Should my wife contribute into a pension?

xylophone

What happens if you only contribute into a pension and then you get dementia and have to go into a home, funded by your pension? What will your wife live off?

The current position....
https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs10_paying_for_permanent_residential_care_fcs.pdf

Income that is partly disregarded
Common types of income partly disregarded include:
 £10 a week of War Widow’s, War Widower’s, War Disablement Pension paid to non-veterans
 50 per cent of a private/occupational pension where the pension is received by a married person or a civil partner in a home, provided this is paid to a spouse or civil partner and they do not live in the same home

bigadaj

Once your child is born then so long as child benefit is credited to your wife she will get NI credits which will accrue state pension benefits at no additional cost.

crv1963

You're looking wisely a long way ahead into the future.

I would advise as did DairyQueen to build both of your pension pots up, no one can guess what the future will hold but having a pot each may reduce the tax paid when the pensions are in payment. That way you'll not be in our position of me always being a tax payer whilst Mrs CRV will only become a taxpayer in retirement (under current rules) if I die and she gets a survivor pension.

Before starting a new pension or increasing contributions to an existing one make sure you have enough life insurance cover in the sad chance that one of you dies while you have young children- hint children don't become any less expensive it's just the packaging/ wrapping that reduces!

PennyForThem_2

Absolutely she should contribute into a pension whether a SIPP or employer pension. So wish I had started much, much younger.

Half a partner's pension (if you die /divorce) is probably not enough to live on comfortably even with SP topup. So, so glad that I was lucky and fell into a public authority job with DB pension and enough salary to contribute to my own SIPP, which is now a fallback.

So, so lucky my deceased partner bought an annuity which was inflation proofed but 50% of what it paid him. Lucky that part of his pension was teachers pension which pays 50% to widow.

But if partner self employed I may not have been so lucky......

I know when you are young money is tight but remember if contributing to a SIPP government gives tax relief top up -- start small and review frequently how much can be afforded to increase pot / contribution.

Albermarle

I know when you are young money is tight but remember if contributing to a SIPP government gives tax relief top up --

Also the earlier in life that money goes into a pension the longer it has to grow and benefit from compounded returns which can make a surprisingly big difference . Also with the long time span you can be more comfortably invested in higher risk/return investments .

kangoora

I'd second (or third) the notion of paying into your wife's pension pot. We didn't because:

a) not realising the tax benefits of two personal allowances until very late
b) I used to get a good employer match
c) She had no company pensions for years due to working for small firms, let alone matching contributions
d) dropping me down from HRT

The result is now we are stuffing as much money as we can afford into her pension to maximise her personal allowance on retirement. Even with this she is likely to be under her PA each year by a few £k (if we draw sustainably) and after she transfers her married allowance to me.

Marcon

lcfcstephen wrote: »

Defined Contribution, based on net pay, rather than RAS.

The terminology is confusing. I think this is a relief at source scheme from the sound of it (most defined contribuiton arrangements are). The pension provider will be claiming basic rate tax relief on behalf of your wife in relation to her contribution, even if she's a non taxpayer, and adding that to her pension pot. Have a look at the pension statement to be certain. The employer contribution is paid gross (so there's no tax claimed by the provider in respect of that).