Husband has a better pension than me should I be worried?

[Nopensiopottopiissin]

So this is about pensions. I took a private pension out in my mid twenties (I'm 40) as I was self employed. I paid in for about eight year roughly £100 per month, then I got a job so I took a work pension out instead which was a similar amount but employers doubled it. During this time I got married after our son was born I became a sahm I didn't pay into a pension for 5 years. This as something we before wanted and it's allowed my husband to build his career. The last year I've worked part time and only paid about £2o a month into the pension which again employer doubles. My dh and I were talking last night and I discovered that he pays £350 a month into his pension which his employer matches and he's been doing that for about 12 years. We have joint income so everything goes in same pot. I now feel a bit concerned that my pension is going to be very small compared to his which is fine unless we split up or he dies. Then I might be screwed. I am annoyed because we can't afford for me to pay a similar amount we literally wouldn't have enough left to pay bills. So is it reasonable that he gets such a large chunk of our money to pay into a pension pot and I don't? Is there anyone else in a similar situation to me?

@Twizbe

I'm a SAHP.

My husband has recently got into pensions and has transferred our various work ones into a single pension bee account. He's adding to his, but is also topping up mine where he can. I think if your husband is able to he should be topping up yours a bit as well. All part of sharing your joint assets. It can also be quite tax efficient as he can split payments between the accounts and use your tax allowance.

Make sure you claim child benefit in your name as well. Husband earns to much for us to get the money but it registers me as not working to raise kids. That then counts towards my NI and state pension.

Dont do this. Very surprised if pension bee is any better than occupation pension scheme you will be in. Especially if current one is defined benefits rather than defined contribution. Also you cant combine you and partners pensions or use someone elses allowance.

Posters are being ridiculously harsh on OPs husband. It’s not sly or sneaky to pay into your pension. If the family have other monetary pressures then fine, discuss it but OP hasn’t alluded to that? If she has inheritance or savings they use for big expenses and she’s not happy then talk to the husband!

The problem with the concept of family money is evident here too. As in the U.K. you are taxed as an individual and pension / retirement arrangements are funded individually. The government has designed some tax advantages to encourage people to pay into pensions and make working more attractive i.e, reducing tax whilst boosting your workplace pension.
So if you want to be a stay at home parent you really need to discuss this with your spouse about how retirement will be funded.

I used to work in customer services for a pension company (defined contribution type) and you’d get wives ringing up to register the death of their husband and ask about what they were entitled to. Often the husband had a single life annuity (probably because it paid more monthly / annually that joint ones) and then I’d have to tell the wife there was nothing coming to her. It was quite sad.

Women really need to get clued up on this stuff. Most people don’t save enough for retirement so if couples are planning to live off just one persons pension then you need to putting a lot into it.

@Twizbe

I'm a SAHP.

My husband has recently got into pensions and has transferred our various work ones into a single pension bee account. He's adding to his, but is also topping up mine where he can. I think if your husband is able to he should be topping up yours a bit as well. All part of sharing your joint assets. It can also be quite tax efficient as he can split payments between the accounts and use your tax allowance.

Make sure you claim child benefit in your name as well. Husband earns to much for us to get the money but it registers me as not working to raise kids. That then counts towards my NI and state pension.

You can only pay YOUR earnings into a pension, as a non earner you have limited ability to pay into a pension in your name.

Your annual pension contribution is capped at £2,880. So no, he can't just share his money out between your schemes.

But everyone who doesn't work should pay in the £2,880pa or as much as they can afford because it is topped up by the government for a notional tax amount, to £3,600. Noone is going to give you that money in any other way.

@echt

He's been a slyboots, hasn't he? Halve the 350 and put it into your pension.

Have a dekko at what his pension offers.

If he dies, you should get tax-free lump sum, pension for children up to 23 in education, and a survivor's pension for life. I say that, but I'm basing it on my experience of local authority pensions.

Absolutely do NOT do this. He’ll then lose the employer matching contribution and his tax relief. Please don’t give advice when you don’t know what you’re talking about.

OP, ask what sort of pension it is. If it’s a defined contribution / money purchase pension (most likely) then the whole pot is passed on tax-free if he dies before taking benefits. If he dies after taking benefits it depends on the arrangement he makes.

If it’s a defined benefit / final salary scheme then it depends on the rules of the scheme. Usually you would get a half widow’s pension.

