuelling a whole new generation of later-life entrepreneurs.”
For more information on using your pension fund for business finance, check out our guide here.