Flowers, chocolates, and romantic dinners are traditional tokens of romance on Valentine’s Day. But you could consider a slightly different gesture of love this year. Paying into your partner’s pension.
Not only will you be investing in their future, but you’re also showing your commitment to building a lifetime together. We know pensions aren’t the most conventional or romantic option for a Valentine’s Day gift. But here's why paying into your partner's pension could be the most meaningful Valentine's gift you can give.
This article isn’t personal advice. If you’re not sure what’s right for you or your partner, ask for financial advice. Pension and tax rules can change, and benefits depend on your circumstances. You can’t normally access money in a pension until you’re 55 (rising to 57 in 2028). Scottish tax bands and rates of tax are different.
A gift from you, plus up to a potential 45% boost from the government
Every time you add money to a pension, the government adds a percentage to your pension too as an incentive for you to save for retirement. This boost is known as pension tax relief, and how much you can get will depend on whether you’re a basic, higher, or additional-rate taxpayer.
If you pay into someone else’s pension, the tax relief they’ll get will be based on their tax status. Even if they’re not earning, as long as they’re under 75, you can pay in up to £2,880 each tax year and they’ll receive 20% in basic-rate tax relief from the government. This adds up to a total contribution of £3,600, which is the most that can be paid into a non-earner’s pension.
If your partner is earning, you can pay in any amount up to their earnings. But this will usually be capped at their annual pension allowance (usually £60,000) to benefit from tax relief.
Just make sure you check how much has already been contributed to their pension (either by them or their employer, plus any tax relief received) to make sure your contribution won’t take them over their limit.
Remember, saving into a pension on behalf of someone else doesn’t affect how much you can save into your own pension.
A £16,000 tax break for your partner?
Let’s say you put away £3,600 each year, since this limit was introduced in 2001, you could’ve contributed £65,726 in total to your partner’s pension. When the government adds tax relief, this would bump it up to a whopping £82,800. That’s over £17,000 in free money from the government over the last 23 years – slightly higher than the £16,000 you’d likely get for the next 23 years thanks to the first seven years when basic-rate income tax was still at 22%.
You could improve your family’s financial resilience
Our research* suggests many couples find themselves overly reliant on one partner’s pension. By paying into your partner’s pension, you could help them improve their financial resilience.
We found that less than half (43%) of people could cope financially if they didn’t receive part of their partner’s pension in retirement.
The figures are particularly grim for women, with just over one quarter saying they could cope on their pension alone. This was a result of having time out of the workforce, being paid less and often only working part-time. All these factors have taken its toll on women’s pension prospects.
FIND OUT MORE ABOUT OUR MISSON TO EMPOWER WOMEN TO SAVE AND INVEST WITH CONFIDENCE
But this issue isn’t exclusive to women. It’s fair to say many men are reliant on their partner’s pension too. Less than 60% said they could cope without a share of their partner’s pension. So it’s important to do all you can to boost your prospects as a couple wherever possible.
*HL survey conducted by Opinium, 1,411 respondents in September 2023.
Make the most of tax relief with a SIPP
The HL Self-Invested Personal Pension (SIPP) could give you the opportunity to boost your partner’s pension savings. They’ll need to open an account in their name first and then you can make your payment. They’ll also benefit from:
- Security – we're a FTSE-listed company, trusted by 1.8 million clients and regulated by the Financial Conduct Authority.
- Award-winning service – Best Buy Pension 2023 and Best Investment App 2023 from the Boring Money Awards.
- Ease – check your pension anytime online or with the HL app. You can even manage your families accounts with HL’s linked accounts service.
- Ongoing support – get help from our UK-based helpdesk and the answers to your questions no matter how big or small.
TELL ME MORE ABOUT THE HL SIPP
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