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?

Of course the reason you're getting very different responses is partly to do with different degrees of commitment in partnerships.

Some people use partner to mean boyfriend, others to describe someone they've moved in with to see how it goes for a year or two, or someone they've been with for 5-10 years but might not be with in ten years time, others to mean an unmarried lifelong commitment.

Only in the last case is there a likelihood of the partners benefitting form each others' pensions. Even then there's no guarantee of that.

Therefore pensions and related savings have to be considered an individual commitment and benefit.

If you're a proper unit (with or without children), you share finances.

If you don't share finances, it's likely to not to be 'fair' or 'equal'. That's the way it goes. There's more of an argument for trying to even things out a bit if one person has given up a salary/pension to look after children - but that's just another argument in favour of completely shared finances.

Two individuals living in the same house with differing salaries and pensions = two individuals who have no particular need to make financial concessions to one another.

Pay after tax/NI but before pension contribution imo.

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?

The question is, how much choice did the poorer party have in setting the joint standard of living? Did they truly understand their own long-term interests when making that choice (few people think enough about their own old age)? Would the higher earner be willing to live at a standard that is truly affordable to the poorer party?

Benefits are not truly beneficial if you didn't ask for them, wouldn't have chosen them and can't really afford them.

In that case, the lower earner is actually subsidising the higher earner, by propping up the lifestyle they desire (albeit proportionally), at long term cost to themselves.

You can't survive old age on memories of the nice house and dinners out you enjoyed in your twenties and thirties.

Gross
My logic for this is that there is a reason we have progressive taxation. Undoing that effectively but going with net is unjustified and benefits the higher earner.

Also the thing about pensions and savings is compound interest / investment returns over time. Saving more when young makes a MASSIVE difference later.

It isn't like other areas of spending, especially disposable stuff.

Saving x amount a month in your 20s is far, far, far more valuable than saving the same amount per month in your 40s. Whereas nice food, clothes, holidays etc cost and benefit about the same, at any time.

If you are going to be together when drawing your pensions then at that point you work out what percentage those pensions provide by way of income and recalculate the split for outgoings surely.

The only relevance of the capital amount of income is assuming you will split before then. If that is to be the case why should a single person have the benefit of another single person's pension. If you want/need to be able to have a share then it's marriage/civil partnership required.

@lottiegarbanzo

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?

The question is, how much choice did the poorer party have in setting the joint standard of living? Did they truly understand their own long-term interests when making that choice (few people think enough about their own old age)? Would the higher earner be willing to live at a standard that is truly affordable to the poorer party?

Benefits are not truly beneficial if you didn't ask for them, wouldn't have chosen them and can't really afford them.

In that case, the lower earner is actually subsidising the higher earner, by propping up the lifestyle they desire (albeit proportionally), at long term cost to themselves.

You can't survive old age on memories of the nice house and dinners out you enjoyed in your twenties and thirties.

Yes, I think that's a fair point, but the lifestyle doesn't sound especially extravagant and presumably the lower earner would be hard pressed to live on much less than £780 if they were living alone?

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

If you marry someone in England and Wales at least, you enter into a 50/50 contract. If you don't want to live on that basis then don't get married. Its not communist to say that a couple who elect to combine their lives and futures should both equally benefit from that combining.

These discussions also need to consider the wider context where women are paid less than men and more likely to have their lifetime earnings and career options disrupted whilst being less likely to have access to generous employer pension schemes to avoid tax.

These discussions also always underestimate the cost to the lower earner of living with a high earner. I don't know a single couple in that situation who have lived down to the lower income to protect the lower earner - there is always pressure to "enjoy" some of the benefits of the higher income and being expected to contribute to those "benefits".

Depends.

If you're just a co-habiting couple then I'd say a % split of your net pay is alright.

But if you're doing this because you're committed to a shared life together, married, children, sharing the load as a family, then the it should be about equal effort, and you should share the rewards equally. One person working full-time for 20k doesn't work a quarter as hard as another working full-time for 80k, in most instances (in my career my lowest-paid roles were where I worked hardest).

Yes, life would be more expensive for both of them, if living alone.

Joining their households together benefits them both.

But I would argue that it ought to benefit them equally. It's working out what is really 'equal' so fair that is difficult.

Just saying 'you're better off because you're sharing' doesn't cut it, as an argument. They're both better off. It is almost inevitable that the consequence of being better off is that the higher earner has more disposable income than they did alone. But does the lower earner?

@lottiegarbanzo

Yes, life would be more expensive for both of them, if living alone.

Joining their households together benefits them both.

But I would argue that it ought to benefit them equally. It's working out what is really 'equal' so fair that is difficult.

Just saying 'you're better off because you're sharing' doesn't cut it, as an argument. They're both better off. It is almost inevitable that the consequence of being better off is that the higher earner has more disposable income than they did alone. But does the lower earner?

There’s a distinction between shared/joint expenses, also the ‘type’ of expense.

For example:
On my own I’d be in a one bed flat. I now have a 3 bed house with DP and pay exactly the same. So nobody’s pushing my standard up.
However if I was moving from a house share it would be increasing my expenses, not necessarily in my interest!

