With life expectancy continuing to increase, making sure people have adequate pensions for their retirement is ever more important. Relying on the state pension is unlikely to be a good choice.
As a business owner, it will be up to you to make your own pension plans. And if you have employees, you need to arrange a pension scheme for them as well. You should consider taking independent financial advice on what to do.
Private pensions for the self-employed
Many business owners are tempted to rely on the value of their business for their long-term financial well-being. But concentrating too much of your wealth in this way is a high-risk strategy. If your business fails - or if you want to be in a position to pass it on to your family - you need other savings.
Sorting out a private pension should be a key part of your personal financial planning. Contributions of up to £40,000 a year can be tax-efficient, subject to a lifetime total pensions savings allowance of £1 million.
For many business owners, the best option is to make contributions to a private pension scheme. You might also want to consider being a member of any pension scheme that your business offers its employees.
If you are planning to make substantial contributions to your private pension, there may be other options worth considering. For example, you might be able to use part of your pension savings to invest in your company.
Employee pension schemes
Most employers have a legal obligation to provide employee pensions and to make pension contributions for their employees. As a minimum, you must ensure that you are complying with the auto-enrolment rules.
You should also consider how providing employee pensions can help your business. Offering more generous terms than your competitors can help make your business a more attractive employer to work for.
Setting up your own employee pension scheme is likely to be too complex and expensive for smaller employers. Instead, you can choose a pension scheme provider to invest the pension contributions and handle most of the administration.