Pension

[Underpressure22]

DH and I (early 40s) have been together for five years and have a three year old DS. When DS was a year old, DH lost his advertising job and has been a stay at home dad ever since (although DS attends nursery 3 days a week). DH could not find another job, but very luckily I am a solicitor and am (just about) able to support us. DH has been slow to find new job but eventually switched tack to be a tutor, although no work yet.
the last two years have been tight because we got screwed on mortgage rates and about 60% of our income goes on those repayments.
The issue is this. My MIL (widowed, very comfortable), has suddenly announced that she wants to give DH a significant sum of money. But “it has to be for his pension, it can’t be on the house, or anything frivolous”.
I have a small pension of about half the amount she wants to give. (I don’t get a workplace one, long story.) I have been paying for everything for two years most significantly the mortgage, which is on a joint tenancy basis (ie sharing all with him). If we could pay a bit more off of the capital, it would be amazing. But he thinks he needs to tell his mother exactly what we do with it and/or respect her wishes about the money.
am I unreasonable to be upset that:

1. his mother is dictating what her 40 year son does with money (he doesn’t see a problem with this…)
2. neither of them has acknowledged my contributions to shared finances, and the fact that I won’t ever get anything like that from my own family. I feel as they think, oh, she’s got a good job, she’s fine. Well - yes but I have to work really hard for it and I have no spare money because he hasn’t worked for two years. The idea that he will have more saved in a pension than me is really upsetting. Am I being unreasonable? ps I really like my MIL, I think she thinks she’s helping.

I think yabu. Reverse the roles and people would be telling the woman to make sure she has her own pension, that her mother can give her money to do as she pleases.
I do think you need a conversation about money in general though, including him working at least part time as your dc gets older

You have a massive advantage over him in terms of career. Yes you are contributing more financially but your CV is also building nicely which means you have more security as you grow older.

He’s in a precarious situation, no prospect of getting a well paid job, gap in his CV. I totally get why his mum is thinking ahead for his retirement years. I would respect her wishes.

It's a gift so I really think you can't dictate how it is spent. - and you're married so it will benefit both of you eventually.

I think it's a problem between you and DH. In fairness the money in question is your MIL's money- the fact she wants to control how it is spent isn't the problem, your problem is that DH is perfectly fine with his mother controlling it.
After all once she gives it to DH it is up to him how he spends it.
You need to have a proper conversation with the finances spread out in front of him showing how much of the burden you are carrying- on the other side , if you stay together you will benefit from DH's enhanced pension.
Should the conversation not go your way and you are still furious suggest putting the house solely in your name-as you are the only one paying in. This will bring it home to DH and MIL that you see the situation as unfair and will not tolerate it.

After all once she gives it to DH it is up to him how he spends it.

It’s not. She’s not giving him money, she’s giving him a pension contribution.

Well look at it this way if you get divorced you will need to give him less money 🤷‍♀️

If this was a Sahm with no pension, the thread would be screaming at her to use it to gain financial security for when she will retire

I agree. It’s perfectly acceptable to give people money for a particular reason. We gave our DCs tens of thousands each for house deposits. If they were going to spend that money on something else we wouldn’t have given it to them. We gave it for a specific reason. We may give them more in the future to pay down their mortgages or put in pensions, but I’m not living hand to mouth in old age just so that they can enjoy exotic holidays or drive round in expensive cars.

I do agree the tone is different here and people do seem to give different advice.

but a lot of sahm threads the couple aren't married and the dp is self employed and the house is in his name. Which means there isn't the same concept of joint assets, and its easy for him to magically show he earns nothing.

Wheras this couple seem married, own the house jointly and she has an employer. So he sounds better protected if they split up than some of the sahm threads.

But a lot of people like a few bits in our own name, like a running away fund.

The irony of it all is that we got married last year before we wrote our will, to make it easier especially if anything happened to me. I think that’s why it has taken me aback - I’ve taken these financial decisions on the basis of what would make sure he wasn’t screwed over (he is amazing btw), but the whole narrative about this money from his mother is “well it’s for DH, it’s for his future”.

