Your business = retirement fund ?

[peterjhale]

The majority of bosses are relying on their business to provide half of their retirement fund, according to a new report.

The report by chartered accountants MacIntyre Hudson, also reveals that one in five business owners count on their business to finance their pension.

The figures come after Pensions Minister, Malcolm Wicks, urged employers to make the issue one of their top priority’s in 2005.

However, despite such dependency on their business assets, the report goes on to show that 77 per cent of owner managers have yet to make a detailed exit plan for when they retire.



Is this how you see your business ?

[Inzvestor]

Failing to have an exit plan is the biggest mistake you can make, as it does not give a defined view of your overall expectations.

Most people haven't given it a thought (as the figures suggest)

Failing to plan is planning to fail.

[Ian J]

My retirement fund is non existent thanks to the exit plans adopted by ex wives and if things go well I should have finished paying off my mortgage by the time I'm 75 so no retirement for me.

[alistair72]

Is it best to get a personal pension or run a fund through the company? What are the tax implications and admin costs on company pensions investments, better than a high street personal pension?

[Cougar]

Good question(s) Alistair72. Problem is the answer is always so complex. You have to do the math of these various scenarios that you put forward, but that just tells you about the efficient way to put money into a pension.

It does not help at all on trying to work out what you think you will need or want in terms of an income in the future; that depends on what lifestyle you will want and what other life events will have transpired by that time; some are know-able and may or may not have happened. Some are just plain unknowable ... full stop. Any estimations are therefore just that.

Another issue is what to actually invest the pension money put aside into. Unless you just put cash in an investment account in a bank or building society (in which case you don't need a pension scheme), then the money has to be put into something like shares (equities), government securities, property, art, wine or a business - or spread around all of these. Your choice will be informed by your attitude to risk, but basically it will be something(s) you think will increase in value more than putting the money into something else - so this involves judgements

Many people have become cynical about equities, investment funds and corporate pension schemes due to poor returns or collapsed corporates (or government raid on pension funds). So this brings us neatly back to Peter's original question which for the smaller owner managed business (either wholly owned by us or in which we have a significant share/stake) may be more attractive as an investment fund for retirement years.

The question I ask myself is whether I am more confident that on my own efforts and skill set, my business will grow to yield a higher return than if I invest money in a pension scheme which (say) just buys shares in other businesses - such as MG Rover, ICI, BT and so on. Would you bet on the management and success of your own business ...or the successful management of theirs (MG, BT etc) ... as giving the longer term return?