What might a post-growth economy mean for small business owners’ pension planning?
The path to post-growth pensions report from the Arketa Institute argues that traditional retirement investing—especially market-dependent, growth-oriented pension systems—rests on fragile assumptions given the climate & nature crisis we find ourselves in.
For small business owners and their advisers, this has significant practical implications.
For background, Post-growth is an economic framework in which the goal of the economy is no longer to continuously increase GDP, but to maintain human well-being within ecological limits.
It does not mean “no economic activity.” It means economic activity is stabilised at a sustainable level, rather than being structurally dependent on perpetual expansion.
Degrowth is the adjustment period for wealthy economies like the UK, and post-growth is the steady state once we have got back within ecological boundaries. You are likely to see the shrinkage of damaging businesses and growth of “green” businesses as we attempt to live with planetary boundaries (either in a controlled way or as part of a collapse)
Post-growth is an economic model in which success is defined by sustained well-being within planetary limits rather than by ever-increasing GDP.
This is a big problem for pensions, which rely on a system designed to operate on 5-7% continuous growth, which is unlikely in the future – the system requires a massive redesign.
Without growth, your pension is less likely to satisfy your basic needs at your point of retirement.
The UK state pension is also a great big Ponzi scheme in which the current workforce funds retirees. Add to the nature & climate crisis, a shrinking ratio of working age people to retirees – we have a big problem with future pensions.
Financial Markets May Not Deliver the Returns You Expect
Most retirement models assume continued economic growth, even under severe climate change scenarios. The report highlights that many pension models project continued growth at 4°C+ warming—an assumption that contradicts climate science and actuarial warnings.
Implication for you:
If your retirement plan depends heavily on equity market appreciation or “market-rate” returns over 20–30 years, you are exposed to systemic risks that may not be priced in today. Returns may appear stable now but could be overstated due to underpriced environmental and social risks.
This doesn’t mean “don’t invest.”
It means:
- Reduce overreliance on growth-dependent projections.
- Stress-test your retirement plan against lower real-return assumptions.
- Recognise that diversification within financial markets may not protect you from system-wide shocks.
Retirement Is Not Just a Financial Problem
The report argues pensions were given an “impossible mandate”: to solve retirement security purely through financial capital.
But retirement wellbeing depends on:
- Affordable healthcare
- Stable housing
- Strong community networks
- Public services
- Ecological stability
For small business owners, who often lack employer-sponsored DB pensions, this is particularly relevant.
Implication for you:
The report suggests you should expand your retirement planning beyond the account balances.
Instead, you want to think in terms of “Mult capital” assets:
- Financial capital – savings, investments, business exit value.
- Human capital – your health, skills, and ability to consult later in life.
- Social capital – relationships, networks, community ties.
- Manufactured capital – owning property or productive assets.
- Natural capital – living in a resilient, liveable region.
Financial savings alone may not protect you if insurance markets collapse or housing becomes unstable.
How do you invest in the non-financial capital assets?
Could you use your business to have a positive impact in any of these areas, or use your investments to strengthen the non-financial capital in your community?
Are there skills you need to invest in in order to improve your well-being in retirement?
Your Business Is Part of Your Retirement Strategy
Unlike employees, small business owners often rely heavily on:
- Business sale proceeds
- Ongoing passive income
- Real assets tied to operations
The report suggests that growth-maximising business models can exacerbate systemic instability (e.g., environmental degradation, social fragmentation), ultimately harming retirees.
Implication for you:
A resilient, sustainable business may be a better long-term retirement asset than one optimised purely for short-term valuation multiples.
Businesses that:
- Operate within ecological constraints
- Build strong customer/community relationships
- Avoid excessive leverage
- Provide essential goods/services
may retain value better in volatile futures than speculative, growth-dependent models.
Transitioning your business to the economy of the future will be essential if you rely on it to fund your retirement.
Look at models like B Corp and advisers who understand the risks to support your business transition.
Business owners also traditionally under-save for their retirement and are less likely to have employer schemes to fall back on.
PAYG and Public Systems May Become More Important
The report suggests that pay-as-you-go (state-based) pension systems are technically easier to adapt in a low-growth world than market-based funded pensions.
Implication for you:
Do not assume public systems will disappear—but do expect political restructuring. Engagement in policy (tax, healthcare, pension reform) is part of protecting your retirement outcome.
Business owners need to consider their responsibilities to fund their teams’ pensions and to pay their fair and reasonable taxes to fund state pensions and to pay for the capital assets they will need to rely on.
There needs to be a big rethink about how we think about taxation and what it delivers towards our wellbeing.
Practical Strategic Adjustments
For small business owners, this framework translates into:
- Use more conservative long-term return assumptions.
- Diversify beyond financial assets (property, community investment, health).
- Reduce dependence on a single liquidity event (e.g., one large business sale).
- Invest in personal resilience: health, relationships, skills.
- Build a business model that remains viable in lower-growth scenarios.
Bottom Line
The report’s core message from the report is not “stop investing.”
It is:
Retirement security in the coming decades will depend as much on systemic stability and real-world resilience as on portfolio performance.
For small business owners, this means shifting from a narrow “grow assets as fast as possible” mindset to a broader strategy focused on durability, adaptability, and well-being.
https://www.arketa-institute.org/resources/category/Publications
As always, take appropriately qualified professional advice, i.e., an independent financial adviser & planner, to explore your retirement planning options.
If you would like any help with your financial planning, please speak to Sebastian Elwell at Switchfoot Wealth