Hi I'm wondering if anyone can help (maybe should be in Legal) but I can't save pension out of gross pay as I earn too much (thanks George Osborne for screwing a hard working young mum who never could afford to save any pension till now). I'm sure I'll get loads of flack on here so yes smallest violin etc etc.
Anyway is it ok to get my DH to save his max pension allowance and for me to pay the entire monthly mortgage payments instead? I mean given we are married, should we ever divorce, the pension and the house would be 50-50 anyway? Not intending to divorce obviously but want to be sensible and protect both of us.
The idea would be to then share his pension later on, as I won't have one to speak of, but I will have paid an equivalent net amount into the mortgage.
You're not guaranteed to get a 50/50 split of pension on divorce. Presumably you can at least put £10k a year in to a pension and get full tax relief as that's the minimum annual allowance for very high earners.
It's not that simple. Some people opt for more house equity or more savings and take zero pension. Do you earn more than him? If you have the children less than him (because you want to maintain the children's standard of living ) then he'd probably get a bigger share of the house equity and you'd get none of his pension as you are working more than him so have the ability to increase your pension nestegg.
Taking a cut of the pension can be a source of resentment as you are giving your ex money long after the children are adults.
I can't save a pension as your allowance goes down by £1 for every £2 you earn over £150k, since April 2016. For example if you earn 200k, your tax free annual pension saving allowance (40k normally) is reduced by 25k (half of your excess earnings over £150k) and would be only £15k. I'll double check if there is a 10k minimum but that's not what my workplace document says.
Thanks for advising that assets would not automatically be 50-50.. I guess we do need to see an IFA first
Definitely a £10k minimum for the reduction. But still not much for you to contribute at that level of income. Have you used up tour prior year allowances? It might be worth making a one off contribution to utilise them if not - but you will lose a year after 5 April, so if it is something to consider get onto it now.
Chasing I don't have the money to contribute any lump sum at all in the next 5 days. So I'll lose an entire year of unused allowance. I've been working for 6 years and only paid in around 30k total so far Feel very stupid for not realising this applied to me till now. Next year I'll aim to use all my unused allowance then that's it I guess. Will ask work about the 10k, thank you
You're earning over 150k, you've it been working 6 years and already have 30k in a pension? You are STILL early in your career, many people have nothing in their pension at your point and earn nowhere near that kind of sum. Rather than having a rather entitled sounding rant here, have a or a and get some proper financial advice on tax efficient savings and investments.
I don't mean to sound entitled, hence disclaimer in my original post, fully expected to get flack for being a high earner on here. I pay so much tax already, so I don't think it's entitled to expect to be able to save for retirement out of gross now, when I won't be earning then. I was hoping people would know the facts. Will go to an IFA.
You might want to take to the IFA about using a LISA if you're under 40. It can only be taken out at retirement (unless you're buying your first home), is topped up by the government by 25% and is tax free at the point of taking it out
Definitely see an IFA. Yes you pay them but it's their job to help you. I work with an IFA and would say that it doesn't matter where you save it, as long as you're saving it. So full pension allowance, full ISA allowance, even get a bond where income is taxed at source. The worst thing to do is keep money in a cash savings account where it's being eroded by inflation. I've also seen pension sharing on divorce orders at 50:50, 60:40 and even 75:25 so be careful there
Thanks for the helpful suggestions. Will try to max out all my unused carry forward first of course, then ISA, then possibly consider DH maxing out his allowance instead of paying for other stuff, but only after seeing an IFA and getting legal advice & wills