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...

Ah, okay, so what he is doing is plausible. He puts £0.60 into a pension, he gets £1 because of tax relief. You have to put in £0.80 to get the same. So let's use small numbers to illustrate. If he puts £600 into his pension, he gets £1,000. On retirement he takes his 25% tax free allowance, that's £250, and puts it in a pension for you. You have, together, £1k of pension for £600.

If instead he put in enough only for £750 into his pension and you put in enough for £250 into yours right now then that will cost you a combined £650 because you have less tax relief.

So there is a plausible reason to do that but my caution would be that tax can change and his pension could well end up with a savings ceiling on it again, or the tax free allowance might drop from 25% to something smaller. If that happened and he had to instead 1) get an annuity in his name that carried on paying you after his death and 2) had to pay income tax without being able to use your personal allowance then you are going to be worse off.

The above is the real issue. People making claims about the risk it would put you at if he left you are talking nonsense really. As long as you know where he is saving that pension, the courts will always equalise pensions on divorce in a long marriage like yours unless there is some other asset that you take the lion's share of.

F

Women need to look after their own retirement provision. The risk ( outside public sector pensions where there tend to be automatic fixed widow/dependant pensions) is that at the point of retirement the men opt to take the highest pension annuity available ie one just for them in their lifetime.
Adding a woman on reduces the annuity rate as women live longer than men. Adding a woman on and opting for her to receive the same amount (not eg just 50%) of the annuity will reduce the amount even more.

Many, many (very nice ? ) men ime will opt for the higher amount benefiting only them because they won't gamble on their wives outliving them.

I know an older couple who did this, planned to live on one very healthy pension together to the end.
He now is in a nursing home with dementia but very healthy, not going anywhere any time soon. All of the pension was his name and is being used to fund him as having so much makes him not eligible for much of anything and she is left living on her state pension only and things are tight for her.
Lesson learned her daughters and their husbands are now making sure to split the pensions they are paying into to make sure bother have money in their names so this doesn't happen to them.

As I posted above, this is the exact situation of my Mum and Dad although the money involved was a lot less. My Dad actually went into a care home because he'd had a stroke and the NHS paid for the first month or so. When he didn't particularly engage with physio everyone realised he wasn't coming out so he had to start paying what he could. At no point was my Mum's situation taken into account aside from the fact that the house could not be sold with her living in it and she was entitled to half of his private pension every month.

She's actually better off financially now he's dead because that particular pension pays her his whole private pension plus she's entitled to some complicated part of his state pension - pretty sure the rules over that have changed now. I'm not sure that many people are aware of this.

This is not giving me bad vibes at all! All your money is currently family money and finances are completely shared. He has therefore suggested an arrangement that he thinks will save the family money in tax, which if he is a high earner, could be substantial, for the benefit of you all. As pp said I'd be discussing with a financial advisor but I wouldn't be assuming he wanted to take all my money so he could leave me. Why would he when he earns so much and has shown literally no sign of this, and been so open about his finances.

It's more - who knows what the future holds??

Because of some of the good advice here - I am adding more into my pension now, I will not be taking any lump sum out either and I will discuss DP adding to my pension too. Because if it IS our money then it IS, so that trust works both ways... and I have take the hit being the main child carer for so long.

I am also paying 40% tax and that is likely to go up to 45% soon even if I earn a lot less than DP.

This is having-money issues, and I am aware that we are lucky to be in positions where this is an issue. We both grew up dirt poor, not enough food/heat/basics poor so do appreciate that through education and jobs that has massively changed.

@yellowcuptea I also grew up with very little was lucky enough to go to uni with full grant (not that it was much!) That was largely due to my deadbeat dad running away and is the reason why I always have some of the money that I earn that only I can access.

Glad that you recognise you have taken a hit relative to him although things are much more even now.

Apologies if this has already been mentioned, but he / you need to look at the full tax position - i.e. money going into the pension & then coming back out again.
As things are going, I can see him paying 40% tax on at least some of his pension withdrawals, whereas you'll probably only be paying 20%. Ignoring the tax free element, he'll be 'saving' 5% re the tax difference on the way in / out & you'll be 'saving' 20%. In this instance, it probably make more sense building up your pension, not his.

Tax savings are a far bigger component of building wealth than they may seem on the face of it. It's shocking the difference it makes investing inside a tax wrapper vs. outside one - and especially pension since it's pre-tax money going in as well as tax-free gains inside the pension.

