Pensioners with an entrepreneurial spirit should be allowed greater tax-free access to their pension pots in order to fund business ideas, according to the Institute of Directors (IoD).
The IoD has called on the government to unlock the entrepreneurial potential of personal pension pots by reducing or removing tax penalties if money is destined for investment in new business ideas and start-ups.
This would come on top of the current 25% tax-free allowance. The IoD, which is formed of business leaders from across the UK, says that the majority of its members are aged over 50 but more than half self-identify as “entrepreneurs”. In addition, a survey conducted of its members found that nearly two in 10 (16%) never plan on retiring.
The institute cites examples of older entrepreneurs as evidence that there is a growing appetite among older people to keep working and investing in businesses well into later life. Steve Perry aged 59 started an online platform to help over 50s find work, and another, Susi Lennox aged 72 started a company that sells a range of natural lubricants.
The IoD is also calling for greater provision of tax relief for people of all ages wishing to access training throughout their careers.
‘It is crucial that those who choose these routes have the right tools’
Lady Barbara Judge, chairman of the Institute of Directors, comments: “I have long been an advocate of working later in life, but it is crucial that those who choose these routes have the right tools, and feel adequately supported in the process. They are people with wisdom, experience and good judgement, who can have many years of productive work ahead of them. Choosing to take financial and business risks later in life can be difficult and I applaud any person who decides to take this route.
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“The changing nature of work will fundamentally affect us all. This, combined with an ageing population, will pose serious challenges to society. People in their sixties now are on the front line of the shifting boundaries between work and retirement. The government should consider introducing tax incentives to encourage people to pursue their ideas and invest in training, so that they can continue to have fulfilling working lives beyond the age expected by previous generations.”