If you divorce, under either arrangement the value of the pension is taken into account in the marital assets so you would be entitled to a share.

Stop worrying! You will be provided for. You and DH should see a financial adviser together though to talk about ways of optimising savings and the options with pension savings.

@saleorbouy

If he dies most employers have a death in service benefit that will pay out a lump sum. He should have nominated benefactors upon death who the plan would transfer to. If you split up, (assuming you're married) than you will be entitled to a portion of his fund. If he is a high rate tax payer then it more beneficial for him to make larger contributions as the pension payment is deducted before tax. (Also if your salary is above the child benefits threshold this can reduce it below the 51k cut-off) If you are at equal tax levels maybe you could even out the payments to each pension fund.

Most pensions now are defined contribution. There is no death benefit associated with them.

Some employers do also have a separate death in service policy, not linked to the pension.

If someone with a DC scheme dies, the trustees decide what to do with the pension pot, which is usually invested in stocks and bonds. To make this decision they use a nomination form the individual would have completed. They can make a different decision than the form requires, but they generally go with it unless there are any significant changes to status (e.g. post divorce, children since born, etc). If there isn't a form (frequent!) then they use whatever information they can fund, such as a will.

There is also a nomination form for death in service benefit, these are often different forms as the schemes are run by different providers for the company. They are enacted on the sane basis.

Please ensure you have your nomination forms completed, I've had to deal with some very difficult and sad cases where a non form would have made things much quicker and less stressful.

On divorce with a DC or any other scheme, it is added to the assets to be discussed and divvied up between you.

I would applaud your DH for being so prudent.

What @penbea and @Warblerinwinter said.

Also this, from @SovietSpy

I used to work in customer services for a pension company (defined contribution type) and you’d get wives ringing up to register the death of their husband and ask about what they were entitled to. Often the husband had a single life annuity (probably because it paid more monthly / annually that joint ones) and then I’d have to tell the wife there was nothing coming to her. It was quite sad.

Women really need to get clued up on this stuff.

100%. I am astonished that people on this thread are asking whether they will get all of their spouse’s pension when the spouse dies, where the pension is in payment. Of course you won’t. Where would the money come from?

What if an 85 year old man married a 21 year old then died the next week: do you think that the pension provider would continue to pay her his full pension for the next 70 years? Of course not. With some DB schemes and other arrangements you might get some entitlement, most likely a reduced sum, often for a defined period, but that’s not guaranteed.

As the example above illustrates, if somebody took a single annuity, which always pays more because it comes to an end on the death of the individual, the surviving spouse is left with nada. An annuity is a bet: you hand over your pension savings and the provider agrees to pay you £X per month until you die. If you vary the terms of the deal such that the provider has to pay £Y every month, not just until you die but until your spouse dies too, then £Y is always going to be smaller than £X.

Part of the family budget for the OP and her husband should have been making at least some pension contribution for her whilst she was at home with the children, because she would still have got tax relief (limited, but some) even though she wasn’t working. Not at the expense of her husband’s pension contributions, but instead of something else.

So is it reasonable that he gets such a large chunk of our money to pay into a pension pot and I don't?

Well he earns more? It takes longer than 5 years to build a career so I highly doubt you staying home with your child made that much of an impact on his career 🤷🏻‍♀️

I earn more than my DH and my pension pot is much bigger - to me that's fair. If he wants a bigger one then he should get a job that pays more

What if an 85 year old man married a 21 year old then died the next week: do you think that the pension provider would continue to pay her his full pension for the next 70 years? Of course not. With some DB schemes and other arrangements you might get some entitlement, most likely a reduced sum, often for a defined period, but that’s not guaranteed.

Interestingly, when my dad died, I went through all the pension rules, because I'm a pension nerd, when I was contacting them to inform them of the death and make the claim for my mum (DB scheme with vg widow's pension), I noticed a clause that said the pension was not payable to widows where the age gap was more than twenty years. There may have been another caveat, like second marriage or something. And it's a very old fashioned scheme in many ways, but I though it was interesting that the scenario above had been considered (and maybe protecting elderly people from scammers too?).

He is presumably paying into pension pre-tax, so there is no benefit to taking extra money out and paying into your pension as the tax benefit would be lost. It does make sense though for you to pay more into your pension. You can do this either by working more or for a higher salary, or adjusting your joint finances. If you pay in, say £100 a month again, pre-tax, then your income will be less and your overall contribution to the family pot will be adjusted (meaning he will need to add in more to make up the difference).

