{"id":6673,"date":"2024-09-19T09:47:10","date_gmt":"2024-09-19T09:47:10","guid":{"rendered":"https:\/\/www.spotlight.com\/?p=6673"},"modified":"2025-06-02T16:26:23","modified_gmt":"2025-06-02T16:26:23","slug":"what-actors-need-to-know-about-pensions","status":"publish","type":"post","link":"https:\/\/www.spotlight.com\/news-and-advice\/self-employment\/what-actors-need-to-know-about-pensions\/","title":{"rendered":"A Guide to Pensions for Self-Employed Actors"},"content":{"rendered":"

How to set up a pension as an actor and how much you should aim to save for your retirement.<\/span><\/h2>\n

When you\u2019re starting your acting career, retirement is probably at the back of your mind. <\/span>Finding an agent<\/span><\/a>, <\/span>preparing for auditions<\/span><\/a> and <\/span>keeping your Spotlight up-to-date<\/span><\/a> seem more urgent.\u00a0<\/span><\/p>\n

Typically, actors are driven by a passion for their craft rather than monetary gain. Early on, your focus may be on establishing yourself in the industry and retirement can seem a long time off. But the later you leave it to start saving for retirement, the more burdensome it can become.\u00a0<\/span><\/p>\n

It\u2019s estimated that just <\/span>31%<\/span><\/a> of self-employed people in the UK have any pension savings. In 2023, a study by Equity and the University of Warwick revealed that 94% of creatives earn less than the median average salary. It could be argued that this makes things tougher for actors, but it also highlights the importance of starting to save as soon as possible.<\/span><\/p>\n

Here is how you can set up a pension as an actor, how much to save and what options are available to you:<\/span><\/p>\n

How Do Actors Get a Pension?<\/h3>\n

Most people in the UK are eligible for the state pension when they reach retirement age. Provided you\u2019ve paid National Insurance (NI) contributions for at least 10 years, you should be entitled to some state pension. To receive the <\/span>full state pension<\/span><\/a> (\u00a3221.20 per week as of August 2024), you\u2019ll need to have paid NI contributions for at least 35 years.\u00a0<\/span><\/p>\n

The retirement age is rising incrementally, so you\u2019ll need to check gov.uk to find out <\/span>when you can start drawing from your pension<\/span><\/a>.\u00a0<\/span><\/p>\n

It\u2019s widely accepted that the state pension doesn\u2019t provide enough to live in later life \u2013 particularly if you have grand plans for retirement. So, it\u2019s best to make separate provisions. For employees on PAYE, this is a workplace pension. Self-employed people, including performers, don\u2019t have this luxury.<\/span><\/p>\n

In 1997, Equity launched its own <\/span>pension plan<\/span><\/a> for its members. For some actors working under contract with production companies, including (but not limited to) BBC, ITV, Disney and UK Theatre, you can get the company to pay your contributions. This is not standard practice across the industry, so don\u2019t expect it, but do take advantage if it\u2019s on offer.<\/span><\/p>\n

You\u2019re not automatically entered into the scheme when you join Equity and must opt-in if you want to join the scheme.<\/span><\/p>\n

Can I Pay into a Pension if I\u2019m Self-Employed as an Actor?<\/h3>\n

The pension options for freelance actors are the same as those for any other self-employed person. One of the benefits of self-employed pensions is that you have the freedom to choose how you plan for retirement.<\/span><\/p>\n

There are two main options:<\/span><\/p>\n

1. Personal Pension<\/h4>\n

Most major pension providers offer a range of products like stakeholder pensions, for example. With a stakeholder pension, you usually choose which plan you want to invest in based on factors such as your level of risk appetite and the potential value of the plan.<\/span><\/p>\n

Your contributions are invested by a fund manager as part of a bulk fund with the intention of maximising returns. You don\u2019t need any market knowledge and personal pensions are generally seen as the safest plans for those who prioritise security over high returns.\u00a0<\/span><\/p>\n

However, no investment is 100% risk-free and you need to be aware that the value of your pension can go down. For safety, most people choose a leading provider with a solid reputation.<\/span><\/p>\n

2. Self Invested Pension Plan (SIPP)<\/h4>\n

A SIPP is really a pension option for those with a bit more knowledge of finance markets and appetite for risk. Fundamentally, SIPPs work just like personal pensions, but you have greater control over where your money is invested.\u00a0<\/span><\/p>\n

Rewards can be greater, but your pension pot is more volatile and charges are usually higher. If you\u2019re considering a SIPP, it\u2019s best to contact a financial advisor for bespoke advice according to your circumstances.<\/span><\/p>\n

It\u2019s not as risky as investing in stocks and shares or crypto. But if you choose to go down this route without the help of a regulated financial advisor, your investment is less likely to be protected if anything goes wrong.<\/span><\/p>\n

How Much Do I Need to Save for Retirement?<\/h3>\n

This is dependent on your personal circumstances and retirement plans. The closer you are to retirement, the clearer you\u2019ll be on how much you\u2019ll need. If you expect to pay off your mortgage and then work for, say, 10 more years to top up your pension pot, you might not need to pay in so much in the early days. Although, it\u2019s worth noting that life doesn\u2019t always follow your script and it\u2019s safer to err on the side of caution.<\/span><\/p>\n

