DP and I never disagree about money but....

[DPpension]

We just disagreed about money.

We both live together and own a property in both names with 50/50 split on the deeds. I’ve tried to make this post as unbiased as poss so bear with!

We have always split household bills according to an equal 40% of take home pay.

So one of us takes home 3.2k per month and one of us 1.9k.

The 1.9k Person contributes £780 and the 3.2k person contributes £1300 which is circa 40% of our net take home pay each. The rest of the money is that persons to do what they see fit.

Both pensions are matched by employer at 10% but given their higher earnings the higher earner pension is higher overall.

We’ve disagreed tonight about whether the contribution should be based on net pay or gross pay.

Should it be split by gross or net?

You can’t penalise someone for what’s not in their hand

But the reason its not in their hand is because they have already stashed money in a very lucrative, tax avoiding savings scheme which isn't even available to the lower earner.

If the lower earner elects to stash a chunk of their income in a regular savings scheme every month should their salary then be considered net of their savings plan?

I say net after pension, mainly because DH's pensions are compulsory and he gets a decent chunk of employer contribution so shouldn't be "penalised" for having a good one.

Different as we are married, and DH puts a big chunk of his disposable in the joint account whereas I don't.

@FrangipaniBlue

I agree it should be net but I think you need to separate out the pensions issue from the bills.

Whether/how you fairly even up the pensions imbalance depends on 2 things for me.

If the lower earner has the lower earnings through mutual agreement ie they became a SAHP, part time or whatever to raise DC then it needs evened out in a fair way.

But if there are no DC and the inequality is purely down to the two individuals different career choices then I'm inclined to say tough, it is what it is?

What would the lower earner like to see happen to even out the pensions? For example, would they like to save an equivalent amount to what the higher earner is putting in their pension or do they have the option to top up their pension to a similar level?

Whichever you went with, that money should come out BEFORE you calculate the bills, so effectively reducing the lower earners "net" pay? Higher earner then pays slightly more towards the bills if that makes sense?

I don't agree however with the MN view that both partners should have the same "spending" money left. I'm a lot higher earner than DH but that's because I've worked harder over the years to further my career.

I pay more towards the household costs and I pay more towards family treats, but I don't see why I shouldn't also have more leftover at the end to treat myself (if I wanted to) as well?!

Agree with this. Circumstances/family etc make a difference here.

[quote Drunkpanda]@Cottonfrenzie I'm struggling to see why you should have less disposable income than your dh, unless you both view teaching as giving you more leisure time and an easier ride than whatever his job is. That he's happy with this split is not good.[/quote]
I’m struggling to see why the lower earner has to be subsidised by the higher.
I think PP are unclear r.e disposable context.
In this context I think ‘individual disposable income’ is more relevant.
It’s obviously ridiculous for the lower earner to pay their half of all holidays, meals out, trips etc. In my view this is separate.

What I mean by disposable income is purely individual. Clothes, toiletries,going out with friends s

If there’s a huge income disparity - is it fair for the ‘higher earner’ to top up a bit? Yes.
Must thé higher earner give the lower earner enough so that it’s EQUAL? No.

Obviously depends on circumstances. You can’t half one half of a couple in Gucci and another in Primark. But I see no issue if one half of s couple can afford an expensive spot, personal trainers etc and the other can’t. The lower earner is already being subsidised by paying less than they would on their own salary + enjoying joint leisure they could never otherwise have afforded.

Caveat: this is with NO KIDs obviously.

Net.

Your system is unfair.

All money goes into pot and both take out the same amount each month for personal use.

@HamCob

What's unfair about that? Of course a higher earner will have more money left.

Well you wouldn't think it was particularly fair if you'd given up a highly paid job to work part time, look after the kids and do all the shitwork at home whilst your partner climbed the career ladder.
Not saying this is the case here but it's not much of a stretch of the imagination.

Except it is a stretch of the imagination given that absolutely none of this has been suggested by op.

Even then you could argue that giving up a high flying career is different from giving up a dead end retail job to look after kids.
I still don’t think ‘equal’ disposable income is needed. Maybe a smaller disparity but not absolutely equal. Depends on how much work is done.

Everybody is different , and it depends on the couple’s values and lifestyles

If theres no kids i dont really understand why it isnt 50 50 and why there is such a push to be "equal".

If there are no kids the lower earner can use their disposable income to top it up.

Net.

You've agreed not to pool your money. The lower earner has £1200 a month disposable income so seems like they have plenty me flex in their budget to pay additional contributions into their own pension if they want to prioritise this.

As you're not married the lower earner is not entitled to a share of the higher earners pension in the event of a split, so it's entirely their responsibility in this scenario.

Is there more to this? Does higher earner always want to spend on luxuries like expensive holiday, savings for home improvements or nights out that means the lower earner feels finances are squeezed and not left with much disposable income?

@NinaDefoe

Your system is unfair.

All money goes into pot and both take out the same amount each month for personal use.

Why is everything in the pot always fair?

Having been in that situation, 'all in the pot' ultimately felt far more unfair, when one person chose a lower stress, lower hour role - but then also didn't spend any extra time on family or household responsibilities, but instead used their extra time to go to the gym, relax, and buy cool stuff with 'their half'.

Especially without kids, or with blended families, paying in proportions can be very reasonable.

Just entirely based on what dh and I do, it would be based on what hits your bank account each month. In our case, dh is actually the higher earner (though a company director, so it's a bit more challenging to work out), but I pay more into my pension than he does. I would be a bit annoyed if he insisted I included this in our overall joint contribution because I do see it as a necessary expense and he too could pay in more and then we would re-jig the calculations. That said, it would only be different if one partner was intentionally paying in way over the usual pension contributions in order to 'keep' money from their partner.

