Your slice of the £250 billion waiting to be invested in small businesses

A £250 billion pot of money is waiting to be invested in the UK’s two million small businesses with owners over the age of 50, it has been revealed.

On the fourth anniversary of pension freedoms, analysis by Clifton Asset Management showed ‘Olderpreneurs’ had already used the freedoms to access almost £1.5 billion from their personal pension pots to fund new ventures.

The analysis of recent ONS data also found that while 30 per cent of older business owners had no personal pension wealth, the remaining 1.5 million (70 per cent) collectively had access to more than £250 billion from their pension pots to invest in a small business.

Olderpreneurs have set up more businesses than any other age group in the last decade, with the latest statistics showing a 700,000 increase from 1.47 million in September 2008 to just short 2.2 million by the end of 2018.

Clifton said it may well be the right strategic decision for the over 55s to access their tax-free allowance from their pension using the freedoms.

But an older business owner seeking a larger investment into their business from their pension should take professional advice and consider Pension-led funding. More than 2,500 SMEs have used Pension-led funding to invest in their business.

Seeking advice is key after recent research found that £3.2 billion had been accessed in lump sums from pension pots by the over 55s without financial advice since the freedoms were introduced in 2015.

Chairman and founder of Clifton Asset Management and Pension-led funding, Adam Tavener, said: “Study after study has shown that Olderpreneurs run more successful businesses, generate greater profits and create more jobs than their younger counterparts.

“But many have done this with one arm tied behind their backs because of a difficulty to fund growth due to strict lending criteria penalising older business owners or they have the majority of their wealth tied up in property.

“There is a real opportunity here to invest pension wealth in successful businesses with more than £250 billion sitting in the pots of businesses owners aged over 50.

“Done properly, Pension-led funding provides older entrepreneurs with significant amounts of growth capital by strategically redeploying their pension savings. The benefits of this approach to the UK economy are evident.”

Research by the older people’s charity Age UK found that 70 per cent of businesses started by people in their 50s survive for a least five years compared to only 28 per cent for those started by younger people

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