So - if you were in the 20% bracket and him 40 or 45% then I'd agree. However, as 40% vs. 45% it really doesn't make enough difference, so if it makes you uncomfortable, then say no.

(However, I'd also say you should be thankful you have a DH who has managed your money well and has set both of you up for a very comfortable retirement)

@MrsCarson this would be my concern too- if one has to go into care- ok the house can't be forced to be sold but the pension can certainly be used to varying degrees and may make the person left at home vulnerable to a very tight income

So how does this work on the way out? By which I mean. When you withdraw from a pension other than the first 25% you are taxed on it. So if one person holds almost all the pension they make large withdrawals and get taxed at a higher rate. Better to both withdraw the same amount and make the most of both allowances and both lower rate allowances.
The gain on the way in is unlikely to offset this.

Isn’t putting more into your pension also tax efficient? No I wouldn’t go along with that.

I'm not sure of your age, but remember the tax free lump sum (assuming no changes in the budget) will move from 55 to 57 in April 2028.

I'd seriously suggest talking to financial advisor (as someone else suggested not associated with St James Place). Not all pensions are equal so the quality is also a factor, guarantees within the pension, charges etc. Pensions can be fairly complex so it's worth making the right choice upfront.

That would make me incredibly uncomfortable. It may be tax efficient but it makes you financially vulnerable.
While no one likes paying taxes, you have already had financial repercussions from having children and it doesn’t mean you should have to absorb more of them if you don’t need to.

If it's more tax efficient, go for it! If you're married but happened to split and get divorced you are entitled to half anyway.
Check his will though and perhaps get a memorandum of understanding written up with a solicitor.
Tax relief is free money at rhe end of the day.

I wouldn’t although in a plot he’s right you’d have a claim on his pot but it feels like it’s about control which is a worry, sorry. Also, Stock market or company final salary scheme. Presumably both of you are currently claiming to the 40% tax rebate on pension contributions or paying in pre-tax? Providing it’s a (private) invested stock market pension and that both pension funds have the same returns, it makes no odds where it’s invested as the return is X% of both pots. If one is performing better than the other then you need to find out why.

See an IFA. Pension rules could change drastically with Labour, just as State Pensioners have taken a hit so will high earners. 2 things to note When the high earner dies or you split you are left with a smaller pot of your own. And once you take and spend your tax free bit that's you paying 40% on every pound you take out. I didn't take any of my ex pension and wish that I had

Are you legally married in the UK? Depending on your religion, a religious ceremony might not be enough. I would seek legal advice before taking any steps. It's probably also a good idea to wait for the budget to be announced as it might change things.

Absolutely not. There is no guarantee you will remain married. It is your responsibility to make sure YOU are financially secure whatever happens. It sounds like he already is.

i would investigate what happens if partner died suddenly. What happens to his pension? What happens if one of you gets sick and can’t work and the money is tied up in pension until you reach the age you can withdraw it.

how old are your kids? Will they have uni expenses that you don’t want tied up in pension.

you could invest in premium bonds and if you buy a big block you could get money every month.

I don’t like the idea that your smaller salary gets gobbled up.

What happens if you divorce?? You might be happily married now, but I’d always keep that scenario in the back of my head.

@user86345625434 @yellowcuptea The lifetime allowance was abolished back in April of this year, but I agree to wait and see what the October budget brings.

i would suggest getting financial advice from a financial planner to be honest.

I think I'd consider this as the tax breaks are so good, but I'd probably want to even things up a bit. For example, maybe moving all savings into your name.

You need independent financial advice, not vague promises or probably incorrect advice from the internet.
I have no idea about the financial side of things and what would be most cost effective.
Make an appointment, go on your own if it will upset him, and get proper answers.

A few thoughts:
What if you get divorced? It would get very messy, and promises made now would fly out of the window in the face (or bed) of the OW.

What if you want a divorce- no chance of equalizing your savings then.

What if he dies- his pension doesn't come to you as his wife automatically in its entirety. Wills can be changed.

What if he needs residential care- how would that be paid for?
Or you do- would you have enough to pay for a decent standard of care?

You also set yourself up for being "dependent " on him and his much larger pension - imagine having to ask him for money, getting his "permission" for purchases...

Now your husband might be a paragon of virtue- you might be one of those couples who really do just have "the money " irrespective of whose bank account it originally went to.
Or not. Better safe than sorry OP.