Boosting a married couples pension....

pensionpawn

Albermarle wrote: »

A SIPP or a workplace pension do not in themselves 'perform' . It is the investments within the pensions.
It is probable that the investments in the SIPP are more high risk/high growth , which will have done well in recent years but will suffer more in any market crash . So you are comparing apples with pears.
Of course in a SIPP you have more choice of investments and some workplace pensions have a very restricted choice ( especially some of the newer auto enrolment ones ) but it is not so straightforward to compare investments performance over the long term.

I understand that however my point is you can't select your investments as flexibly through a company pension (they usually offer 'investment strategy' based on years to retirement or 'low / medium / high' risk growth) as with a SIPP. Not quite apples and pears, I see it more as lots of apples and pears with lots of combinations compared to some apples and pears in restricted combinations. It's all down to personal choice

Dazed_and_confused

Between the two of us a tax free income of just under £30k pa will keep us quite happy.

Assuming your "just under £30k" is one DC pension of £12,500 and another of £16,666 (inclusive of TFLS) then if you both end up with full new State Pension then that covers c£17.5k so much reduced withdrawals will be needed from State Pension age.

Dazed_and_confused

I'm 50 and have a good SS scheme, I currently contribute enough to get down to 20% tax band. I will pay tax in retirement.
My wife (48 years old, £40k salary) has a poor auto enrolment scheme. We have been considering a SIPP or additional contributions for my wife and making large contributions over what we could normally afford into her pension, by depleting savings and possibly my TFLS (post 55), to be able to utilize her personal allowance when we retire for tax efficiency.

But doing some calcs, it looks like my SalSac scheme (even paying tax in retirement), beats contributions for my wife even though she will likely pay zero tax in retirement!

In that situation one (small) way of improving things would be for your wife to apply for Marriage Allowance when she is retired, assuming this won't make her liable to pay £250 additional tax

She then only has Personal Allowance of £11,250 to use up whilst you get £250 knocked off your tax liability.

This assumes you will only be a starter, basic or intermediate rate taxpayer on retirement.

Albermarle

ou can't select your investments as flexibly through a company pension (they usually offer 'investment strategy' based on years to retirement or 'low / medium / high' risk growth)

For some of the newer auto enrolment workplace pensions ( like NEST for example ) it is true that choice is very limited .
However for the more established workplace pension providers , like Standard Life, Aviva, Royal London etc there is a much wider choice , usually two to three hundred different funds .

pensionpawn

Dazed_and_confused wrote: »

Assuming your "just under £30k" is one DC pension of £12,500 and another of £16,666 (inclusive of TFLS) then if you both end up with full new State Pension then that covers c£17.5k so much reduced withdrawals will be needed from State Pension age.

Spot on! We just have to take a 20% penalty on any lump sum we may need although I very much expect to save some of the ~£30k pa. I don't expect us to blow £2430 every month (well, after the first few months :eek:)

happyandcontented

Is it possible to put the TFLS from one partners pension directly into the others partners SIPP if their employer doesn't allow money transfers into their workplace pension or if they have already accessed that pension?

What benefits does that have tax-wise?

Bemma

pensionpawn wrote: »

Everyone's circumstances differ slightly.

Absolutely… Everyone's circumstances are different. I've been focusing more on this as I've got older… A few years ago I would have said it was a no brainer to utilize my wife's tax free allowance, but the calcs say different. Not meaning to have a dig at OldBeanz, but

OldBeanz wrote: »

You should be planning to ensure that your spouse has sufficient pension income to ensure she can use all her personal tax allowance in retirement.

Is very good general advice, but it's not the best thing for my partner and I to do, maybe we're a very specific case. My employer NI tips it away from that.

And yes performance of investments is extremely important. I've opted out of the 'life styling option' in my company scheme and have selected my own funds, which I'm currently happy with. Also, much to my chagrin! my wife is infinitely less bothered about pensions than I am. So maybe a blessing that an increasingly large part of our retirement planning falls to someone who takes an active interest in it, my partner is happy that do this and glazes over when I talk pensions and tax (I wonder how common that is for members of this board?). Understanding how to maximise my pension through SalSac, Tax, NI, HICBC, depleting savings, NOT overpaying the mortgage etc. will make the pair of us considerably better off in our retirement.

Anyway, this could be all moot for me now. Chatting to my partner and I underestimated her salary, she's now on the verge of breaking £50k and probably will next year! All good news, but back for some more sums. She needs put enough in to claim all her 40% tax, then any spare cash in my SS .

zagfles

We had a discussion on this a few years ago https://forums.moneysavingexpert.com/discussion/5456781/can-husband-give-his-25-tax-free-sum-to-me-to-reinvest-in-my-pension-pot

crv1963

Bemma wrote: »

Absolutely…

Also, much to my chagrin! my wife is infinitely less bothered about pensions than I am. So maybe a blessing that an increasingly large part of our retirement planning falls to someone who takes an active interest in it, my partner is happy that do this and glazes over when I talk pensions and tax (I wonder how common that is for members of this board?)

Mrs CRV has very little interest in most of the retirement planning and glazes over too! Her bottom lines are, how much? When? What is the cost to us now? The rest she doesn't really want to know!

So you're not alone, thankfully there are a host of posters on here I can sound off to or ask opinions of!

pensionpawn

zagfles wrote: »

We had a discussion on this a few years ago https://forums.moneysavingexpert.com/discussion/5456781/can-husband-give-his-25-tax-free-sum-to-me-to-reinvest-in-my-pension-pot

Cheers. Not a problem then!