Whether you’re married, in a civil partnership, or in any form of long-term relationship, planning your finances alongside your spouse or partner can be powerful.

By planning in tandem, you can make decisions with your joint wealth. You can discuss and align your financial goals, ensuring you can both get what you want out of life together.

Furthermore, you can essentially double your entitlement to tax allowances, exemptions, and breaks that are applied individually, and make the most of financial strategies to boost the wealth you manage collectively.

One such strategy that you could consider exploring is paying into your spouse or partner’s pension. Making contributions to their retirement fund can be highly beneficial to you both, especially if you are a high earner.

Find out how paying into your spouse or partner’s pension works, and three reasons why it could be beneficial for you.

Your spouse or partner can receive tax relief at their marginal rate

In theory, you could contribute to any person’s pension. That’s because third-party pension contributions are treated as if they were made by the pension holder themselves.

Each tax year, you can make tax-efficient pension contributions up to the Annual Allowance. In 2024/25, this stands at the lower of £60,000 or 100% of your earnings. You may have a lower Annual Allowance if you have already flexibly accessed your pension. Similarly, you may be subject to the Tapered Annual Allowance if your earnings exceed certain thresholds – more on this later.

The Annual Allowance encompasses personal contributions, tax relief, and crucially, third-party pension contributions, such as those from your employer or indeed someone else.

So, when you contribute to your spouse or partner’s pension, this contribution is treated as if they made it themselves. It goes into their pot and is invested along with any contributions they make themselves, with any interest or returns free from Income Tax or Capital Gains Tax.

Perhaps most importantly of all, the contributions still attract tax relief, paid at your spouse or partner’s marginal rate of Income Tax. This effectively means that a £100 pension contribution technically only costs:

 

  • £80 for basic-rate taxpayers
  • £60 for higher-rate taxpayers
  • £55 for additional-rate taxpayers.

 

The basic rate is applied automatically, and your spouse or partner can then claim any higher- or additional-rate relief through a self-assessment tax return.

With all this in mind, it simply means that paying into your spouse or partner’s pension attracts the same benefits as paying into their pot themselves.

3 reasons it could be beneficial to pay into your spouse or partner’s pension

As a couple, there may be specific advantages to paying into your spouse or partner’s pension, especially if you’re a high earner. Below are three reasons why it could be beneficial for you to do so.

 

  1. You’ve used your Annual Allowance

 

If you’ve already made the most of your Annual Allowance and want somewhere to keep tax-efficiently investing your wealth, your spouse or partner’s pension could be ideal for this – provided you don’t need this wealth in the short term.

By planning together and treating your pensions as shared assets, you can make the most of their Annual Allowance too, increasing your ability to save money for the future into pensions.

 

2. You have a Tapered Annual Allowance

 

As a high earner, you may be subject to the Tapered Annual Allowance if your income exceeds certain thresholds, reducing how much you can tax-efficiently pay into your pension each tax year.

This comes into effect if both your:

 

  • Adjusted income (your earnings including your pension contributions) exceeds £260,000
  • Threshold income (your earnings excluding pension contributions) exceeds £200,000.

 

When you exceed both of these thresholds, your Annual Allowance is reduced by £1 for every £2 you’re over the adjusted income limit, down to a minimum of £10,000. So, if you have a threshold income exceeding £200,000 and an adjusted income of £360,000 or more, you’ll only be able to tax-efficiently contribute up to £10,000 to your pension.

If you’re in this position and you’re limited on your tax-efficient pension contributions, paying into your spouse or partner’s retirement savings instead could be an effective alternative.

 

3. Your spouse or partner took a career break

 

Perhaps the most important facet to consider when thinking about paying into a spouse or partner’s pension is their individual pension wealth – particularly if your spouse or partner is a woman.

Indeed, as figures from Legal & General show, the average UK pension pot for women over 50 holds £39,654. That compares to £84,205 for men, leaving women with around 53% less than their male counterparts when they reach the latter stages of their careers and retirement.

There are various reasons for this disparity, including that women earn less on average and are less likely to be in positions of senior leadership in their workplaces.

But another key contributing factor is that women are more likely to take career breaks due to caring responsibilities. Figures from Be Applied show that women are three times more likely to take a break for childcare and are also narrowly more likely to do so to care for another relative or friend.

This can lead to women having smaller pots on average, as noted above.

Contributing to your spouse or partner’s pension can help to reduce this gap, using your earnings to balance out how much goes into your pots. This ensures they have their own retirement savings that are sufficient for them to reach their own goals.

Bear in mind that if your spouse or partner takes a career break and has no “relevant UK earnings”, their Annual Allowance may be reduced to £3,600. This would mean you could only contribute up to £2,880 each tax year, accounting for tax relief.

Get in touch

If you’d like to find out more about saving for your financial future with your spouse or partner, please do contact us at Cordiner Wealth.

Email hello@cordinerwealth.co.uk or call 0113 262 1242 to speak to us today.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.