Almost three-quarters (73 per cent) of older farmers plan to use private pensions as a source of income, according to research from NFU Mutual.

Less than half (43 per cent) of those surveyed planned to use income from their farm during retirement, even though nine out of ten (90 per cent) farmers said they planned to continue working in retirement.

A third of farmers (33 per cent) said they would use income from letting property in later life and 40 per cent planned to use income from other investments, with NFU Mutual noting that farmers were able to tick more than one source of retirement income when answering the survey.

NFU Mutual chartered financial planner, Sean McCann, said: “Pensions provide an independent source of income for the older generation, giving them the freedom to take less from the farm. This can be particularly important when two and sometimes three generations are relying on the farm for their livelihood.

“Because of the range of options when it comes to taking money from pensions, it’s important to take advice to ensure you don’t pay more tax than you need to.”

The firm noted that farmers were “increasingly considering their later life plans” following the Department for Environment, Food and Rural Affairs’ (Defra) announcement of a proposed lump sum for English farmers to exit the industry.

Farmers could receive payments of up to £100,000 under the scheme from 2022, although eligibility requirements have yet to be determined and are the subject of an ongoing consultation.

McCann commented: “This new scheme is likely to spark renewed interest in later life plans among farmers. Although the details of the payments have not yet been finalised, farmers will be looking at their pensions and other investments to see what options are open to them. Avoiding unnecessary tax bills by taking advice should be a key part of any later life planning.”

A separate survey from NFU, which specialises in rural customers, found that pensions were the issue that its client base needed the most assistance with.

Almost nine out of ten (85 per cent) of its customers said they would seek professional help for pensions, while 78 per cent would turn to an adviser for their investments, 46 per cent would seek help with an ISA, and 39 per cent required assistance with life insurance and other protection products.

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