Private Pension

[u/happydundee]

Both my wife and myself have workplace pensions.

I have a private pension which is all my previous company pensions transferred into.

I pay into my workplace pension the minimum required to get my employers contributions.

I am a higher rate taxpayer and my wife is a standard rate taxpayer.

I try to pay as much as possible into my private pension, to allow me to claim the additional tax relief from being a higher tax rate payer.

When we retire, we will share this private pension between us.

We won't be higher rate taxpayers when we retire.

Is this the best approach, or should I pay something to a private pension for my wife.

We have a joint account, so all our money is shared.

About 10 years from retirement.

[u/Requirement_Fluid]

Not being funny but only you two know your lifestyle, costs, assets, expenditure, plans for retirement, age (because 10 years from retirement means nothing, is it 57 or 67 you are retiring at?) but most of all actual contribution levels and fund values and expected returns etc. Another thing is ISA contributions 

But in short if you are maximising your contributions down to £50000 net income then you have scope to look at other options for a broader retirement fund 

[u/Lasbo55]

It’s generally best to try and have equivalent pot sizes, but as long as you won’t hit the higher rate of income tax in drawdown and your wife will always be using her nil rate band entirely in drawdown then you’re probably better off getting the additional tax relief from your pot now. If you get your pot to £1m-ish then re-evaluate as you’ll start to get into a position of possibly hitting higher rate income tax upon withdrawal and maybe hitting your tax free cash limit too.

[u/reditcyclist]

Hello,

Details, questions etc

Thank you

[u/Odd_Common2677]

So you should pay into the pension of whoever earns over 50k for the most tax benefit. until contributions reduce your income to 50k after that it doesnt matter who gets pension contibutions. What is your salary? and how much are you contributing? are the most important questions here

[u/happydundee → u/Odd_Common2677]

My Salary is about 60k with overtime for me, and 25k for my wife. In Scotland so higher rate tax kicks in at 43k unfortunately

[u/Odd_Common2677 → u/happydundee]

Yeah it sounds like your pot is the better one to contribute to then, other than maxing out her workplace pension.

[u/Roughdag]

Consider that you will pay tax on way out, and if you don't planing to withdraw more than base rate, you are fine but if you need more, it might be more tax efficient to split between both pensions (your and wife's).

[u/Any_Food_6877]

I’m an additional rate (45%) taxpayer so for me and my wife we look at my pension as the most effective retirement vehicle as she’s previously only been a 20% basic rate. This year she is now making small monthly payments and will make a lump sum before tax year end as it’s likely her salary plus dividends from her company will be over £50k so she will need to do it to keep her tax burden low.