Members of the UK200Group comment on news that pensions are being used to aid SME expansion plans
Members of the UK200Group of independent accountancy and law firms have today commented on news that a growing number of business owners are using their pensions to facilitate expansion plans, according to a report by innovation charity Nesta and Cambridge University. In fact, around £25m of funding was secured by businesses using pension-led funding (PLF) last year.
Duncan Montgomery, tax partner at UK200Group member firm Whittingham Riddell LLP, said: “Pension-led funding has been used in practice to solve cash crises, allow for expansion and can be done while protecting core assets, all in all a very pragmatic way to use the fund. Some balance to ensure the fund is still of value when it has to be used for pensioners is needed, but this kind of funding is very much in point if you have the right pension fund at hand.”
Jonathan Russell, partner at UK200Group member firm ReesRussell, said: “That small businesses are accessing their pension funds to expand or finance their businesses is no great surprise. Business owners often see their pension pots as funds which are not being put to good use as often they consider the returns the pension fund managers get is significantly lower than they think they can achieve within their own businesses. As a result, many business owners use their pension funds positively within their businesses, particularly as this is money which is often easier for them to access.”
