The Magic of Pensions for Business Owners

We just met an amazing client for some Financial Planning. He runs his own business, is young, dynamic, highly entrepreneurial and was utterly disinterested when we talked to him about pensions. However, by the time we had finished the meeting, he walked out convinced he needed one. What changed?

Well, during the meeting it came out that he was looking for new offices. Did you know you can use your pension to buy your own office? Who wouldn’t want to own their own office building? Your business becomes more stable as you can’t be evicted by a greedy landlord. When you come to retire and sell your business, whoever buys the business from you will continue paying rent into your pension. Ongoing rental income gives you a great source of inflation linked income for your old age.

We also talked about special types of pensions where you can invest more than the annual allowance rules initially let you – useful if you’re starting to save for a pension late and are having to play catch-up to get that valuable 25% tax free cash on retirement.

We showed him how using some of his company’s profits to pay into his pension will reduce his corporation tax – meaning more money goes into his pocket long term.

Finally, having a young family, he was keen to shelter assets from inheritance tax. He was surprised to learn that his pension could be inherited tax free. And most importantly he still had access to the money for his retirement whilst still being free of inheritance tax.  Who would have thought that pensions were so exciting?

Suddenly pensions became a fantastic vehicle for our client to achieve several of his financial goals in one fell swoop – new offices, decent retirement income, accelerated saving, reduction in corporation tax and inheritance tax planning. Pensions are surprisingly useful things for business owners and can transform their finances and retirement plans. If you want to know more, contact us – we’d be delighted to help.