Over half a million over-55s might take advantage of new pension freedoms to start a new business.
A survey by AXA Wealth polled 1,500 UK residents aged over 55 and found that that 10% of the UK's over-55s who are due to retire in the next 18 months are considering drawing down on their pension pots to start a small business or go into consultancy.
It means that over a half a million late-life entrepreneurs could potentially set up in business in the next few years. Of those, almost half said they intended to use their 25% tax-free lump sum to fund their start-up.
In addition to creating a start-up business or going into consultancy, almost 9% are thinking about investing in a franchise using some of their pension pot.
However, AXA's study polled 1,500 ABC1 UK residents aged 55 and over who had previously expressed an interest in business management, which makes the result less surprising. The average value of their pension pots was £550,000.
The top three reasons for starting a new business with released pension funds were:
- Realising a lifelong dream to be a business owner (cited as the top motivation by 35%);
- Monetising a hobby (cited by 25%);
- Using professional skills and experience in order to supplement pension income (19%).
The top ten sectors most likely to see a surge in silver start-ups are: Healthcare; travel and transport; professional services such as accountancy; manufacturing and utilities; IT, telecoms and digital; education; HR; arts and culture; retail and catering; and legal services.
Adrian Lowcock, head of investing at AXA Wealth, said: "We're seeing a revolution when it comes to retirement spending. The widespread concern that pensioners will blow their whole pension on a supercar feels exaggerated. Instead we are seeing a diverse approach; with the over 55s taking to the freedom and opportunities created by the pension reforms."
He added: "But with more choice and freedom inevitably comes more risk … 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."