Use nest eggs to boost older business soloists, Hammond told

Latecomers to contracting and other forms of working for oneself should be allowed to use their personal pension savings as a way to fund their business.

Issuing this recommendation, the Institute of Directors said it would help “fuel older entrepreneurship,” particularly if the withdrawal could be made on top of the 25% tax free allowance.

“A theoretical cap on the withdrawal amount could be set at, say, £100,000 (or 10% of the fund value if smaller),” said the institute, sounding aware that Autumn Budget 2017 is upcoming but yet to be written.

It added that such a capped, tax-free withdrawal from personal pension pots should at least be considered by government, as long as the saver clearly earmarks the money for start-up investment.

“[There] are people with wisdom, experience and good judgement, who can have many years of productive work ahead of them,” said IoD chair Lady Barbara Judge, referring to people who start working for themselves later in life.

“It is a cause for celebration that an increasing number of experienced workers are going it alone as entrepreneurs” she added, “but it is crucial that those who choose these routes have the right tools, and feel adequately supported”.

The institute acknowledged that pension saving participation among the self-employed “continues to lag those in employment.”

In the decade between 2001/02 and 2012/13 for example, the proportion of self-employed people contributing to pensions more than halved.

Ahead of the chancellor’s November 22nd statement, the institute said the government should consult on how the self-employed could be nudged into more regular, adequate contributions to personal pension pots.