Company directors should not see their business as their pension, warns Rowanmoor Pensions.
Speaking at the Henry Stewart SSAS conference in London yesterday, David Seaton, director of consultancy at Rowanmoor Pensions, urged business owners to not rely on selling their business to fund retirement.
He says: “Small self-administered schemes remain key to a large number of shareholding directors who partly provide for their retirement through them. All too many owner directors see their business as their pension. This is a dangerous plan.
“Unforeseen market changes, particularly in this digital age, can render a business worthless, which is why it is vital that some of the profits are transferred tax efficiently to a SSAS.
“Outside the company and creditor free, the funds can then be used to assist the business, particularly with commercial property purchase. This has been and will continue to be the principal driver for SSAS."
He also says the Government has made a disaster of pension simplification after making a number of “knee jerk” decisions. Seaton highlights tangible moveable property and unauthorised payment rules as particularly complex legislation.
Online reporting requirements could make pensions so complex and expensive directors will give up pensions altogether, he adds.
“If they stop providing for themselves then why should they for their staff? This Government may well be remembered for overseeing not only the decline of the final salary pensions but pensions for all.”
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First mentioned in Cridland Report