New research from Rathbones suggests this confidence may be misplaced. Three in ten business owners have no pension at all, and 44% do not hold an Individual Savings Account (ISA) – despite the vast majority holding cash savings. The result is a worrying reliance on short-term cash and long-term assumptions about business value, at a time when economic and tax uncertainty is rising.
This points to a clear risk: many business owners may be too reliant on a single and unpredictable asset when planning for retirement.
The risk of treating your business as your pension
It is easy to understand why business owners prioritise their company. The business demands capital, attention and resilience, often leaving little room to think about life beyond it.
The challenge is that a business as an asset is unpredictable. Economic shocks, regulatory changes or the loss of a major client can quickly alter its future value.
Even a successful sale may not guarantee the retirement income many owners expect. Without other assets in place, business owners can find themselves asset-rich on paper but short of reliable income in retirement as earn outs can be in place for years.
Cash rich, but necessarily retirement ready?
While 95% of business owners hold cash, almost half do not hold an ISA and three in ten don't have any pension savings. Holding cash can play an important role in day-to-day resilience, but relying on too much of it for the long term may reduce growth potential, weakens the impact of inflation and limits tax efficiency.
Why pensions still play an important role
Pensions remain one of the most powerful and tax-efficient tools available to business owners — and one of the most underutilised.
For limited company owners, employer pension contributions can be made directly from profits before Corporation Tax and without National Insurance (NI). With NI set to rise to 15% from 2026/27, this can make pension contributions an even more valuable planning tool.
Planning for greater certainty
Robust retirement planning is about building diversified assets alongside your business to reduce reliance on a single exit event.
What you can do next
Review how much of your wealth is tied up in your business and whether your current plans could deliver the income you may need in retirement. You may also want to consider:
- whether you already have a pension in place.
- whether you are making full use of your ISA allowance.
- how much cash you are holding, what role it is expected to play and for how long.
- whether building pensions and other investments alongside your business could give you greater flexibility and control over your future.
If you’d like to explore how this could apply to your circumstances, our experts are here to help you review your options and discuss next steps that suit your situation.
