Spouses who plan their finances together, including coordinating pension contributions, tax planning and long-term financial goals, could add £2 million to their pension pots, new analysis from Rathbones has revealed.
The wealth manager’s calculations show that a married couple or civil partners can build a combined pension pot of around £2.6 million over 20 years if one partner, an additional-rate taxpayer, contributes the full £60,000 annual pension allowance and also pays £20,000 into their partner’s pension each year.
This translates to net annual contributions of £33,000 for the additional-rate taxpayer and £12,000 for their higher-rate taxpayer partner once tax relief is included.
Rathbones said almost half of the uplift comes from pension tax relief, when reinvested and compounded over time.
By comparison, if only the additional‑rate taxpayer contributes £60,000 a year, the combined pot would be just under £2 million after 20 years. These figures assume the partner receiving contributions is a higher‑rate taxpayer, tax relief is reinvested, and investments grow at 5% a year.
Meanwhile, if the additional‑rate taxpayer were to maximise both their own and their partner’s full £60,000 annual allowances, their combined pension could reach £4 million over 20 years, the analysis showed.
Rathbones said the benefits are evident even over shorter periods. After 10 years, an additional‑rate taxpayer contributing £60,000 to their own pension and the same amount to their higher‑rate‑taxpayer partner could accumulate around £1.5 million. This compares with £1 million if the partner receives a £20,000 top‑up, and £755,000 if only the additional‑rate earner contributes £60,000.
Ryan Jackson, associate financial planning director at Rathbones, said: “The phrase ‘better together’ couldn’t be truer when it comes to spouses and their finances. Our analysis shows that by simply making the most of the tax allowances and reliefs already available, spouses can build a genuinely life changing sum of money.
“We know from experience that people can be hesitant when talking about money but when we show them the potential financial benefit in pounds and pence, the impact is undeniable. Even those who put only part of this approach into action can be significantly better off today and far into the future.
“Marriage itself is an incredibly effective financial planning tool, because it gives couples access to a range of tax allowances and reliefs that simply aren’t available to individuals.”
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