Total pension imbalance - how to manage?

[laclochette]

I met my boyfriend just over a year ago. As things have got more serious, we've started to think about a long term future together, and I've started to think about finances as part of that.

One of the things that really troubles me is that we have a totally different attitude to saving for later in life, and therefore, totally different pension situations.

He's 41, has no pension of any kind, and hasn't even given it any thought (he just isn't one of life's planners and isn't interested in money, where as I'm a real planner and find finances both really interesting and important). He's always been freelance (the nature of his industry), so hasn't even had a workplace pension scheme that he's paid into or even that might have prompted him to think about the issue.

I'm 5 years younger, and while I don't have a massive pension pot now, as I only started working aged 25 following my postgrad / was a relatively low earner until I was 30, since then, I've prioritised ramping up my career and my financial security. I've been able to buy a flat, and am now saving massively into a pension, so in spite of only working for companies with truly rubbish pension schemes, I should have an income of about £35k from my private pension, plus state pension (if that even exists when I'm old!).

The whole thing worries me, because if we are together long-term, either we're on track to have a huge difference in income and lifestyle when we're retired, or I'd have to supplement his income and have a retirement that's half as well-off as I'd expected. If I were doing so because my partner had eg sacrificed their earnings to take on caring responsibilities, or to support my career in some way, that would seem very fair, but in his case it's simply that he isn't choosing to have a pension.

I earn about 50% more than him, for broader context. He also owns a flat which is about 25% more valuable than mine, and on which he has a much smaller (and much lower interest rate!) mortgage, as his parents gifted him about 60% of the value for the deposit. So, in day to day terms, we're not hugely imbalanced in terms of income and house set-up. But the long term thing worries me.

I guess in an ideal world I'd love him to start saving - for his own sake as much as our joint sakes! But I don't know how to have that conversation without feeling like I'm lecturing him. We have a wonderful, joyful relationship in the here and now, so perhaps I'm worrying too much about something 30 years in the future. But, I want the person I'm with now to be someone I can dream about that future with, and this worry puts a block on that.

How would you approach this issue in my position?

I'd point out the tax advantages and support him to start a private pension. Gently lead him in the right direction.

It's a valid concern but given he owns a property, not one I'd lose too much sleep over. I'm a wee bit older than you but met DH at a similar age and it was imbalanced then. I owned a flat, he didn't, I earned about 25% more and paid into a good pension scheme and like you, planned and thought about money where he didn't and had barely any pension. But now, 10 years later, it's worked out. We own a property together which was bought through my flat equity and some money he ended up getting through some shares he had in the business he worked for that got sold. We have 2 DC. He earns more than me now and I sort all the money and finances so basically told him what to put into a pension! I'll still have more in 'my' pension schemes when we retire but it'll all be pooled anyway.

If you do get married etc you need to view things jointly anyway.

We're none of us guaranteed an old age. I think a happy medium is somewhere between the pair of you. Don't fixate on the future at the expense of now.

i think you’re right to be pondering this sooner rather than later and especially if children are ever on the cards. People don’t change - he’s unlikely to suddenly become an enthusiastic forward planner, same as you’re unlikely to suddenly become live-for-the-moment. I would say you need to think about how you would reach a happy compromise where you both feel you have a fair deal, given a disparity in income one way and equity the other.

He just needs to putting money in a private pension.

He could spend ages learning about why and comparing providers or he could just fucking do it and start paying into a balanced index tracker pension fund with someone like Vanguard and it would be better than doing nothing.

Ideally he'd set up a standing order to put 20% of his gross income in there (rule of thumb the percentage should be half your age) but that will seem like a huge sum but that's the price you pay for sticking your head in the sand for the first two decades of your working life.

Do you think he'll be willing and able to save this amount with some gentle persuasion?

Has he thought about money in his old age? Would he and could he keep on working? Do you think he's relying on an inheritance and is this a realistic expectation?

"I'm 5 years younger, and while I don't have a massive pension pot now, as I only started working aged 25 following my postgrad / was a relatively low earner until I was 30, since then, I've prioritised ramping up my career and my financial security. I've been able to buy a flat, and am now saving massively into a pension, so in spite of only working for companies with truly rubbish pension schemes, I should have an income of about £35k from my private pension, plus state pension (if that even exists when I'm old!)."

Not the point of your thread but are you sure you've understood your pension correctly? You've only been working 11 years, of which 5 were low paid. But you're on track for £35k a year pension? That's quite an achievement!

