Pension for wife (non-earner) help please!

beanie414

Hi guys,

I have asked for advice here before about my AVC which I sorted out last year and now wanted to have some advice about my wife's pension. I've read a few threads on here but I'm not amazingly clear about what to do. I thought I would start a new thread to see if I can get some much needed help.:)

We haven't sorted out my wife's pension as we were thinking of moving house until quite recently so all available money was going into her First Direct 6% account and my cash ISA.

Since we have changed our mind about moving house and put an extra £400 into my AVC we only have about £300 a month spare to save/invest or put into her pension so we thought the pension is the best option.

I had a few questions.

We were wondering if we should put the £2,880 into a pension for my wife before April? Can we do it before the tax year starts and put the full amount in one go or does it have to be put in monthly?

Does the money have to come out of my tax slip, do I have to inform my work or can it just come out of my salary after tax?

Is it a stakeholder or personal pension that she needs?

My wife got a statement from DWP and it says she has 9 years on her pension. It said that she needs 10 National Insurance qualifying years but it doesn't really explain how to add the extra year or how much it costs to do that. The woman on the phone said she could call back and ask questions but I was just wondering if someone on here could make it clear.

It says that there are new scheme rules after April anyway...

Just a bit confused really so hoping someone could help!:)

PensionTech

We were wondering if we should put the £2,880 into a pension for my wife before April? Can we do it before the tax year starts and put the full amount in one go or does it have to be put in monthly?

Yes, you can do it before the tax year starts, and you can put it in all in one go.

Does the money have to come out of my tax slip, do I have to inform my work or can it just come out of my salary after tax?

Pay it out of your take-home pay (i.e. salary after tax) - the tax relief is claimed back by the provider on your wife's behalf.

Is it a stakeholder or personal pension that she needs?

I can't profess much knowledge here but as far as I understand it, stakeholder is a type of personal pension and doesn't necessarily have any advantages over other personal pensions - the relevant questions for you to ask yourself are a) cost (set-up fees, regular management charges, etc.) and b) investment options offered.

Can't answer the state pension stuff I'm afraid - will leave that open for someone else.

xylophone

With regard to state pension see

https://www.gov.uk/state-pension/overview

The £2880 can be paid as a lump sum.

How old is your wife?

When would she wish to access the pension?

beanie414

PensionTech wrote: »

Yes, you can do it before the tax year starts, and you can put it in all in one go.



Pay it out of your take-home pay (i.e. salary after tax) - the tax relief is claimed back by the provider on your wife's behalf.



I can't profess much knowledge here but as far as I understand it, stakeholder is a type of personal pension and doesn't necessarily have any advantages over other personal pensions - the relevant questions for you to ask yourself are a) cost (set-up fees, regular management charges, etc.) and b) investment options offered.

Oh okay, great thanks. Her First Direct interest will be paid this month as she has almost the full amount in there so I can just use some of that to make the lump sum.

xylophone wrote: »

With regard to state pension see

https://www.gov.uk/state-pension/overview

The £2880 can be paid as a lump sum.

How old is your wife?

When would she wish to access the pension?

She is 40 this year (I'm 46 this year) and we were thinking of me retiring when I was about 55-60 so we could put the £2,880 in every year until then. I have a final salary pension so we could still put the money into her pension after then too.

xylophone

https://forums.moneysavingexpert.com/discussion/comment/68247847#Comment_68247847

Some discussion here around the subject.

xylophone

You and your wife should read the information about the new state pension.

There may be changes to pension tax relief after the Budget in March.

http://www.professionaladviser.com/professional-adviser/news/2443013/flat-rate-tax-relief-fairer-for-all-pension-savers-abi

beanie414

xylophone wrote: »

You and your wife should read the information about the new state pension.

There may be changes to pension tax relief after the Budget in March.

http://www.professionaladviser.com/professional-adviser/news/2443013/flat-rate-tax-relief-fairer-for-all-pension-savers-abi

I did see that as it would be fairer to basic rate taxpayers but not of much benefit for higher earners, as I understand.

Does that mean I should wait until March to do my wife's pension, or would it not make much difference?

GunJack

what about post-april 2016 ensuring she will get SP entitlement? You say she has 9 yrs NI, need at least 10 to get any SP under the new system. Buying added years may be worth looking at?

atush

If you have a FS pension, and want to retire at 55-60, what is your scheme age? When you can take the pension w/o reduction? Will your AVC be large enough?

As your wife wont be 55 until after you get to 60, you wont be able to use her pension TFLS, so you might need more provision for yourself to bridge the gap?

beanie414

GunJack wrote: »

what about post-april 2016 ensuring she will get SP entitlement? You say she has 9 yrs NI, need at least 10 to get any SP under the new system. Buying added years may be worth looking at?

How do you go about doing buying added years? Would I have to do that before April?

atush wrote: »

If you have a FS pension, and want to retire at 55-60, what is your scheme age? When you can take the pension w/o reduction? Will your AVC be large enough?

As your wife wont be 55 until after you get to 60, you wont be able to use her pension TFLS, so you might need more provision for yourself to bridge the gap?

Most men retire about 57 at my work. My pension is about £400,000 at the moment which is £19,000 a year. If I take it at 60 without reduction it is £31,000 a year. I was hoping I would have enough in my AVC to retire around 57.

saver861

beanie414 wrote: »

Does that mean I should wait until March to do my wife's pension, or would it not make much difference?

You would be better waiting until March and see what the changes are. It may be that the changes are not effective until the new FY though the theory any changes will be effective on the day to stop the rush of high earners trying to beat it. That's if he does change the tax relief of course.

Myself and Mrs S have SIPPS for the same purpose to gain the tax relief. You can set up one easily yourself and do it all that way.