Entrepreneurs shunning pensions

New research into the wealth management behaviours of entrepreneurs reveals that business owners are shunning traditional pension schemes, with fewer than half those surveyed opting to fund one.

The research conducted by the accountancy firm Kingston Smith found that;

• Over half of business owners do not have a pension

• Almost one in ten has never invested in any kind of tax saving opportunity

• 93% of entrepreneurs will fail to review their personal finances in the wake of the recently announced changes to the pensions regime

• 85% failing to seek advice on how to protect their finances when they get married or commit to a long term partner

• 73% plan to stay with their business for 10 years or more

• Under half of entrepreneurs regularly review their finances and 29% have not reviewed their finances in the last twelve months

• 39% of business owners expect to become millionaires when they exit their business and 16% expect to get nothing from the sale of their business

• 60% of entrepreneurs expect a retirement income of £50,000 or more per year, but few entrepreneurs actually have a real fix on what it will take to achieve that level of income

• 31% of entrepreneurs would like to invest unpaid time in charity work when they leave their business.

The conclusion that entrepreneurs are prioritising their business at the expense of their personal finances in the belief that their business will be their pension is fair, but is it really wrong?

Does the fact that UK business owners are investing their money in their own business as opposed to a pension mean that they are really putting their future wealth at risk?

With all the troubles surrounding pensions; the mis-selling scandal, low annuity rates and the increase in retirement age to name a few, many people would conclude that it's pensions that are the real gamble.

Commenting on the research, Andrew Shaw, head of private client group and partner at Kingston Smith said, "Entrepreneurs may feel that by running their own businesses they are taking hold of their own destiny, but their failure to plan adequately for the future could seriously undermine their prospects of profiting from their hard work. The fact that the majority of entrepreneurs do not have a pension and almost one in ten has never invested in any kind of tax saving opportunity is as alarming as the lack of regular attention they give to their finances."

As any entrepreneur will tell you, running a business involves taking regular and calculated risks. It's clear that the majority of entrepreneurs are weighing up the pros and cons and are deciding that their own business is a better investment for their long-term wealth than a traditional pension scheme.