Bosses need to focus on their pensions too

QAThe results of the Haines Watts owner-managed business survey struck a chord. Many business owners do not have adequate pension provision. Is there a solution for the one third of business owners that do not? PENSION rules have been a political football so it is not surprising many business owners have disengaged from the concept. However, pensions play a key role in providing for a family’s future while providing opportunities for reducing the tax burden.

Pensions are complex but an independent financial adviser (IFA) will turn the rules into easy to understand, practical advice.

I know there are concerns about the cost of using an IFA but advisers are today more transparent and initial advice may even be obtained for free.

A frequent point made by owners is that they would be better off investing directly in property rather than pensions.

A city centre apartment might well sound appealing but getting your pension to invest in a property orientated fund is likely to have generated better returns over the years than direct investment in property.

It also has a lower risk and less hassle.

While we read of remarkable property investment returns, less publicised are properties that fall in value.

The final point is affordability. If a business owner has no surplus cash they will be unable to make pension provision but not making adequate pension provision because the business can’t afford it is little different to not paying yourself properly.

Most people massively underestimate how early they need to start making provision, as well as the contributions required to give them the income in retirement they desire.

In short, focus on what you want out of your business – and structure it to deliver it.

And if you do achieve a handsome sale, think how much better off you will be with both.