There are two scenarios:

1. Higher earner pays more to reflect higher standard they THEY want. Lower earner pays less or none. For example a more expensive house, meals out etc etc.
   This is fair.

2. Higher earner is made to pay more solely to even out disposable income. No other reason other than ‘it’s unfair for one person to have more money’.
   So lower earner can’t afford an expensive sport, or their hair done every two weeks. But their partner can.
   And people think lower earner should be able to have it too!
   This is ridiculous.

@PearPickingPorky

Depends.

If you're just a co-habiting couple then I'd say a % split of your net pay is alright.

But if you're doing this because you're committed to a shared life together, married, children, sharing the load as a family, then the it should be about equal effort, and you should share the rewards equally. One person working full-time for 20k doesn't work a quarter as hard as another working full-time for 80k, in most instances (in my career my lowest-paid roles were where I worked hardest).

An interesting thing r.e lower paid roles- what is ‘work’? I did work the hardest in my lowest paid roles, but I didn’t take any home with me. Once I left, I was done. Compared to my current roles where I’m constantly thinking, planning. Even if I ‘look’ like I’m relaxing… I’m really not!

If it’s something like teachers (who are made to do lots of unpaid OT) fair enough. But nurses, carers, nursery workers etc while stressed ‘on’ the job don’t take any work home.

Also I believe if people want to combine assets they should just do to the simple way and get married. It’s a bit disingenuous to want a ‘fair split’ etc etc if you insist on being legally separate.

Also @PearPickingPorky sorry yes you did mention people being married! In that case it should be shared, if people didn’t want to then don’t marry.

Yes I agree @sanbeiji My concern is about the higher earner imposing their desired standard of living on the lower earning partner - not necessarily deliberately, just failing to recognise what the standard of living is that the lower earner can afford. They may never have lived like that, if they're always earned well.

So maybe a useful comparator would be, if the lower earner moved in with someone on the same income as them, how would things look?

Pensions are an essential, not a luxury. They are tied to the individual. So they have to be saved for first, before each person's available income is calculated.

We do net here

I think the lifestyle point is absolutely true. My partner (much lower earner) moved in with me - into a property he could never have afforded. He contributes significantly to bills, not at all to the mortgage, as the house is my asset. And I enjoy us having a lifestyle that he largely can't afford (more takeaways, dinners out etc), so I fund 80% of those.... I never expect him to pay for things I want, which I know he wouldn't choose to spend on if he were alone.

But we are both independently earning adults, with neither of us sacrificing for the other. so do I owe it to him to have no more money than he does at the end of the month? To pay into his pension? To not spend anymore on personal pleasures than he can? Just because he is in a partnership with me does he have the same rights to my salary as I do? No.

Very different of you are co-habiting but independent people, versus a pooled-all-resources-both-physical-and-mental family.

If you're married then everything should be pooled imo.

If you have kids. The same. So everyone has the same spending money etc.

If you're not married and don't have kids then anything goes imo. Unless the lower earning partner is giving up something in order to help the other - eg. Relocating, housework therefore works lower hours etc.

@GeorgiaGirl52

So DP is not your DH. You have no DC in common, only a 50/50 property. You are really just roommates. Split the household bills 50/50 and each pays for their own car, phone, insurance, takeaways, haircuts, etc. This includes pensions. Start saving so that when you break up you will have the money to buy our his share of the property. Then when you get a new DP, he can be a boarder and pay you rent.

How patronising

What is your argument, OP?

@GeorgiaGirl52

So DP is not your DH. You have no DC in common, only a 50/50 property. You are really just roommates. Split the household bills 50/50 and each pays for their own car, phone, insurance, takeaways, haircuts, etc. This includes pensions. Start saving so that when you break up you will have the money to buy our his share of the property. Then when you get a new DP, he can be a boarder and pay you rent.

I'm married, we pay for our own cars, phone bills, insurance and haircuts :S we take turns paying for takeaways, I wouldn't expect my necessities to be funded in part by my partners wages and vice versa.

Also our pensions aren't really an issue with us, they have no bearing on our day to day lives, I'm on a defined contribution scheme and my partner is on a final salary scheme, if I want to pay more or less into mine I do so. We'll have what we have when we retire, and can work from there what to do with that, at that point, as mentioned by someone else, I'm not stashing away money to spend on flash things for myself, I'm saving so that we have a comfortable life when we are no longer able/want to work.

FWIW I'm the higher earner, and pay slightly more into the joint account each month, I also overpay the mortgage by more each month, what we have left after that is our own to do with how we see fit.

You have a reasonable rule, splitting in proportion to net pay.

I don't think the level of pension contributions should affect anything, that's future income, not current income. People should be free to reduce their net salary (and contribution) by any reasonable amount, by upping their pension contributions. In the same way that they could possibly work fewer hours and earn less, or take an easier and lower-paying job, if they wanted to.

Net. Of course the higher earner should have mire disposable and pension - why should the lower earner be entitled to their money?!

@HandScreen

Net. Of course the higher earner should have mire disposable and pension - why should the lower earner be entitled to their money?!

They might be earning less because they work p/t or have had to change jobs to cover childcare?