Is a Pension a household bill???

dazednconfuzed

Hi All,

I'm hoping you can throw so impartial advise my way.

We own a house and have a child but are not married.

My partner and I are trying to split the bills fairly. My partner earns around 6-7K per year more than me (around a 3rd of my wages extra) so I proposed that we split the bills by what we earn so that we both have the same left over each month.
Currently we split the household bills 50/50 so my partner has a fair amount more leftover than I do. We agreed this would be fair to do it on % earn bills paid.

We then moved onto the topic of Pensions.

As is I don't have an Pension but my partner has a 9% contributory pension and is putting in around 250/300 per month.

My partner insists that their pension is a household bill and as such that we are both paying an equal share of the bills.

Personally I dont think this is fair.I dont want or have the spare money for a pension at the moment.

I have no stake in my partners Pension should something happen in the future. Like death or a breakup of our relationship.

This was met with derision and mild rage.

Currently at the moment after I have paid everything like mortgage , life and house insurance etc I have around £100 (not including any overtime) to my name left over for the month.

I've tried explaining that I cant afford to contribute to a pension. Especially 150 pm and that its not fair for you to force me into it.

However my partner sees it as that im forcing them into not having a pension.

I'm not saying don't have a pension im just saying why should I pay for their pension.

What happens say if we get to 65 retire and split up? The hundreds of thousands of pounds in that pot would go to my partner and I would be left with nothing.

Any advice on what I should do to make this a fair an amicable situation for the both of us?

Thanks in advance

tigerspill

I don't think a pension is an expense of any king. It is just moving one asset to another. There is no expense at all.

lvader

A fairer way to look at it would be to look at monthly income after tax and pension contributions. He is doing the right thing and shouldn't be penalised for it.

quotememiserable

lvader wrote: »

A fairer way to look at it would be to look at monthly income after tax and pension contributions. He is doing the right thing and shouldn't be penalised for it.

Quite right.

Another key point is whether you are benefiting from the pension. If you were married, you would absolutely be entitled to half of it if you divorced, so why not take account of it in the paying phase. I suspect the same is true for common law partners, but maybe someone else can confirm.

edinburgher

A fairer way to look at it would be to look at monthly income after tax and pension contributions. He is doing the right thing and shouldn't be penalised for it.

Who said the partner was a man? Although I agree that after pension salary is definitely the fair figure to use for calculations.

Maybe not the best source ever, but you're right to be concerned about your rights when co-habiting.

With your current financial and relationship statuses, your partner will likely be entitled to a bigger percentage of your home if you split up and you would have no claim on their pension.

So it's entirely unreasonable for them to expect you to pay for part of something that you have no right to.

Again, we don't know all the circumstances, but it strikes me that your partner is having a !!!!!! reaction to your request to split the bills based on income.

Some people might operate differently, but my wife and I have always received the same amount 'spare' at the end of the month, with the remainder going to pay bills and to save for both of our futures. That said, we are married and that's different legally, and we've always trusted each other with money.

I wouldn't feel comfortable knowing that she was skint when I was fine!

Daniel54

quotememiserable wrote: »

I suspect the same is true for common law partners, but maybe someone else can confirm.

Incorrect -sharing of pensions applies only to spouses and civil partners

Snakey

It's not a household bill, it's your partner's own personal savings and - if you're both truly trying to split things fairly - should be paid out of whatever disposable income your partner has left after you have both paid your share of the bills and so on.

I have used pension contributions as a way of equalising net income in order to sidestep any potential "you earn more so you should pay more" issues. I knew I could never move in with him if it meant reducing the level of my monthly savings in order to watch him spend "his" (my!) extra money on computer games, booze and junk food, so I upped my pension payments and hey presto, identical take-home pay each month, 50/50 split and everyone's happy. (Looking back, we weren't terribly well suited, were we? But the point being - I wasn't trying to claim that it was fair, whereas you two presumably are, and what your partner is suggesting isn't, really. I can see the argument in the other direction, but I don't think it's "right".)

Happier_Me

Hi OP

I would work out the split of bills based on your take home pay (so after tax, NI and pension contributions) so you should both end up with the same amount spare each month.

This way you will be contributing a higher % to the bills than if your partner didn't contribute to a pension scheme but you should still end up better off. I would make it clear to your partner now that you intend to contribute to a pension too in the future and this would mean a reduction in the amount you contribute to the bills as your take home pay would reduce as a result.

jamesd

Pension contributions are something that mortgage providers have to consider in affordability calculations. It's not a household bill but it is something that reduces available income. A pension contribution is counted as reducing income for things like child benefit, housing benefit and working tax credits. Both government and private business recognise that it is a necessary expense and not reasonable to require someone not to pay into one just because they are relying on some sort of means tested benefits. It's a normal deduction from income to provide for the future and we're all expected to do that.

