Bosses relying on their business to fund retirement

The report by chartered accountants MacIntyre Hudson, also reveals that one in five business owners count on their business to finance their pension.

The figures come after Pensions Minister, Malcolm Wicks, urged employers to make the issue one of their top priority’s in 2005.

However, despite such dependency on their business assets, the report goes on to show that 77 per cent of owner managers have yet to make a detailed exit plan for when they retire.

Ken Linge, a partner at MacIntyre Hudson, said: “Those looking to their business to fund their retirement need to consider that it takes on average over three years to prepare a business for sale or to put it in a position where their day to day involvement can be substantially reduced.

“A business primed for sale can be worth considerably more than one where the owner has neglected to plan ahead. With this in mind, owner managers should take action now to formulate or review their plans for their own future.”

In terms of age group, 57 per cent of owners aged 50 and over depend on their business for at least half of their pension, despite one in three refusing to consider an exit plan.

Furthermore, figures reveal that more and more bosses are expecting to delay their retirement due to the recent period of economic downturn, falling annuity rates and declining investment.

43 per cent of those under 30 believed that they would be forced to delay their retirement in the future due to recent trends in the economy.

Linge said: “While it has always been challenging to build up a successful business which enables you to retire comfortably in your 50s, nowadays it is even more difficult to achieve this goal.

“Although, it is not unreasonable for owner managers to look to their business to provide the capital they will need to finance their retirement, it is important that they make additional provision for later life.”