The future is not rose-tinted: that is the warning from Axa Wealth’s head of investing to over-55s seeking to use pension funds for new business start-ups.
Adrian Lowcock said: “Although small businesses are the backbone of Britain, most fail to make a profit and end up losing all their investors’ money. For the majority of people it is not an appropriate use of their pension pot.
“You would not want to risk your hard-earned pension money, so anyone considering investing in a small business needs to consider what the loss of their investment and retirement income, would have on the quality of their retirement.”
His comments came after Axa Wealth conducted a survey, backed by O2 Business, found that a quarter of over-55s, planned to use their 25 per cent tax-free lump sum to fund a start-up business.
Bob Wilson, financial adviser at Norwich-based GreenSky Wealth Ltd, said: “If people are looking for flexi access and use all or the majority of their funds for this, that is an extremely risky thing to do and not something I would suggest unless they had significant other pension provision.
“If they were using tax-free cash I would take a slightly different approach and they may generate some income. It will not affect their day to day standard of living when retired but may affect their luxuries.”