If you\u2019re renting or your mortgage term takes you nearer retirement age, you might prefer to pay in more now and build your desired pension pot throughout your working life. This will help prevent panic from setting in as you near the end of your working life.<\/span><\/p>\n

Also, remember that you won\u2019t get the benefit of employer contributions to top up your pension pot, so it\u2019s all up to you.<\/span><\/p>\n

The \u2018half-your-age\u2019 rule is a good guide to how much you need to invest in your pension each month:<\/span><\/p>\n

Take the age at which you start paying into a pension and halve it. This is the percentage of your pre-tax income you should pay into your pension.<\/span><\/p>\n

So, if you start building your pension pot at 30, you should be paying 15%. If you start at 50, you\u2019ll need to pay closer to 25%. As you can see, the later you leave it, the greater the impact on your monthly budget.<\/span><\/p>\n

Calculating How Much to Pay into Your Pension if You Stopped Working to Study<\/h3>\n

If acting is not your first job and you\u2019ve paid into previous company pensions, work out when you first started making contributions. However, if you haven’t paid into a pension scheme while studying, you\u2019ll need to factor that in.<\/span><\/p>\n

For example, let\u2019s imagine you worked full-time and paid into a pension from the age of 18 and started drama school at 21. You\u2019ve already started saving towards retirement and according to the \u2018half your age\u2019 rule, you\u2019ll need to make minimum pension contributions of 9% of your earnings per month.\u00a0<\/span><\/p>\n

However, you made no contributions between the ages of 21-24. To ensure you pay enough into your retirement pot, you\u2019ll need to account for those three years. So, for the purpose of calculating your pension contributions, extend your starting age by three years. This means your effective starting age is 21 (18 + 3).\u00a0<\/span><\/p>\n

If you worked part-time while studying and paid into a pension, pro rata your maths to fit your specific circumstances.<\/span><\/p>\n

Tax Relief for Self-Employed Pensions<\/h3>\n

With a few exceptions, pension contributions are not taxed. So, for most actors, everything paid into a pension should be included as a deduction when submitting a self-assessment return.<\/span><\/p>\n

Typically, you can claim tax relief on pension contributions on up to 100% of your annual earnings up to \u00a360,000. If you have multiple pensions, this cap applies across your entire pension pot, not each individual one.<\/span><\/p>\n

How to Set Up a Pension as a Freelance Actor<\/h3>\n

Follow these steps to set up your pension as a self-employed actor:<\/span><\/p>\n

    \n
  1. Decide when you want to retire.<\/b>
    \n<\/span>Some people like the idea of sacrificing luxuries throughout their working life with the idea of retiring early, while others opt to save less and work for longer.<\/span><\/li>\n
  2. Decide how much you want to receive each year in retirement.<\/b>
    \n<\/span>Are you looking for a relaxing retirement, or do you see it as your chance to travel the world? Don\u2019t automatically assume you need the same monthly income in retirement. If your living costs are lower (for example, you own your house or downsize), a lower monthly income could give you the same amount to spend on the things you enjoy.<\/span><\/li>\n
  3. Do the maths.<\/b>
    \n<\/span>Work out what savings (if any) you already have and calculate how much you need to contribute each month.\u00a0<\/span><\/li>\n
  4. Make a realistic judgement on whether what you can afford will lead to what you want.<\/b>
    \n<\/span>Don\u2019t try to fool yourself. If the maths doesn\u2019t add up, the worst thing you can do is bury your head in the sand and pretend that it does. If needs be, adjust your plan to match your circumstances.<\/span><\/li>\n<\/ol>\n

     <\/p>\n

    When planning so far ahead, you\u2019re dealing with several unknowns. You might land that big role and put yourself in a position where you can afford to increase your pension contributions.<\/span><\/p>\n

    As an actor, you\u2019re entering a career you love and you may not want to call it a day when you reach retirement age. The important thing is to review your pension arrangements and overall financial situation annually. If you need to change your contributions or your lifestyle, be pragmatic.<\/span><\/p>\n

    Equally, if you have a decent pension pot but decide you don\u2019t want to stop working, you\u2019re under no obligation to do so. Planning for your pension while still young is a way of giving yourself the widest range of options when you\u2019re able to retire.\u00a0<\/span><\/p>\n

    At the start of<\/span> your acting career, balancing pension contributions with other financial priorities is a juggling act. It\u2019s equally important to build an emergency fund of around three to six months of living expenses.\u00a0<\/span><\/p>\n

    Once you have that safety net in place, try to allocate your savings between short-term goals (like saving for new headshots or acting classes) and long-term pension contributions. Small, regular contributions to your pension add up over time and will start to build towards your retirement income.\u00a0<\/span><\/p>\n

    Don’t feel discouraged if you can’t put away as much as you’d like right away. Pay what you can comfortably afford into your pension and increase contributions as your situation changes.<\/span><\/p>\n

    Take a look at our website for more <\/span><\/i>tips and advice for self-employed actors<\/span><\/i><\/a>, including:<\/span><\/i><\/p>\n