It’s often difficult to think with a long term view of anything when working as a freelancer. Being focused and determined to meet client’s projects and expectations, taking care of the everyday admin, marketing yourself, replying to emails…veryday personal life admin such as paying rent, grocery shopping, that having views about the future seems luxurious. Creative Boom’s survey found that the majority of creative freelancers have not started a pension as of yet.

And we understand why! Most freelancers don’t have the necessary money left from projects to put into a pension fund. Although, we all know that it’s very important to invest in the future. We all saw the damages Covid-19 has already done to our work and earnings. With an estimate of 60% of projects being cancelled or rescheduled with no expected date to resume according to the latest Wishu Covid-19 Lockdown survey.

What we learned is that this is an awakening call to invest in our future security. It’s a perfect time to look around and sort out your pension. Have a look below, where we outline the main things you would need to know.

The UK basic state pension

If you’re self-employed (freelancer) you’re entitled to the State Pension in the same way as anyone else. From April 2016 there is a new flat-rate State Pension which is based entirely on your National Insurance (NI) record. Will you be entitled to the state pension? The answer is yes, as long as you’ve paid enough national insurance (NI) contributions over the years.

Always remember → If you worked for someone else rather than yourself in the past, you might have built up entitlement to additional State Pension under the old system and get more than this. To find out how much you have built up, get a State Pension statement on the https://www.gov.uk/check-state-pension But on its own, the State Pension is unlikely to provide you with enough income to maintain the standard of living you might like. So it’s crucial you plan how to provide yourself with the rest of the retirement income you’ll need. This could come from your passive income streams and private pensions.

Always aim for extra private pension

When it comes to taking out a private pension, you have a lot of choices, with lots of companies vying for your business. There are broadly three types. With the standard personal pension, you pay in a regular amount and the company invests it for you. With a self-invested personal pension (aka SIPP), you’re given the choice of where to invest your funds, from shares to commercial property, stated by Tom May Self-employed people can also use NEST (National Employment Savings Trust) which is the workplace pension scheme created by the government for automatic enrolment. It’s run as a trust by the NEST Corporation which means there are no shareholders or owners and it’s run for the benefit of its members. Although NEST is primarily for people who are employed, they also allow some self-employed people to save with them.

Benefits of a private pension

There are two main benefits of paying into a private pension rather than just putting it into a savings account. The first is that, in theory at least, these investments will grow over time, increasing your pension pot in an era where interest rates are virtually zero. The second is that you’ll get significant tax relief on your pension contributions. Specifically, if you’re a sole trader in England, Wales or Northern Ireland paying the basic rate of tax, you’ll get a 25% tax top-up from the government. So if you paid £50 into your pension from a personal bank account, you’ll get another £12.50 as tax relief. 

Combining your past pensions

If you spend many years as an employee before going freelance, then typically you’ll have built up different amounts in different company pension schemes. It’s a good idea to find the paperwork for these schemes (or contact your old employers and ask for it), and combine them with your private pension scheme.

Choosing a pension provider that works for you, Of course, there’s a lot to consider, anything from choosing a pension provider, paying attention to fees, the variation between plan to plan and what per cent % you pay into the pension plan. Have a look at how flexible the pension is in terms of payments. There is lots of information and pension plans and providers to consider and choose from, we’d recommend you see an independent financial advisor before committing to any pension plan.

More details on pensions (here)