Aside from that, encourage him to start saving into a pension. For his own sake, not just your long-term future as a couple.

I imagine she means " if I continue saving at the same rate"

I wondered the same. Wouldn’t you need a pension pot of 1 million to get 35k a year?

I wouldn’t say anything as he has his property.
Do you plan to get married?

@LegendsBeyond and @Plexie, thanks for the sense-check, yes, as @WrongSwanson says this is based on if I continue saving at my current rate. I'm optimistic I can actually save at a higher rate than at present as I continue to process in my career, but as I now earn a good six-figure salary, I'm able to start making up for lost time - painful as it is to stick so much into a pension every month. If I retired tomorrow/ didn't save anything between now and retirement then yes, I'd have about £3 a month in pension income 🤣

Progress not process 🤦‍♀️

Thanks everyone for your thoughtful comments and for sharing your stories, I really appreciate it! Reading these makes me realise how rare these conversations are among friends etc and how valuable they are to have somewhere like this.

When it came up the first time between us I acted in a really unhelpful and ultimately quite judgemental way, not intentionally, but I was just so shocked and surprised in the moment - so that's partly on me, but I think we can find a way to talk about it again in a more constructive and positive way.

@AutumnAuntie I'm not fussed about marriage, but I know it means a lot to him, so assuming it made sense for us practically (including financially) I can see it happening at some point.

@BarbaraofSeville Interesting that you mentioned inheritance - when I did press him on it a while back, he did say that he expected to inherit some money from his family and so that is his "plan" such as it exists, really. However, he doesn't have any understanding of how much income is generated by a given capital sum and isn't clear what that capital sum could be. His father runs a successful business, is very canny with money and very much believes in passing it on (unlike my family who seem to leave most of their estates to animal charities... I'm not even joking), so I'm sure he will get a decent inheritance, but I'm just wary about banking on anything until it's in the bank in life, so to speak. You never know if it'll be needed to pay for care, or some kind of family emergency, or whatever else may happen. As an only child, in theory I stand to inherit an estate of around half a million to a million pounds one day, but I wouldn't base my personal finances on an expectation and my mum would be a bit horrified if I did - she expects me to be independently sufficient. Money and our "personal stories" around it are so emotional, aren't they. My dad died when I was 4, so I know how things can change out of the blue, and I think that's part of what's made me such a cautious person who always plans for the worst.
His "personal story" is that his father's business really took off later in life, so I think he has a programmed assumption that things always work out, whereas I think I'm programmed by my life experience to expect the opposite...

@laclochette I was in a very similar position! I'm quite financially savvy and my partner, when we met, was not. He's self employed and finance is not his strong point (he has many strong points of which I am terrible at so it's swings and roundabouts).

He didn't have a pension or savings and generally just didn't have a handle on his finances. As our relationship grew the topics of money, pension etc came up again and again and it transpired that he didn't really understand any of it and avoided it. I helped him set up a personal pension, did a budget for him, set up a savings account etc.

My point being he was a bit embarrassed that he didn't understand these things so ignored them and his blustery front was more a cover.

This may be similar to your partner. It may not, as you do sound like quite different people and maybe he is happy with his 'plan'.

But I'd second a PP about a non judgemental conversation on the tax benefits, compound interest etc and go from there.

I'm in a similar position with the mismatched pension at least, with me being the saver. I figure by that time, we'll have been together so long, I won't mind subsidising him (I subsidise him now as I'm the much higher earner). We're not married so my assets are protected.

Everybody is different, but surely if you've been in a partnership for 30-40 years, why care if you have to "spend" some of your pension on him. Seems crazy.

Do you pool your finances now, or plan to in the future? If so, him having more disposal income now should benefit you (e.g. when he pays for dinners, drinks, days out etc). Or if you split things (e.g. 70/30 due to income differences) is the split worked out after pension contributions are taken into account- you benefit here as well? If you are a higher rate tax payer and he is a standard rate tax payer, then it makes more sense for you to save more in a pension - for example to cover both of you - due to the tax benefits, whereas he can 'spend' more now as he pays less tax. So seeing tax efficiency as a joint thing. Obviously in an ideal world he would prepare more for his retirement, but you can't force him. Although you can keep having the conversation with him to try and bring him round. He's the one who will lose out if you remain unmarried and split in the future as he hasn't prepared for his retirement.

Do you seem a long term future with this guy, or is the pension thing a deal breaker?

