Three In 10 Business Owners Have No Pension

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Three in 10 business owners do not have a pension independent of their business, according to Rathbones Group, one of the UK’s leading wealth and asset management firms, warning that millions may be taking unnecessary risks with their future finances.

Rathbones polled 3,092 UK adults, including almost 10% business owners, and also found that 44% do not even hold an ISA of any kind. The vast majority (95%) have money in savings accounts and/or Premium Bonds, suggesting many are prioritising short term cash over long-term planning.

Faye Church, Senior Financial Planning Director at Rathbones, based in Guildford, says:

“We often meet owners of successful businesses who see their company as their retirement plan and prioritise reinvesting back into the business over pension saving. That’s often driven by a desire to grow the business, and the belief that a future sale will ultimately take care of retirement. But relying on a business alone to fund later life is a risky strategy."

“The future is unpredictable. Small businesses can be hit by economic shocks, supply chain disruption, losing customers or a crisis no one sees coming. That makes it hard to know what your business will be worth when you eventually step back – or even whether you’ll be able to sell it at all."

“Without a pension, you could end up with far less to live on than planned, and even a successful sale may still fall short of funding the lifestyle you want in retirement.”

Looking specifically at entrepreneurs, almost a quarter (24%) of respondents said they do not have a pension. More than a third (36%) said they do not have an ISA, although 95% do hold savings and/or Premium Bonds.

Gordon Lawrie, Senior Investment Director and Head of Edinburgh Office at Rathbones says:

“From our dealings with early-stage businesses, there are often many competing financial pressures, from irregular cash flow and reinvesting in the company to paying down borrowing or covering personal expenses,”

“But for limited company owners, contributing to a pension can be one of the most tax efficient ways to extract money from the business and invest for the future.”

Why pensions are still powerful for business owners

Faye Church says:

It’s common for business owners to prioritise tax efficient income today, typically taking a small salary within the personal allowance and the rest as dividends. That approach can create the false impression that pensions aren’t worthwhile, particularly if your salary sits below the income tax threshold. In reality, pensions can be one of the most tax efficient ways for business owners to invest for the future.

Tax relief on personal pension contributions

When you make a personal contribution to a pension, the government automatically adds basic rate tax relief. For every £100 you contribute, HMRC tops it up by £25. Higher and additional rate taxpayers can also claim further tax relief through self-assessment.

Employer contributions from your limited company

Limited company owners can make employer pension contributions directly from the business rather than paying themselves and contributing personally. These payments are made from pre tax profits and do not attract National Insurance. With employer NI set at 15% from 2026/27, this can represent a significant saving compared with taking the same amount as salary.

Reducing your corporation tax bill

Employer pension contributions are treated as an allowable business expense and can be offset against a company’s Corporation Tax bill. Depending on the rate paid, this could reduce Corporation Tax by up to 25%, making pensions one of the most tax efficient ways to extract profits from a business.

Higher limits and more flexibility

Business owners can currently contribute up to £60,000 a year into a pension. The removal of the Lifetime Allowance also means it’s now possible to build a larger pension pot without the risk of additional tax charges. Where a spouse is involved in the business, making pension contributions for them can further improve household tax efficiency.

Why professional advice matters

Pensions can be highly tax efficient for business owners, but the rules are complex and what works best depends on income, profits and long-term goals. Allowances and tax treatments can change, and mistakes can be costly. Regulated financial advice can help ensure pension contributions are structured efficiently and support wider retirement and income plans.

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Nov 23, 2023
3 min read

Updated: Nov 28, 2023

An inspirational youngster has been chosen to ‘Light up Loughborough’ and switch on the town’s Christmas lights in front of thousands of people.

Amellia Baker, from Sileby, has been named the winner of the Light up Loughborough competition run by Charnwood Borough Council which organises the festive event on Sunday, November 26.

The 11-year-old stood out to judges for the time she sacrifices to help her mum Vicky Wilson and dad Russ Baker, look after her nine-year-old sister, Imogen who has Angelman Syndrome.

The rare neuro-genetic disorder causes developmental problems and leads to a child having learning difficulties, an abnormal sleep pattern and means they can be non-verbal.

Amellia helps her parents look after Imogen, meaning she often misses out on school clubs, activities and social events with friends. The great news was broken to Amellia by the Mayor of Charnwood, Councillor Margaret Smidowicz and Councillor Jennifer Tillotson at a surprise assembly at her school, Wreake Valley Academy, on Friday November 17.

Amellia said:

“I was really surprised to find out that I am turning on the Christmas lights as I didn’t even know my mum had entered me into the competition."

“I can’t wait for Sunday, it will be a lot of fun to go up on stage and turn the lights on in front of all those people.”

Mum Vicky, entered Amellia for being ‘a kind, caring, loving, young lady who never complains and is always happy to help with Imogen’.

Vicky said:

“Amellia is a very loving and caring, young lady. She often misses out on some social activities but never complains."

“When I was sent the link to nominate Amellia, I felt this would be something that will show her how proud we are of her and appreciate everything she does and sacrifices to help me. All young carers are superstars!”

Councillor Jennifer Tillotson, the Council’s lead member for economic development, regeneration and town centres was part of the judging panel and who attended the surprise assembly, said: “As always, it is a pleasure to read so many of the entries into the Light Up Loughborough competition and it was a tough choice once again."

“Amellia stood out to us because of the work she puts into looking after her sister and the time which she sacrifices to help her parents. We were so inspired by her story and felt like she deserved a day of festive joy and happiness and hopefully this will lead to Amellia having a memory which will last a very long time."

“I would like to thank everyone that entered this year’s competition and I look forward to seeing everyone and Amellia at the Christmas lights switch-on.”

Mayor of Charnwood said: “It was an honour to be on the judging panel and to read so many stories about children across Charnwood. Amellia’s story stood out for all the work she does and the way she goes above and beyond for her sister.”

The Light up Loughborough winner has also received a family ticket to this year’s pantomime, Peter Pan, at Loughborough Town Hall and a £50 Love Loughborough voucher.

The Christmas lights will be switched on in Loughborough on Sunday, November 26 in a day of festive fun in the town.

Market Place will host a wide range of stalls, food and drink stands and fairground rides from 11am and then from 12pm, a host of talented performers will be appearing on the main stage to entertain the crowds.

The lights will then be switched on at 5pm by Amellia.

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