Pension Plans

Planning for retirement is important for any business owner, but it is imperative to plan so that retirement is unlikely to have a detrimental effect or be a burden on the farm's finances where younger family members take over the running of the farm.

Successors need to be able to make a living from the farm without its financial viability being affected by the need for retired family members still being dependent on the business. As with other aspects of succession planning it is important to plan provision for retirement several years in advance.

As the state pension is increasingly less likely to meet the income needs of most people after retirement, choosing and paying into a private pension scheme is becoming essential, particularly for the self-employed. Having an idea of future income needs will help to define how much money needs to be invested in a pension plan. Age at retirement, lifestyle needs, basic living expenses and ownership of other assets will also play a part.

Professional advice is also important. Restructuring the business may be appropriate for succession and retirement purposes and the formation of family partnerships will also have consequences.