We have recently been talking a lot about using pensions as a means of funding. Judging by the comments I have received on LinkedIn, this seems to have resonated with many advisers. In a recent article I wrote for Professional Adviser, I talked about the lack of awareness among clients when it comes to using pension savings as an alternative means of finance.

The fact that hardly any clients would consider this an option surprises me and reaffirms my view that more needs to be done to not only raise awareness of using pension savings for business funding purposes but also highlight why it might be the better option.

With a whopping 80% of small businesses (-those with between 10 and 49 employees) using external finance in the last three years, there is clearly demand for funding. So why not think pension? Especially when calling upon the bank today is somewhat more of an onerous task than it once was.

Rather than going cap in hand to a third party, using one’s pension means clients are not beholden to anyone. Rather they are simply utilising their existing savings, albeit those saved via a pension. Moreover, the absence of any third party means any financial benefits are retained for your client’s ultimate benefit – for example, accumulating pension savings via the collection of rent.

To me, it’s a no-brainer and I would encourage more advisers to highlight such option, where they do not already. To help with this, here is a short checklist of things to consider when evaluating a possible pension funding option for their clients business:

  1. Quantify what level of pension savings are available
  2. Determine how long it is expected before the client will be required to draw any of their pension savings
  3. Identify if the client or their business owns business premises or can offer any unencumbered security.


Lee Halpin,

Head of Technical Services