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Pension pots and start-up businesses

Published 28 June 2015 by

Thanks to the new pension reforms which came into force in April 2015, people over 55 can now take out up to 100% of their private pension pot in one lump sum. Whilst only a quarter can be taken as a tax-free sum, some commentators are expecting many people will withdraw larger amounts.

And they’re not just buying the things you’d expect: a fast car, a holiday home, or paying for their daughter’s wedding. According to new research, one in 10 over-55s retiring soon say they’re thinking about using some of their pension pot to start up a small business.

Starting a business later in life might seem like a difficult thing to do, especially as it’s usually the time when most of us would expect to be winding down and working less. But that doesn’t mean you can’t get into a new venture once you’ve retired – there are definitely a few upsides.

“I’m too old for this”

It’s understandable if you think that starting businesses is only for those youngsters – that too much has changed and you’ll never be able to get to grips with it all. But that doesn’t mean it’s true though! Colonel Sanders started KFC when he was 65, John Pemberton invented Coca-Cola at the age of 55 and Ray Croc turned McDonald’s into a franchise aged 52. So if they’ve done it, why can’t you?

More retirees are getting involved in business, with almost half a million over 65s now being self-employed. And this number has more than doubled over the past five years, showing this really is a growing trend.

One barrier to getting into business could be if you don’t have much experience with technology, like using computers and the internet. If you’re looking to get a few basic skills, search for computing courses near you through hotcourses or see what’s on offer at your local library for affordable classes.


As someone who’s already spent a good few years in employment, you’ll definitely have a few extra skills up on the 20-somethings who’ve just got out of university. You’ll find it easier to attract financial backing and respect if you’ve worked in the field before, and even just being able to speak the business lingo will stand you in good stead.

You’re also more likely to have useful contacts in the area you want to open a business in, even if it’s not something you’ve actually worked in before. If you’ve not done so already, sign up to LinkedIn and reconnect with some of your former colleagues – you’ll be surprised at the range of people you know.

While you’ll have more experience of being in a job than university graduates, you might be less willing to take risks than younger business owners – simply because you have more to lose. That’s okay – you don’t have to withdraw your entire pension pot, sell your house and put it all into a .com business that you don’t know anything about. If you’re less sure, just take out the 25% tax-free amount and use that to start a business instead.

Spend some time researching business areas that you’re interested in and where you think there’s a gap in the market. You could also speak to a friend or two who have retired or will be retiring soon and see if they have any skills or experience that could help you with your own venture. You might even find that it will be more fun to start a business together – you’ll be more likely to make it succeed with a few of you!