Honestly though, dh and I have over the years earned different amounts and worked varyingly FT/PT. I have never even thought about what he puts into his pension and nor has he ever asked what I put into mine. It's important for me to have a good pension pot so I work FT and pay into it and some extra. I wouldn't expect dh to pay less into his to compensate for me working/earning less, but I would expect him to take on the equivalent in terms of childcare/household responsibility to allow me to develop my career and earning potential.

@VanGoghsDog

What if an 85 year old man married a 21 year old then died the next week: do you think that the pension provider would continue to pay her his full pension for the next 70 years? Of course not. With some DB schemes and other arrangements you might get some entitlement, most likely a reduced sum, often for a defined period, but that’s not guaranteed.

Interestingly, when my dad died, I went through all the pension rules, because I'm a pension nerd, when I was contacting them to inform them of the death and make the claim for my mum (DB scheme with vg widow's pension), I noticed a clause that said the pension was not payable to widows where the age gap was more than twenty years. There may have been another caveat, like second marriage or something. And it's a very old fashioned scheme in many ways, but I though it was interesting that the scenario above had been considered (and maybe protecting elderly people from scammers too?).

Really? That is interesting, and you’d wonder whether that exclusion was introduced in response to something happening that made the pension provider sit up and take notice.

Your DH is being incredibly sensible. You’re responsible for your own pension & chose to pay in very little when self employed. I’d be delighted if my DH paid that much into his pension & got it matched by his employer.

So many people don’t seem to understand pensions at all.

One of my dh’s pensions dies with him so we are in the process of getting that changed so that I get some afterwards in that situation. Obviously it will mean that we get a reduced benefit whilst he is alive but I will need money if he dies so that’s a sacrifice we will need to make.

It’s currently being sorted out and will cost a few thousands from his fund to do so. Apparently an independant body has to authorise this to avoid any mis selling claims afterwards.

With workplace schemes a payment of 50% to the widow is standard, though perhaps your DH should check. If you purchase a private pension you can have whatever terms you want. If you go for 50% to spouse then the monthly pension payments are smaller.

Well explained @Iamthewombat

I think there are all sort of rules to watch out for and also the options on benefit crystallisation can be overwhelming if someone doesn’t really understand pensions. Taking the tax free cash and a single annuity because it pays more now will always be attractive because people don’t tend to plan long term and just want the most they can get!

I have seen some joint annuities that stopped payment to the surviving spouse after 5 years in the past. Not sure if they are still common now. But I remember taking calls on these and the surviving spouse asking about what happened after 5 years. I’d tell them the annuity would cease payment and of course they’d be saying ‘but how will I survive, Keith would never have gone for that option’. All I could ever say is go back to the paperwork if you think it’s wrong or I can raise a complaint. But rarely it was wrong, it was just a case of poor planning.

I know alot more people want to stick with drawdown now as they can stay invested but this requires either getting financial advice or being really clued up.

You have joint finances so I think this is fine. I'm in a similar situation although I've probably built up a bigger pot than you historically but I'm not contributing much now and my DH has a lot more. However if an employer is matching his contributions it would not make sense to throw that away.

Make sure you are named as the beneficiary on his pension in the event of his premature death (and he on yours). Also if/when he decides to take an annuity you can look into a 50% spouse pension if he dies first.

The size of his pension would be taken into account in a divorce settlement and you might get a bigger share of the house/savings. If you think divorce is likely then you may want to put more in yours going forwards but that's a slightly different issue.

Is it his private pension or an employer one though? My pension just gets taken as a % of salary & matched by employer.

Yabu if you stopped working for 5 years and didnt do the maths on what it would do to your pension.

@Iamthewombat

What *@penbea and @Warblerinwinter* said.

Also this, from @SovietSpy

I used to work in customer services for a pension company (defined contribution type) and you’d get wives ringing up to register the death of their husband and ask about what they were entitled to. Often the husband had a single life annuity (probably because it paid more monthly / annually that joint ones) and then I’d have to tell the wife there was nothing coming to her. It was quite sad.

Women really need to get clued up on this stuff.

100%. I am astonished that people on this thread are asking whether they will get all of their spouse’s pension when the spouse dies, where the pension is in payment. Of course you won’t. Where would the money come from?

