Own Business

When you run your own business then pensions are one of the things you would rather not think about. ‘My business is my pension’ is normally enough to keep such thoughts at bay.

Over the last 30 years I have advised people at all stages of their business and life stages and have some interesting observations gathered over the years.

The best time to sell your business is when it is at its peak. When do you think people normally sell?

If the next generation want to take over you can’t really sell it to them and they have to keep you on with a salary. How do you think they feel about running in your shadow? How would you feel about it?

Businesses can survive the second generation if the children were brought up with the culture but I have only seen one out of many hundreds where the third generation made it a success.

Of those businesses that survive till retirement age only 1/3rd will actually be worth enough to provide more income in retirement than National Average earnings.

Despite what you think you are not as capable at 60 as you were at 35. Better now to plan to play golf and have good holidays when you are 55 than to reach 65 or 70 and wonder where your life went.

And the advantage of pensions – Where else can you take money out of a company, avoid tax and NI and have virtually tax-free growth on the money saved – with the whole amount outside your estate if you don’t make it to retirement? Of course if you do make it to retirement you will eventually have to pay tax on the pension you receive, but this might be at a lower rate and you can under current rules still take 25% of the fund as a tax-free lump sum.