Nearly all UK farmers see their current farm as funding part of their future “pension”.
Research from wealth manager Investec Wealth & Investment (UK) suggests that more than four in five (86%) UK farmers have more than 50% of their wealth tied up in their farm. Three in 10 said their agricultural business represented 75% or more of their wealth.
It estimates that on average 53% of UK farmers’ retirement expenditure or living costs will come from the investment or wealth they have tied up in their farm.
More than half (51%) of those interviewed believe that they will rely on their farm to finance between 25% and 50% of their cost-of-living expenditure once they are retired, while 48% say it will provide more than 50% of their retirement income. Some 16% believe they will be almost wholly reliant on their farm which will fund 75% or more of their living costs once retired.
Despite the findings revealing that many farmers are relying heavily on their farms to fund their future retirement income, the research showed that the majority (92%) of UK farmers say they have a private pension. In terms of how well they think they understand the tax benefits of paying into a pension, 15% of UK farmers said they understood them “very well” while 69% said they understood them “quite well”.
The average age when UK farmers surveyed started saving into a private pension was 37 years. However some 60% of UK farmers said they were aged 40 or over before they started paying into a private pension, with 12% saying they were aged 45 or over.
Scott Jones, Divisional Director – Southern Offices at Investec Wealth & Investment (UK), said:
“Our findings have highlighted that farmers typically have the majority of their wealth tied up in their farms, which is unsurprising given that many have dedicated their entire lives to building and maintaining their agricultural enterprises. Factors such as fluctuating commodity prices, extreme weather events and market volatility can also significantly impact their income from year to year. As a result, some farmers may understandably prioritise reinvesting profits back into the farm business rather than setting aside funds for retirement.
“However, this reliance on their farm as the primary source of income during retirement highlights the need for effective financial planning and succession strategies to ensure a smooth transition and a comfortable lifestyle when they retire.”
James Gower, Managing Director of the UK’s largest countryside show, The Game Fair, said:
“The findings from the research highlight key factors affecting the farming community which is an important part of the future of our countryside. Our partnership with Investec Wealth & Investment (UK) is at the heart of our drive to create the perfect opportunity at The Game Fair for farmers to come together to share values, discuss the latest topics and find solutions to the challenges they face.”