And I agree, it just feels different if it’s a woman - we should all have running away funds…

It is possible to give it to him specifically as a pension contribution- but it requires a lawyer to do so, also not an economical way of making a gift.
His mother needs to accept her son, his wife and child are a single financial entity- and all the factors of the families finances need to be taken into consideration, not just a mother's wish for her son.
Marriage is essentially a legal contract, this mother's nor any mother's son can be thought of as an individual financially ,if they have a wife and children.

Why would it require a lawyer? He gives her the details of his pension fund and she transfers the money online. I don’t suppose she gives a rat’s arse whether it’s the most economical way of giving.

Presumably his pension would be paid to you if he died @Underpressure22?

I really feel for you here. No financial advisor would advise doing this. If he makes a pension contribution then only the first £2880 will be subject to tax relief- meaning a maximum uplift of £720 from HMRC. You are presumably at least a higher rate tax payer and so would receive a 40% uplift on anything up to £60k annually. If you could suggest that your husband first takes financial advice they will tell him this- perhaps she'll listen to this and agree for it to be paid into an ISA or something that makes a bit more financial sense.

I expect MIL is very worried about how her son might fare into the future - perhaps when she is no longer around. In such circumstances, I think it's very understandable for her to offer to fund his pension provision. I doubt it's anything to do with not acknowledging your financial contribution.

From your MIL perspective she sees a couple:
-not in alignment with secure financial plans and goals;
-that doesn't have a good grasp of how to build the family's wealth and financial security over the longer term;
-overstretched on their property purchase;
-unaware of the precarious nature of the financial risks inherent in their current set-up.

In your situation, the way forward is for you and your spouse to focus on clarifying joint goals to build a good secure financial footing together, and take action. If these were in place, the offer from MIL becomes a generous welcome extra boost that benefits you both.

What a bunch of bullshit from your MIL

is your DH on team pension too?

firstly its not clear how much she giving him but there are pay in limits.
It's 60k pa or your taxable earnings which ever is lower
You can use any left over allowance from last 3 previous tax years so depending on when he quit they can maybe put in some???

But I think they might struggle.
Laughably if shes insistent on a pension it would need to go into yours....

Is your DH open to saying yes yes mum and then making your own investments as you like...?

Your MIL can def do JISA £9k and and JSIPP for your child £3.6k and £20k for your DH and you if she trusted you/was smart both of these would be very sensible

If you stay married I assume you will both make sure uou have similar pension incomes and if you divorce would it be an asset to divide?

Either way, you can't stop him taking it but you can be less hospitable to his mother (don't organise dh gifts, go out of your way for mothers day) and you can have a rethink about whether you're happy woth the status quo and what changes you want going forward e.g. perhaps you want to save 40k for your pension instead of putting your share into joint savings.

Are there any patterns here which are cause for concern? You're paying because he lost his job, mil is paying his pension. What were his finances before and whst are his future plans?

I am a SAHD and we are in almost exactly the same position, albeit because of an inheritance rather than a gift from a living relative. For background I came to the end of a contract just as DC1 was born so stayed at home while my wife (also a solicitor) went back to work, we had DC2 and I then took on caring responsibilities for another relative who is likely to shortly leave another substantial inheritance. Although I've been applying for jobs I've not actually had a reply since March 2022 and, turning 50 with what is now a seven year gap on my CV, we have to face the reality that I may not work again regardless of how much I want to.

Assuming you're in the UK, the unfortunate reality is that your DH can only put £2880 a year into a pension if he has no other income. It's a nice idea, but in your family's current circumstances it's fairly insignificant in terms of long term wealth building. If your MIL is determined that a large lump sum should go into pension provision, then either it gets drip fed into your DH's pension at this rate, or it goes into yours in significantly greater quantities. You could also put £2880 a year into a SIPP for DS and any future children. Until he (DH, not DS!) is earning there are simply no other options within pensions and your DH needs to explain that to his mother.

