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Am I better off with single or spit pensions?

Hi everyone - I run my own limited company and pay myself and my wife pensions from it, each to our own pension accounts. We are 40 and these were set up with the help of an IFA many moons ago and we just went with his advice. However I'm doing a bit of a financial audit and trying to get some thoughts on whether this is still considered best practice for my situation with the following considerations:

1) Our fees are based on % of account value, so we wouldn't save any fees by combining, although I'm not sure if that's normal if we ever do move our pension (currently a managed target retirement fund with Vanguard).

2) From a tax perspective as far as I can see it makes no odds in the present, but I'm wondering when we retire from a tax perspective if there's any benefit to one person retiring with a large pot and the other not much.

3) We are potentially planning to move to Australia (i'm an Aussie expat) so that's a curveball on the odd chance any folks understand anything about that system.

Many thanks!

Comments

  • Albermarle
    Albermarle Posts: 25,993 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
    Some pensions have a fixed fee rather than a % of fund value ( which is the more common method) A fixed fee can become more attractive as the pot gets bigger.

    Normally it is better for both parties to have a balance of pension. The main reason is so that nobody's personal tax allowance is wasted by not having enough income. This is more of an issue if you retire pre state pension.
    Also if one person has a large pension/income they may end up paying 40% tax.
  • MallyGirl
    MallyGirl Posts: 7,092 Senior Ambassador
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    There is no concept of a joint pension 
    I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
    & Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
    All views are my own and not the official line of MoneySavingExpert.
  • "Am I better off with single or spit pensions?"
    I take it that "spit" was a typo for "split"? And that you're talking about the pension for yourself being split into several parts (and similarly but separately for your wife)?

    If so, I remember having a pension like that set up some time in the 80s IIRC. I forget why it was done. I long ago consolidated them and other pensions into a SIPP with HL. I agree with what previous posters have said. Pensions balanced between the two of you is also better in the unhappy event that one dies.
  • dilby said:
    Hi everyone - I run my own limited company and pay myself and my wife pensions from it, each to our own pension accounts. We are 40 and these were set up with the help of an IFA many moons ago and we just went with his advice. However I'm doing a bit of a financial audit and trying to get some thoughts on whether this is still considered best practice for my situation with the following considerations:

    1) Our fees are based on % of account value, so we wouldn't save any fees by combining, although I'm not sure if that's normal if we ever do move our pension (currently a managed target retirement fund with Vanguard).

    2) From a tax perspective as far as I can see it makes no odds in the present, but I'm wondering when we retire from a tax perspective if there's any benefit to one person retiring with a large pot and the other not much.

    3) We are potentially planning to move to Australia (i'm an Aussie expat) so that's a curveball on the odd chance any folks understand anything about that system.

    Many thanks!
    Hi, caught the fact you an ex pat Aussie so may choose to retire there.

    I have no specific knowledge of the Australian private pension system, however you may wish to explore whether transferring your UK Sipps to an Australian ROPS  in future maybe beneficial compared to leaving your Sipps to be drawn down in the UK. To this end see below a link from Wise the currency specialist:

    https://wise.com/gb/blog/uk-pension-transfer-to-australia#:~:text=Yes, you should be able,Scheme (QROPS) in Australia

    With UK sipps becoming liable to IHT from 2027 onwards,  and there are no inheritance taxes ( as such ) in Australia., this maybe a reason to eventually consider moving your accrued pots there. That said there does appear to be some tax complexities related to Austriian pension pots which would need explaining to you . However this does assume a UK exit charge is not introduced post 2027 to discourage Cross border transfers in future.

    Also herewith a link to an Australian ROPs provider. I have no idea of their competency or otherwise, however  they  may be able to walk you through the nuances of the Australian pension system.  I would also in your position also seek general  Australian tax advice in due course as well as UK exit tax advice if you plan to retain any UK situated assets in  retirement.


    https://www.aesf.com.au/#:~:text=We are proud to be,process for your UK pension.




  • dilby
    dilby Posts: 229 Forumite
    Part of the Furniture 100 Posts Name Dropper
    Some pensions have a fixed fee rather than a % of fund value ( which is the more common method) A fixed fee can become more attractive as the pot gets bigger.

    Normally it is better for both parties to have a balance of pension. The main reason is so that nobody's personal tax allowance is wasted by not having enough income. This is more of an issue if you retire pre state pension.
    Also if one person has a large pension/income they may end up paying 40% tax.
    Thank you!
  • dilby
    dilby Posts: 229 Forumite
    Part of the Furniture 100 Posts Name Dropper
    MallyGirl said:
    There is no concept of a joint pension 
    Apologies, badly worded. By 'joint' i just meant a single pot where the funds would go rather than being split into the 2 separate pots.
  • dilby
    dilby Posts: 229 Forumite
    Part of the Furniture 100 Posts Name Dropper
    poseidon1 said:
    dilby said:
    Hi everyone - I run my own limited company and pay myself and my wife pensions from it, each to our own pension accounts. We are 40 and these were set up with the help of an IFA many moons ago and we just went with his advice. However I'm doing a bit of a financial audit and trying to get some thoughts on whether this is still considered best practice for my situation with the following considerations:

    1) Our fees are based on % of account value, so we wouldn't save any fees by combining, although I'm not sure if that's normal if we ever do move our pension (currently a managed target retirement fund with Vanguard).

    2) From a tax perspective as far as I can see it makes no odds in the present, but I'm wondering when we retire from a tax perspective if there's any benefit to one person retiring with a large pot and the other not much.

    3) We are potentially planning to move to Australia (i'm an Aussie expat) so that's a curveball on the odd chance any folks understand anything about that system.

    Many thanks!
    Hi, caught the fact you an ex pat Aussie so may choose to retire there.

    I have no specific knowledge of the Australian private pension system, however you may wish to explore whether transferring your UK Sipps to an Australian ROPS  in future maybe beneficial compared to leaving your Sipps to be drawn down in the UK. To this end see below a link from Wise the currency specialist:

    https://wise.com/gb/blog/uk-pension-transfer-to-australia#:~:text=Yes, you should be able,Scheme (QROPS) in Australia

    With UK sipps becoming liable to IHT from 2027 onwards,  and there are no inheritance taxes ( as such ) in Australia., this maybe a reason to eventually consider moving your accrued pots there. That said there does appear to be some tax complexities related to Austriian pension pots which would need explaining to you . However this does assume a UK exit charge is not introduced post 2027 to discourage Cross border transfers in future.

    Also herewith a link to an Australian ROPs provider. I have no idea of their competency or otherwise, however  they  may be able to walk you through the nuances of the Australian pension system.  I would also in your position also seek general  Australian tax advice in due course as well as UK exit tax advice if you plan to retain any UK situated assets in  retirement.


    https://www.aesf.com.au/#:~:text=We are proud to be,process for your UK pension.




    Thank you so much - it's never easy is it?! Haha. Much to research it seems; was aware of inheritance tax issues but didn't consider a possible exit tax. I think I'm going to have to reach out to a specialist in aus. Thanks again for the heads up. 
  • QrizB
    QrizB Posts: 15,330 Forumite
    10,000 Posts Third Anniversary Photogenic Name Dropper
    dilby said:
    MallyGirl said:
    There is no concept of a joint pension 
    Apologies, badly worded. By 'joint' i just meant a single pot where the funds would go rather than being split into the 2 separate pots.
    That's not possible either. Your pension is yours. Your wife's pension is hers. They can't be combined, and (short of divorce) there's no way to redistribute them.
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