One in 10 of the UK’s over 55s who are due to retire in the next 18 months would consider drawing down on their pension pots to start a small business or go into consultancy, according to Axa Wealth.
Results were drawn from a pool of 1,500 UK residents and suggested that the ‘later-life entrepreneurs’ trend could see over half a million over 55s start up their own business venture, as opposed to retiring.
Of those considering withdrawing money to invest in a new business, almost half - 47 per cent - intend to use their 25 per cent tax-free lump sum to fund their start-up. The average value of pension pots of those surveyed was £550,000.
Adrian Lowcock, head of investing at Axa Wealth, commented that the findings indicate that even though retirees now have the opportunity to access their pension funds and blow the cash on super cars or luxury holidays, a number are considering investing in a new business venture.
“Financial advisers are undoubtedly well placed to help later-life entrepreneurs avoid the tax traps that litter the new pension freedoms landscape. They are also ideally positioned to advise on the benefits of re-funding pension pots once the businesses are up and running profitably.
“This could be an opportunity for advisers to work with their contacts in other professional fields to provide holistic advice to anyone considering this route.
Mr Lowcock added that this is an area which could grow over the next few years, so advisers most likely to benefit are the ones ahead of the game, offering specialist advice to this target market.