@GreenMushrooms Thanks for sharing your story - you're right that the idea of subsidising a partner is just part and parcel of, well, partnership - having a sense of the common good beyond your own. I can't imagine how I'll really feel in 30 years time, but if we are still together I'm sure it'll be very different.

FYI he's a higher rate taxpayer too, he makes about £70k.

This isn't a deal-breaker in itself, no - I think what would be a deal breaker is if we couldn't talk about it respectfully and caring and come to an understanding of our different approaches and some kind of collaborative compromise. So I guess I need to try it properly, and see how that goes!

What I didn't mention (because my first post was quite long enough already) is that this is really reflective of a general mismatch in terms of attitudes to money. He has no savings, is in debt to a lot of his utilities suppliers, has a terrible credit rating, etc (so if we were to buy a home together in future I'm not sure we would be able to get a joint mortgage - his mum is his guarantor on his current property). So it's part of a bigger conversation. However, I have the same view on that bigger picture piece as I do above re being able to talk about it and figure it out together.

I guess my bigger proper question then is how to get a conversation about money underway.

I was thinking of suggesting a time a few weeks in the future to sit down and talk about it, so he doesn't feel unprepared, but I'm not sure how I'd guide that conversation. Each share our goals/plans for the future with regards how money fits into those? Share the things that worry us when it comes to money? I kinda wish there was a conversation handbook for this...!

@jesmonabullets Sounds v similar, yes! I think you're right that there's a bit of shame and head in the sand stuff going on, which mixes with my anxieties around security and stability and being able to properly provide for myself, so we have to find a way to be gentle to each other around those difficult emotions as we talk about it.

I definitely don't mind being the money person in the relationship, if he's happy for me to take on that role for us - like your partner, he has many areas of strength where I'm wanting, so it's swings and roundabouts. I just want to figure out how to at least have the conversations and get that ball rolling. It won't be one conversation of course, but that would be a start...

It's a dilemma. In your place I'd actually be more concerned about what happens before you draw your pensions. He is probably always going to be scatty with money. He may be rescued, by parental gifts, or inheritance, but he may also be rescued by you. Repeatedly. You need to think seriously about whether you want to do this or whether it would drive you nuts. Different attitudes to money can be very difficult to live with.

Mmm going on your update.... I would be seriously uncomfortable. In debt to utility companies and his mum is his guarantor at 41! Barring some awful bad luck or poor decisions that he has learned from then I'd say your update doesn't just show he doesn't particularly plan ahead but that he is terrible with money and expects others to bail him out. Don't be that person.

@jesmonabullets Hmm yes this is what worries me, and why, while I agree with a PP that partners share and cross-subsidise each other, I have this sense that I don't want to pay to make up for his outright poor decisions. However, to be clear, he's never gone to his parents (or me!) for money, and actually resisted their offers to help him buy a house for years until his two younger siblings (who each already had their own huge gift as a deposit) sat him down and told him he was being ridiculous. He's now very happy to not be at the mercy of the rental market! He even refused the money his dad tried to give him as a present at Christmas. So he definitely doesn't expect handouts. He's someone who prioritised creative fulfillment in his career and it's a creative industry where it's very hard to get a foothold. He spent most of his 20s and into his 30s barely making any money, eating one meal a day, only shopping in charity shops, and so forth while he slowly worked his way into his industry, and is now doing really well, but I think he just sort of got used to never having any money, so didn't even bother thinking about how to manage it, let alone plan ahead with it. Of course you could say that there's a certain irresponsibility and indulgence in that. But for him, his work is for self expression and creativity, and I can't help but admire that. And yet at the same time it's so different to my attitude (much as I love my job). It's tricky.

You seem to be very very money focussed. Doesn't seem to me this will be a good long term relationship.

He sounds a bit haphazard with his finances and he does need to get a grip. You're absolutely right to be concerned but hopefully it's not insurmountable. MN is full of posters who are dependent on men for money, pension, handouts etc and you shouldn't be made to feel 'too money focused' for protecting yourself.
Nip it in the bud though or it'll fester. My DH is pretty rubbish at understanding anything financial but thankfully I'm not and he's happy for me to take total control of it all - money is pooled and I manage it all. But only now we're married. You need to be careful about trying to take too much control at this stage of your relationship.

@Heatherbell1978 Thank you ❤️ You're right. Yes I want to be comfortable and secure, not like previous generations of my family who struggled and had so few opportunities. And I want to have a partner I can share that security and the opportunities it creates with.

I think maybe you need to find a different partner with more aligned views around money and finances.

Sorry!