What if an 85 year old man married a 21 year old then died the next week: do you think that the pension provider would continue to pay her his full pension for the next 70 years? Of course not. With some DB schemes and other arrangements you might get some entitlement, most likely a reduced sum, often for a defined period, but that’s not guaranteed.

As the example above illustrates, if somebody took a single annuity, which always pays more because it comes to an end on the death of the individual, the surviving spouse is left with nada. An annuity is a bet: you hand over your pension savings and the provider agrees to pay you £X per month until you die. If you vary the terms of the deal such that the provider has to pay £Y every month, not just until you die but until your spouse dies too, then £Y is always going to be smaller than £X.

Part of the family budget for the OP and her husband should have been making at least some pension contribution for her whilst she was at home with the children, because she would still have got tax relief (limited, but some) even though she wasn’t working. Not at the expense of her husband’s pension contributions, but instead of something else.

You’re right about annuity. However, it’s one of many reasons you really need to think twice about annuity. Right now, as the pot is not “crystallised” that the OPs DH is paying into, then this isn’t the actual issue. With a defined contribution pot (which I assume this is) then as long as he dies before the Op and before taking the pot as pensionn(crystallises it) she can inherit the full pot tax free as a pension pot ( up to when he’s 75). However, once he crystallises the pot and takes a draw down or annuity then she will only get a widows pension if he pays for that and how much they/he agrees to pay for that offering. A draw down is seen as better for most as the pot can then be transferred on his death. But, they’d have to choose the product they bought as a pension carefully. Right now it’s just a saving/investment pot that’s wrapped in a tax efficient pension wrapper- it isn’t an actual pension as such- the decisions on what type of pension he will take will come just before retirement Obviously ifs it’s a defined benefit it’s a whole kettle of other fish. Most defined benefit pensions give some sort of spousal pension, and death benefits if he dies while still in service.

@ExConstance

With workplace schemes a payment of 50% to the widow is standard, though perhaps your DH should check. If you purchase a private pension you can have whatever terms you want. If you go for 50% to spouse then the monthly pension payments are smaller.

It's so NOT standard.

Standard now is a DC scheme with no actual widow benefit, just a pot that goes to them, whatever there is, or whatever is left.

Really? That is interesting, and you’d wonder whether that exclusion was introduced in response to something happening that made the pension provider sit up and take notice.

Yep. The scheme has been closed to new entrants for many years and the terms I was reading were very old, from the 1970's. I just assumed it was good old fashioned sexism (a lot of the scheme rules were very male centred, all surviving spouses were assumed female, etc.). Ironically, he worked for a union.

But I'm just glad mum gets a decent pension and I don't have to worry about her. It even paid us c£3k towards a funeral.

In the event of divorce a pension is a marital asset and can be taken into consideration - that you know about it now is good. Keep a log of all the finances and keep track of them so he can’t hide anything from you. In the meantime check with hmrc what you need to pay in to qualify for state pension and work a plan with your DH about ensuring this. I think rather than contribute into dead pensions you should probably focus on a stocks and shares ISA as that will grow faster from 40. Go to Hargreaves Lansdown and check their top funds and agree how mucy your DH will give to you to invest in your name.

What are "dead pensions"? That's not a term I've heard?

Just to echo other posters, your DH is being sensible and almost certainly doesn’t have a say in what his employer takes out without him opting out.

I’m NHS and the higher earner. My employer sets my contributions, matches them, and it all happens without me needing to lift a finger. I can’t control how much they take off me. If DP tried to tell me that was sly and selfish, I’d be very upset. I’ve nominated him for my pension if I die, and seperately he gets a lump sum if I die in service; also had to be nominated.

I view the pension pot as a joint asset. He benefits from my very good pension. It would be madness to damage my pot in any way.

I’d suggest talking to a financial advisor if you are clueless about pensions, rather than asking here. Many people post knee jerk man hating responses, and many people (myself included) aren’t pension experts.

@VanGoghsDog

What are "dead pensions"? That's not a term I've heard?

It’s an old pension where your employer doesn’t contribute. Far better to invest in a stocks and shares isa instead. Yes pension contributions can give ‘free money’ in terms of tax but they can’t be touched until you are nearing retirement age. For a SAHM who is reliant on their spouse’s income a stocks and shares ISA makes more sense - as you can dip into it whenever you need to but on a 5 year basis, with carefully picked funds, your ISA has far higher / faster growth potential.

@Warblerinwinter thank you very helpful