Oh and if he's worried about food check out the Forn des Theatre in Palma their chicken pastello (I think it's called - like a pie) is the best thing I've ever put in my mouth. I could eat them every day of the week.

Ooops wrong thread sorry x

Could the lower earner earn more money and get a better pension? Assume no children so not working part time. I think your split is fair and your DP will have a better pension as he’s got a better job. If you’re not happy with your pension why not look for a better paid job? Is there anything stopping you?

@CrinklyCraggy

How can you be married to someone who can afford better restaurants and holidays than you can?

They aren’t married.

@HomeHomeInTheRange

The contribution of the lower earner should be calculated on what is left AFTER paying an extra pension too up.

It isn’t fair that the higher earner gets to squirrel away a significant pension savings before calculating the household contribution.

This is especially important since you are not married. The pension would not be considered in the event of a split, whereas it would in a divorce. Some pensions might not be payable to a surviving partner as they would to a widowed spouse.

This is all especially relevant if the lower earner is in that position due to caring responsibilities of shared Dc.

This.

And I’m think very carefully about having children together, unless you are both willing to share the work and cost of pregnancy, childbirth, breastfeeding, parenting and paying for a child for teh next 21 years.

Because your current system isn’t very fair and I suspect will become even less fair if you have a child.

I really don't understand the idea that all money is 'couple' money and it is unfair for one to have more left over than the other.

We are not living in a communist country.

In this case these are two working adults, without children, who are not married. I assume neither, therefore are sacrificing their earning power for the other..... so why all this income redistribution?

Sure it's nice if the higher earner covers more if it's necessary for a comfortable life for both. But that's something surely to be appreciated, not demanded as 'fair'. why on earth is it unfair for one of them to end up with more at the end of the month? And why should the higher earner be obliged to pay more for the same thing? (Living in the same house with the same expenses).

They earn more because of the decisions they made through life, therefore they have more. That's not injustice - just common sense.

I think expenses should be divided equally, unless the lower earner is unable to meet their half. If the lower earner basically can't pay for the lifestyle they enjoy, then they are being subsidised. Unless they are looking after the children or doing a disproportionate amount of the house management or contributing more in some other way, then that is basically a skewed deal in favour of the lower earner.

If children etc, or someone has sacrificed earning power for the other that is totally different.

Why would it be based on gross? That doesn’t make sense

@BraveGoldie

I really don't understand the idea that all money is 'couple' money and it is unfair for one to have more left over than the other.

We are not living in a communist country.

In this case these are two working adults, without children, who are not married. I assume neither, therefore are sacrificing their earning power for the other..... so why all this income redistribution?

Sure it's nice if the higher earner covers more if it's necessary for a comfortable life for both. But that's something surely to be appreciated, not demanded as 'fair'. why on earth is it unfair for one of them to end up with more at the end of the month? And why should the higher earner be obliged to pay more for the same thing? (Living in the same house with the same expenses).

They earn more because of the decisions they made through life, therefore they have more. That's not injustice - just common sense.

I think expenses should be divided equally, unless the lower earner is unable to meet their half. If the lower earner basically can't pay for the lifestyle they enjoy, then they are being subsidised. Unless they are looking after the children or doing a disproportionate amount of the house management or contributing more in some other way, then that is basically a skewed deal in favour of the lower earner.

If children etc, or someone has sacrificed earning power for the other that is totally different.

I agree with this and I earn lower than DP not by a massive difference though tbf)

@GettingThemFromHereToThere

So my OH and I have very different incomes.

The way we work it is we split everything so we're left with the same disposable income each month.

So that means, for us, that one of us pays ALL the bills AND transfers the other a set amount each month. Then what we do with the disposable income is up to each of us.

Pensions - the higher earner has considerably more and will retire with considerably more. But not a lot we can do about that. I mean, the higher earner could give more to the lower earner to put in a private pension, but we don't do that currently.

And do you contribute more than your OH in other ways to the relationship, to justify this transfer of wealth?

Genuine question - because I think this arrangement could be very fair if you do, or you are very lucky!

My starting point is that most people should think more about their pensions than they do. Most people, especially low earners, should pay more into them than they do. An impoverished old age is not something to aspire towards.

So a low-ish earner should be thinking seriously about saving as much as they can towards retirement. Maxing their employment-based contributions, then saving some more; either into a private pension or a tax-free savings pot.

That is what is in their interests, as an individual, whether or not they are also partnered.

Then, they can declare how much money they have available for living costs; either alone, or pooling with someone else.

A pp's point about the lower earner's standard of living being pushed up against their interests, by the desires of a higher earning partner, is a really insightful one.

It doesn't matter that both people benefit from pooling living costs, that's an easy red herring of an argument, the question is how much can each person actually afford to spend on living costs.

Then, if the better off person feels their standard of living is being dragged down by the poorer partner, they can choose to top up the household / holiday / leisure budgets with their discretionary income. That's the right way round to do it, not to guilt the poorer party into subsidising their higher standard of living.

In a partnership, sharing has to be fair, so recognise individual interests as continuously important, as a basis for that partnership.

Not sure if anyone else has pointed it out, but it does make sense to at least consider pensions with couples, purely for the tax advantages.

If one partner has a huge pot and the other has nothing, the huge pot person will be highly taxed when taking their pension. Makes more sense to split the contributions and pay some of that money into a pension for the person with no pension, so they can take some money out tax free at pension age. Waste of a tax free allowance otherwise.

In this scenario, the higher earner is already paying for a higher percentage of the shared costs. If there are no dc involved, then the lower earner is already being heavily subsidised and getting the better end of the bargain. I'm not really sure why they would expect the balance to be tipped even further in their favour?