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 have several years of ISA contributions, anyone could make a transfer into it online if they had my login details. Nobody would know it wasn’t me. Your mother was pretty slow off the mark if she failed to make a claim on her exes’ pensions as part of the divorce settlement.

The real issue is your husband needs to get a job and contribute so you can contribute less.

They would know these days as contributions have to come from your linked account. A UK bank account held in your name. And obviously you shouldn’t give other people your log in details.

But if you did nobody would know.

There’d be no benefit of someone else logging on to your ISA as you. Any financial gift would have to be paid into your linked bank account first (an account in your name) and then paid into your ISA (also in your name).

MIL doesnt understand the tax implications of DH chucking £50k (or whatever her largess is) into a pension

Explain to her that he can only use £X for a pension and the rest will have to be invested

Its quite simple

Also - he's her son. She's trying to look after him. You're being a bit 'me me me', OP

Well if they have your login details, definitely- but personally I'm not giving my login for my savings to anyone, and if you have 2 remaining healthy braincells neither should you.

THIS

Because he isn’t earning, he is very limited on what he can pay in to a pension, on the other hand, the money could go into your pension as you can pay in 100% of your earnings!! I would have thought reducing your outstanding mortgage would be the top priority. He could invest £20k into an ISA and put rest towards mortgage depending on how much MIL is gifting.

He can put in any amount he chooses, he just won’t get tax relief on any amount over £2880.

You can only put a certain amount in a pension per year as it tax free
Max is 60k per year

This.

I’ve just retired. The last thing I would want to do now is sell my house and move. Luckily, I’ve made pension provision elsewhere.

Nearly all providers won’t take the money due the rules of their schemes, they will ask for his earnings and calculate your allowance. Consumer duty regulations would expect providers to check, as not getting tax relief negates the advantage of pension saving over other options.

MIL plan might be a no go anyway, you can only put a certain amount in your pension each year and it’s £2,880 net per year for people who don’t work. He could use up allowances for previous years he was in work though, max 4 years

I don't think he can. It's the annual allowance you carry forward not tax relief. Therefore he can only get tax relief based on his earnings in the current tax year or £3,600.

You can contribute the following

1. Up to £60k Gross pa (£48k net) if you earn over £60k
2. Up to your gross annual salary, so if you earned £30k pa you could contribute £24k, which grossed up is £30
3. Or £2,880, which grossed up is £3,600.

He could contribute £2,880 for the years he wasn’t working then carry forward any unused allowances from before the last 2 years and contribute more this year.

He will only be entitled to tax relief based on current years earnings.

Most posts I have seen have said that a SAHM should get a job once her child is in nursery and certainly if they are financially insecure. Mumsnet is quite anti-SAHM in fact.

Also, people do often say that the DH should be contributing to the pension of a SAHM but I think that is based on the assumption that the DH is paying into his own pension, which is clearly not the case here.

OP, I think you have to accept that MIL has the last word on what it’s spent on, but I would be presenting the case for using the money better given your current situation. See a financial advisor or, at the very least, work out the numbers yourself and present your case. I would calculate how much more the money would work for DH (assuming you’re a family unit!) if: you put a % in DH’s pension, you put enough in your pension to put you below the higher rate tax level (or whatever seems ‘fair’) and reinvest that additional saving, then pay off a % of the mortgage and reinvest the money saved on interest. I don’t think she’s going to want to hear an argument that involves you/DH having a bit more to spend right now on nice-to-haves - she wants to know it’s being used for long-term security. As you are married, his long-term security is your long-term security, so try to think of it that way, but putting it all in his pension is unlikely to be the most financially beneficial option.

And please start paying into your own pension as soon as you can, even if it’s not a huge amount - the compounding effect when combined with your tax saving is significant. e.g. If you earn £70k you’d be taking home c.£4200pm. If you put £8k in a pension each year (£666pm) your take home pay only reduces by c.£400pm. The estimated size of your pot by 68 - assuming you’re 42ish - is around £320k (for your £210k paid in). The same principle is true even if you can only manage £200pm. Plus, compound interest is so powerful that it could be worth even more than this, if well invested - we recently rediscovered a pension pot from a job my husband had about 10-15 years ago, which he obviously hasn’t been contributing to (we’d forgotten to update the address on the account). It is now worth 2.5x what he paid in, and this year it increased by nearly 19% (obviously, investments can go down as well as up, etc. etc.)