to not want to put money in DH pension and not mine?

[yellowcuptea]

Okay - so DH & I together 20 years, 2 kids. Have had the usual ups and downs.

DH is in highest earner bracket so puts a lot in pension as it's tax efficient. I earn about a third of what DH does. I went part-time for kids, took a hit on promotions, didn't pay into pension in maternity etc. but DH was free to go for big jobs.

DH has close to £1m in pension, I have a quarter of that. DH is now suggesting I basically drop my pension contributions to minimum, we put more of DH money in his pension, and use more of my salary to live off. More tax efficient.
Then when I'm 55 we take the 25% out of my pension that's allowed too.

AIBU that this makes me feel really uncertain?? I don't like the idea that my pension will be worth so much less! DH of course is saying, but it's OUR money at the end of the day and even if we split, pensions are a shared asset so I'd still benefit.

YABU - it's family money. Use your salary to live on and save more in DP pension

YANBU - you should both have separate pensions, and you should be paying more into yours not less...

I say new one I just mean different one as I have two one I can add to is apparently gold plated so worthwhile even tho mid fifties

Fuck no.
Keep your OWN pension- let him contribute to that.

What is the situation around his pension(s) should he die before retirement? Will all of it come to you? What about after retirement?

(We have a mix of DB, DC and self-invested to get our heads round, with various conditions for the survivor. Need to get on top of that.)

if you divorce, I would have thought you’d get half his pension anyway?

not always

My main concern would be having access to his pension if he dies.

This.

This

It’s highly doubtful that any tax advantage he gets will remain after the budget anyway (imo of course, no one knows for certain)
Tax advantages might continue for lower earners but it’s been widely touted as a loophole in the firing line to be closed in a week or two

This actually isn’t a bad idea from a financial planning perspective but if you’re not comfortable with it don’t do it. If you got divorced you’d get some of his pension anyway.

edit to add - I misread your post about which tax band you’re in. Is he older than you? If so it sort of makes sense because he can get the tax free cash sooner but it’s more marginal if you’d be getting 40% relief anyway. I’d also wait until the budget before bothering to thrash this out.

No - aside from your financial independence, it’s a bad strategy from a tax / investment perspective.

• the tax free amount is capped at something like £250k and at £1m your DH will have maxed it out. It’s better tax planning to now build your pension to £1m. Also when you come to draw down an income you want to maximise draw down at the lower income tax rates
• I would also check no IHT on the pension would be imposed if your DH dies (Labour might change the rules on pensions being exempt from IHT, though I think maybe no IHT between spouses?).
• Also Labour might re-introduce the cap in which case your DH pension would be frozen effectively to avoid the punitive tax charge whilst the money could have been in your pension accruing investment gains.
• what if your DH dies and wills it to someone else? Your retirement plans would be screwed. I would not take that kind of risk (even if you view it as remote currently - might not be that you fall out he might just feel strongly he wants to help out your kids)
• if your husband decides to buy an annuity at retirement it goes with his death (unless he specifies you as a beneficiary - you get a lot less though I think and I have read most men go for the higher rate whilst they are alive!)
• if you divorce much cleaner if you have roughly equal pensions

With those amounts involved you should be taking financial advice on tax, estate planning etc. I am no expert but the above are the questions I would be wanting answers for.

it’s a no brainer to me to equalise pensions as takes it off the table if any relationship issues down the line

my pension is significantly higher than my husbands and we contribute more to his to try to equalise by retirement

You need to do some proper planning with an adviser! What happens if your DH passes away before you? Will the pension switch to you? If so, and big if, it’ll be 50% of his payments. There are many ways you could do this but you need proper advice that protects you both in the most tax efficient way.

No chance in hell, what if you divorce?

Easy on the no chance comments. Op, many committed couples arrange finances between them to minimise tax. It’s not suspicious to want ti do this. However, it is his pension vs yours. If he hasn’t always been great at sharing or you don’t feel solid it’s understandable to want to prioritise yours.

we currently pay all the extra into my pension, as it’s better for tax and I’m running out of my extra contributions capacity. We will switch to dhs then. (Not in the uk)

45% mine is 40%.
and we do have a joint bank account, we both pay money into it. DH pays in more than twice the amount I do, isn’t stingy with money in general at all. Big household purchases are usually paid by DH entirely.

I’d be uncomfortable too especially if you’re used to having your own money. So he wants to live off you build up a big pension pot then cut down your pension further by getting 25% out. In theory you should be entitled to some of his pension in the event of divorce but it’s not always clear cut and the divorce courts don’t always seem fair tbh. I wouldn’t risk it personally.

I didn’t realise that, not sure DH does.
DH originally planned to take some money out at 55 but apparently if that happens DH is limited to putting 10% into pension…

Not a chance I"d do this. Makes more sense that he pays more into your pension.

Yes proper financial and legal advice is crucial as lots of variables and potential for rule changes so tricky waters to navigate.

also you need to look at pension planning holistically - will you both get full state pension? Will you both own the house mortgage free or will you need to rent?

also whilst you are in theory entitled to his pension in divorce from what I can see of friends it’s so bloody difficult and take years to actually get your hands on it as men hold on to them tightly that many just give up or accept a paltry amount in order to get housing sorted for the kids. It’s also such a technical area the legal fees are huge so I know a few women who have just called it a day and walked away. Bird in the hand worth 2 in the bush and all that

Wait until the budget and then get separate and joint financial advice about the best thing to do to maximise it all

If he has close to 1m then it makes no sense to pay more into his. You both need to priortise your pension.

yes, we’ll wait and see I think. Neither of us mind paying g tax per se, we know we’re lucky with our earnings.
and we are going to get some pension/ tax advice too… but the whole reason of putting in in pension is to get the tax relief - DH can’t do that putting in to mine??

He is correct in that the income tax benefit of contributing to his pension will be greater. The gross roll up will increase the value. However, there are further factors to consider than this. Firstly, the new lump sum allowance is £268,275 meaning that in the absence of transitional protection, any benefit beyond this would be taxable at HIS marginal rate.

Secondly, how old and how is his life expectancy? If he is beyond 75, the pot is taxable on his beneficiaries, whereas if you are younger with a longer life expectancy, it may be more tax efficient for your beneficiaries to hold it in your name.

Next, a personal contribution will be subject to the annual allowance of £60,000 which may cause him issues - although carry forward may change this picture slightly.

Lastly, the previous chancellor removed the lifetime allowance, although lump sum tax free benefits remain capped. There are several rumours of pension reform circulating, meaning that the budget could render current planning unsuitable. Maybe hang off until after we find out how much our new chancellor wants to attack our retirement provision.

Seek financial advice from an adviser with no affiliation to St James Place and also consider whether how much you see your finances as a joint enterprise and of course how much you trust your husband to manage joint finances fairly.

Thanks @Everanewbie that seems sensible and very knowledgeable!

If he’s already close to £1m, I’d be worried about them re-instating the lifetime allowance.

If he wants to retire at 55, I’d just invest the money elsewhere. Then you can build a sum to take from earlier.

I'd want to speak to an independent financial adviser before making a decision like that. Fair enough you may get half his pension if you divorce. What if he dies? Are you certain you're the beneficiary of his pension in that circumstance? Does he treat all money as family money now? I'm thinking, if you don't divorce, will he allow you equal access to the pension annuity when it comes time for claiming it?