In your circumstances it would be far more sensible to do what we've done: max out the SIPP contributions, but put the bulk of the money into ISAs and just exercise some self control if you are prepared to honour the spirit of MIL's desire that this is for the future. If you use both of your ISA allowances of £20k per year (and even DS's £9k if MIL agrees) you can get large lump sums into tax shelters much more quickly. If at some point in the future your circumstances change and DH is working, then you can withdraw from the ISAs and transfer into a SIPP, but if his earnings remain non existent then you can just view the ISA as retirement provision but without tax relief (and no tax on withdrawals) and invest the money in the same way as you would in a pension.

We were only just keeping our heads above water before my wife moved jobs a few months ago, but we made a conscious decision not to use the money to pay off the mortgage. We are getting a better return investing it than we are paying mortgage interest. I appreciate that you've been skint for a few years and it is understandable to want recognition of the sacrifices you've made but if you are covering your expenses then locking any gifts away for the long term will benefit you a lot more than reducing your mortgage slightly and then allowing the extra income this releases to simply disappear in lifestyle inflation.

As a PP said, make sure that DS's child benefit is paid to DH if it isn't already - even if you earn enough that you lose it all through the taper - so he gets the NICs towards his own state pension. And if you haven't done so already, claim married couples allowance (which you can backdate for, I think, three years).

Honestly can’t understand why people are criticising your mil. The entitlement of some people is truly staggering.

OP, I wonder whether some of your feelings here are connected to you feeling unappreciated generally. Being the sole breadwinner is hard and it’s galling if your mil seems not to focus on this. But she’s right that your husband is financially vulnerable as a result of not working and its
not unreasonable of her to want to help with that.

Really the person who should be making you feel appreciated is your husband- the person you’re actually providing for- not his mother.

In practical terms, he can’t put a large sum into his pension so that’s a non starter. He could invest inside an ISA or even just in a GIA. Whether that’s a better decision than paying off some mortgage really depends- you’re likely to get higher growth on the investments that you’re paying on the mortgage but you also need to think about security, risk tolerance etc.

If you and your husband both think it would better to pay off some mortgage I’d suggest he explains this reasoning to his mum and take it from there. She may be happy for you to do this once she understands the thinking and that he can’t put a large sum into to a pension. Or she may not, and then he can decide whether he’s happy to accept it on that basis.

But my main feeling is that it sounds like your feelings about being unappreciated are getting tangled up with your feelings about the money and it would be better to try and untangle them a bit. It’s not your mil’s job to use her money to make you feel better about supporting your husband.

How would he feel about using the equivalent of half the mortgage payments he didn't contribute to, for paying down the mortgage, and then paying the rest into a pension?

This is so helpful, thank you.

I think it is natural for a parent to give money to their child, but not their spouse. You also have future issues of having very little pension contributions, so do need to have at least one of you saving into a pension. You are married, so it would be in the overall pot if you ever separated. Your husband should really have a conversation with his mum about not being able to add much to his pension now and that adding to your name would give more tax relief. Depending on how much she is offering, he could put as much in at the end of the tax year as he earns in tutoring, plus the previous two years carry over. Please do strongly consider a pension in your own name once your child is out of nursery and your outgoings reduce.

I think you'll find transferring money into someone's pension will ring a load of money laundering bells. She won't get any of the pension if they divorce, but he will get half the house she paid for, so this is not a good solution.

Of course she’d get a share of the pension if they divorce. And please tell me how an online anonymous transfer would ring money laundering bells - how exactly does that work?

It works by virtue of the money laundering rules, large deposits into pensions or saving products will need to follow those rules- if you had ever opened an ISA or a pension you would know you have to prove who you are- you think a large deposit by a third party would go completely unnoticed-how exactly? You transfer into your own account, you will have previously shown who you with documents- a third party transfer would require the same.
My mother was divorced 3 times, 2 of the husbands have died she never got any of their pension, it's possible you might but it depends on personal circumstances, making assumptions like this has landed many people in a very bad financial position.