Financial advisers are considering directing clients towards enterprise investment schemes following the pension changes, industry specialists have claimed.
Ben Beaton, principal for London-based investment manager Triple Point, which focuses on areas including EIS, said some advisers had shown interest in taking a lump sum and putting it into an EIS.
This would mean clients could benefit from tax relief before getting their investment back three years later.
Mr Beaton said: “What will be interesting is how people mitigate against the income tax bill.”
But Claire Ainsworth, managing partner for Triple Point, believed the investment may not best suit people with small pots. She said: “For some people who have got lots of assets and are pulling in their pension and flipping it into EIS, that is a good option.
“Unfortunately the people who are taking it out may be the people who have not got very much.”
Patrick Reeve, managing partner of City-based Albion Ventures LLP, warned that the process could be more complicated than people expected.
He said: “There is a danger that you pay tax when you take money out of the pension fund, you get relief when you go into something like a VCT, and if your view is to take the money out after three years, it is not that easy. There will be a cost to that, and it is not that simple.”
Ray Adams, chartered financial planner for Gwent-based Niche Independent Financial Advisers, said: “It could be possible for affluent clients. But an EIS or venture capital trust can be high-risk. It is not like sticking money into an Isa.”