We should not underestimate the invaluable role that startups play in driving the UK's economic growth. In fact, it's thought that the collective value of Britain's leading 500 startups rose more than six-fold between 2011 and 2017, while delivering an annual, compound return in the region of 30%.

While it may be possible to achieve success when launching a startup in the current economic climate, however, there are significant challenges facing entrepreneurs. It can be hard for business owners to optimise the value of their pension funds, for example, particularly given the absence of a workplace scheme and the need to reinvest capital into their ventures.

In this post, we'll look at how Britain's generation of startup entrepreneurs can optimise their pension plans while focusing primarily on work.

1. Seek out the Right Plan

Firstly, and arguably most importantly, you'll need to ensure that your funds are invested in the right plan. This not only enables you to generate the highest returns, but it also makes it easier to manage your funds and commit wholeheartedly to running your business.

In this respect, opening a self-invested pension plan (SIPP) with a reputable provider such as Bestinvest may be your best move. After all, SIPPs are renowned for offering investors access to a wealth of domestic and international asset classes, while you can also dictate precisely how much control you have over your investments.

Not only this, but companies like Bestinvest enable you to transfer multiple pensions into a single and easy to manage SIPP, while mitigating the cost of prematurely withdrawing funds from other pots.

2. Reconsider the Most Tax-efficient Way of Extracting Company Profits

In April 2016, new legislation surrounding dividend taxation was passed which enabled individuals to receive up to £5,000 tax-free. The dividend tax credit was abandoned, however, and it's thought that the new laws favoured basic rate earners and entrepreneurs earning less than £5,000 in dividends.

With the rules surrounding dividend taxation and the extraction of company profits changing, you'll have to revisit the most tax-efficient way of optimising your business’ bottom line.

This may take time and some expert guidance, but the key is that you fully appraise your options to ensure that you optimise your profits and the amount that can be invested in your future.

3. Don't Use Your Pension Pot to Fund your Business

In recent times, we've seen a number of entrepreneurs cash in their pension pots in order to fund the growth of their startup in the belief that this will deliver longer terms in the future.

The issue with this is that it's fraught with danger as the sudden decline or failure of their business could leave entrepreneurs with nothing and no source of sustained income in their retirement.

With this in mind, it's wise to create pension funds and investments that have no affiliation to your business, so that you can build personal wealth that can sustain you well into the future.

This does not mean that you cannot coordinate business and personal wealth planning, however, as this can create a number of financial and tax efficiencies that may benefit you in the long term.