50% of entrepreneurs do not have a pension plan, Bank of Ireland survey concludes

MORE that half of Ireland’s 345,000 entrepreneurs do not have a pension plan despite the availability of generous tax reliefs, new research has found.

The study by Bank of Ireland Life found that 56% of self-employed people have no pension provision and that 81% of people working in a business with less than five employees have no pension either.

And the biggest reason cited by many Irish entrepreneurs for not having a pension was that they never got around to it.

Head of pensions Bank of Ireland Life Brian Sullivan said: “Ireland is a thriving country of entrepreneurs, but we are finding that few are taking advantage of one of the best tax relief schemes available.

“The extent of pension tax relief available to self-employed people and business owners is significant, in many cases it is more tax efficient for business owners to put a portion of their company profits into a pension instead of a pay rise.

“What is interesting is that of those self-employed entrepreneurs who don’t have a pension, 33% paid into an SSIA proving that the capacity to save for the future is there.

“A pension can offer almost double the SSIA bonus through tax relief for a self-employed person, while the tax relief incentives for business owners are even greater again,” he said.

The survey also found that 60% of Irish entrepreneurs record an annual financial turnover of less than €100,000 in their first year of business, while 62% of established entrepreneurs report an average turnover of €500,000.

Established male entrepreneurs report a larger financial turnover than their female counterparts with 17% of males reporting turnover of more than €1m compared to just 5% of females.

The research also uncovered a difference in strategy employed by women and men, with more women entrepreneurs seek advice from friends, family and State bodies, while more men get advice from financial institutions.

“The best advice I can offer the business start-up community is to start paying into a pension as soon as you are generating a profit. Every business-owner has to pay tax, whether you are self-employed or a limited company. Paying into a pension will reduce your annual tax liability, which makes good business sense,” said Mr Sullivan.

“There are many business pressures in the early years such as finding premises, purchasing equipment, building a client base and more, but starting a pension early with small contributions and gradually building these up, can make a huge difference to the size of your pension fund in the long run.

“With most Irish entrepreneurs working significantly longer hours than the average person, many hope to retire early and so must ensure they have a decent pension in place,” said Mr Sullivan.