It is not really true that you have no stake in their pension.

If the child is theirs as well as yours, the child would have a claim on the pension death benefits and could be expected to end up with 100% of the pension pot held in trust in their name and controlled by you as trustee to provide for their needs. Like housing, clothing and food. You would naturally benefit from this because you'd be living in the place even if it did end up owned by the child.

Should you marry at some point and be in England and Wales the basic divorce situation is that you would be entitled to 50% of the money in the pension, including any resulting from payments made into it before marriage. They would have a similar entitlement to 50% of yours. Not pro-rated by income, 50%.

Say you stay together and retire together. You are presumably going to expect them to use some of that pension money to help pay the bills, presumably you'll also want it pro-rated in some way based on them having a higher pension income because they paid in and you didn't?

A reaction of derision and mild rage to your claim that you get no benefit isn't helpful but given the outrageous claim that you made it's understandable.

It's very unlikely that you and your partner are not receiving roughly equal benefits from the housing and bills. Does one of you live at a colder temperature than the other or in less space or using less electricity or water? Or in a less good part of town? In seeking an income-related split you'd be seeking to enrich yourself in living standard at their expense. Which is fine in a permanent relationship but not so fine in non-permanent ones. I'm surprised that they agreed to such a split unless they are contemplating marriage.

But you both appear to be missing something quite significant. The child. Assuming that the child is yours and theirs rather than only yours or only theirs, what split is each of you making to cover the child's benefit from the bills? For a child it's normal for the provision to be related to earnings. So each of you might normally expect to be paying for the child's interests that proportional amount after a one third for each of you split on those shared costs. Then the net income related split would be done and used to cover the child's needs and basic 1/3 of normal non-food household running costs.

How is child benefit considered? Is it all attributable to you? To your partner? 50-50 if the child is 50-50 derived from each of you? 100% to the child, nothing to either of you alone? I suggest considering it to be 100% the child's to cover the child's split of costs. That then takes it out of your own net income. Have yo both looked at what the Child Support Agency rules say about income for children? You might both want to pay that much into the child's own income pot. Which will tend to shift the costs away from you and towards your partner.

It also appears given your shortage of money that you are in a place where you can't afford to live. How did you end up in a place where mortgage and other costs like the council tax are above what you could afford? Did they say that it's OK that you can't afford it, they will pick up the extra cost of living in a place that is more expensive than you could afford? Did you say you want to live there and they reluctantly agree? Barring them wanting it and agreeing to pay it seems that one resolution to your money shortage problem is to free up some money by reducing expense is through moving to a cheaper home. But perhaps your partner doesn't want to do that and prefers to provide an explicit cost subsidy to allow living in an unaffordable place, to benefit them and the child, even if not you?

What is the ownership state of the property? Joint tenants so 50-50 and you inheriting it all if they are hit by a bus? Tenants in common and if so is the ownership interest split in proportion to the deposit and payments toward s the mortgage that are being made? Or is one of you getting a bigger ownership interest than the one they are paying for with deposit and payments split?

In general I'm concerned that you appear to be treating this as a short term rather than permanent relationship and seeking to maximise your financial benefit from it.

But bigger than that, you two both appear to be missing the simple fact that there is a third person with income and expense splits to consider. With the income being partly state and partly income-related from each of you. That three way split will inevitably greatly reduce your own proportion of costs and may well solve the problem.

How partners deal with this sort of thing varies. Those in relationships that they expect to be long term may do something like pooling total resources and providing the same amount of discretionary spending for each.

So one other potential avenue to consider is thinking about the nature of the relationship and what each of you expects from it long term. If you both expect and intend to be long term partners then your planning can look very different. For example, a pension is planning for the future income and retirement of both of you and is a joint benefit and cost.

So: pay attention to the child's split of income and costs, then to whether you're in an affordable place and how the two of you want to resolve that, then to the long or short term nature of your relationship and which spending money model you want to use.

chiefie

I had a view on this which changed somewhat after reading others views.
For me it would be stupid as a couple for one or either of you to give up a pension if the employer were contributing. It's a perk of the job and if between you you can afford it it is probably a good idea to keep it. It could be there for both of you, especially if you believe the relationship is long term. So your partner is 'saving' for both of you and presumably (?) you will both benefit.
Tough call though, but I can see why the 'mild rage' may be there as it could be interpreted as you questioning the strength of the relationship.

Mojisola

Your OH is putting £250/300 away into 'savings' each month (which only he/she would benefit from if you split up).

If the money going into that pension fund is counted as a household bill, you are going to paying half of those pension contributions. To even things up, £300 should come out of the joint funds to go into savings in your name.