£100bn pension boost for entrepreneurs
THOUSANDS more company owners are expected to use their retirement savings to back their firms after pension freedoms came into force last week.
Bristol-based Clifton Asset Management’s website, pensionledfunding.com, has enabled more than 2,000 owners of small and medium-sized firms, from a stonemason to a Costa Coffee franchise, to invest in their companies using their pensions.
Chairman Adam Tavener said the rules will ‘have a significant impact on the awareness [of using pension funds for a business] and so probably the capturing of new business’. Pension-led funding allows SME owners and directors to reinvest pension funds into their business ventures through a self-invested pension plan or a small self-administered scheme.
Tavener claims that with pensions in the news, £100billion could be sourced through such schemes. The 2014 UK Alternative Finance Industry report, produced by innovation charity Nesta and the University of Cambridge, found pension-led funding – where intellectual property is often used as collateral – supplied £25million of finance to SMEs in 2014 at an average sum of £70,257.
Husband and wife Graham and Kate Holbrook turned to Pensionledfunding, which won best alternative funding provider at the Business Moneyfacts 2014 Awards, for their recycled silk and cashmere business, Turtle Doves, based in Shrewsbury.
Clifton helped them create a director-owned SSAS in July 2014 using a £500,000 pension pot. With funding of £80,000 from the scheme, Turtle Doves built a new website, bought machinery and ran an advertising drive. The team grew from eight to 14 last year. Kate said: ‘It means we are able to make our pension work for us, while putting money back into it at a 12 per cent return.’