The use of a pension to fund a business start-up is an interesting by product of the pension freedoms. However, I would hope that anyone using their pension in this way has first sought some advice not just on setting up their business, but the potential impact on funding their lifestyle in retirement.
Just because the freedom now exists to take a pension from age 55 doesn't mean it should be viewed as easy access cash. For the vast majority of people, their pension is there to provide the means to fund their desired lifestyle throughout their retirement. This pot will have taken them their whole career to build up and unless they have alternative income means, it will need to sustain them through retirement.
When it comes to start-ups, most picture graduates fresh out of university starting a dotcom business or mobile app. But that perception could be misleading as 'olderpreneurs' take advantage of new pension freedoms to kick-start their own business by tapping into their retirement savings as funding.According to Nesta's Alternative Finance Report, pension-led funding was worth a mere £25million in 2014 - dwarfed by peer-to-peer consumer and business lending, which were worth an estimated £547million and £749million respectively.