investments<\/a> grow 5 per cent per year, then 20 years later, they would accrue \u00a3595,821 if contributions were split equally.<\/p>\nHowever, if it was just the higher-earner paying in the full amount, two decades later they would accrue \u00a3680,968 \u2013 an improvement of \u00a385,147.<\/p>\n<\/p>\n
If the couple were to doubles the household contribution to \u00a320,000 per year, split evenly, the pot would reach \u00a31,191,684 after 20 years<\/p>\n
But prioritising the higher-rate partner lifts the pot to \u00a31,361,895 \u2013 which is \u00a3170,211 extra them.<\/p>\n<\/p>\n
Jackson said: \u201cBigger tax relief means bigger upfront contributions \u2013 and once compounded over years or even decades, the result can be a retirement nest egg that\u2019s dramatically larger.<\/p>\n
\u201cIt\u2019s one of those rare financial wins that doesn\u2019t require saving more, just saving smarter.\u201d<\/p>\n
He recommended that couples start by agreeing their financial goals together \u2013 covering short-term priorities such as saving for a home, and longer-term plans like retirement and estate preparation.<\/p>\n
Being open about income, savings, debts, and spending habits helps build trust and ensures that the plan is realistic, he added.<\/p>\n
Is it the right choice, despite the tax advantages?<\/p>\n
Experts broadly agree that joint planning makes sense but stress that individual circumstances matter.<\/p>\n
In many cases, it would not be right to prioritise one partner entirely in a couple\u2019s pension, even if this has tax benefits.<\/p>\n
One key risk comes if the couple later separates. Former pensions minister Sir Steve Webb, now a consultant at LCP, warned: \u201cIn a world where couples often split, people need to be very cautious about strategies that could leave one partner with the lion\u2019s share of the pension savings and the other with very little.<\/p>\n
\u201cGiven the many reasons why women tend to reach retirement with private pensions much lower than men, we need to be very careful about advocating a strategy which could exacerbate those differences.\u201d<\/p>\n
Zo\u00eb Dagless, director of Meliora Financial Planning, said separation risk was a consideration, adding: \u201cIt\u2019s similar to other joint financial decisions such as buying property. In reality, if a couple is married, pensions would form part of any divorce settlement.\u201d<\/p>\n
She said there were other reasons why it may make sense for a lower earner to prioritise their pension.<\/p>\n
\u201cOne of the main reasons would be a particularly generous employer scheme, especially where there is strong matching from the employer, effectively providing additional \u2018free money\u2019,\u201d she explained.<\/p>\n
She also pointed out that when drawing down on pensions, having two distinct pots may advantage those with large savings.<\/p>\n
Under current rules, people can draw a quarter of their pension savings tax-free when they hit 55, up to the value of \u00a3268,275. If one person in a couple ends up with a pension pot bigger than \u00a31,073,100 \u2013 four times \u00a3268,275 \u2013 then they may be better having separate pots, to maximise the amount that can be taken tax-free.<\/p>\n
Dagless added: \u201cMy general view is that there\u2019s no blanket strategy when it comes to pension planning. While it will often make sense to favour the higher earner from a tax-relief perspective, other factors: such as employer generosity, age differences, and the desire to balance pension pots, mean it\u2019s unlikely we would recommend creating an extreme imbalance in most cases.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Boosting the pension contributions of a higher earner in a couple can mean higher retirement income – but…\n","protected":false},"author":2,"featured_media":434405,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,4178,4174,4175,4204,56,54,55],"class_list":["post-434404","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-pensions","tag-personal-finance","tag-personalfinance","tag-retirement","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/434404","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=434404"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/434404\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/434405"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=434404"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=434404"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=434404"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}