Millions of married people ‘not discussing retirement plans with spouses’

The value of a retirement fund after a lifetime of saving can be as much as a property, LV= said.

Vicky Shaw
Monday 06 September 2021 00:01
More than three-quarters of married people have no idea what their spouse’s pensions are worth, according to LV= (Rui Vieira/PA)
More than three-quarters of married people have no idea what their spouse’s pensions are worth, according to LV= (Rui Vieira/PA)

More than three-quarters of married people have no idea what their spouse’s pensions are worth, according to research.

Some 78% of married people who are yet to retire are unaware of the value of their other half’s retirement savings, a survey of over 4,000 people across the UK for LV= found.

Nearly half (47%) of non-retired married people have not spoken to their spouse about their retirement plans, the pensions and retirement specialist said.

And 85% of non-retired married people are not aware of the tax efficiencies of planning retirement together, according to its wealth and wellbeing monitor.

People with assets between £100,000 and £500,000 excluding property were more likely to be aware of the value of their spouse’s pension.

Couples who jointly plan their retirement can be much better off when they stop working

Clive Bolton, LV=

But the majority (60%) did not intend to plan their retirement finances with their spouse and 78% were not aware of the benefits of planning retirement together.

Clive Bolton, managing director of savings and retirement at LV= said: “LV=’s research indicates that millions of married people are not talking to their partners about their pensions and retirement plans.

“That’s a mistake because couples who jointly plan their retirement can be much better off when they stop working.

“Most people have a good idea of what their house is worth, and the same attitude should apply to their retirement funds. After a lifetime of saving, the value of a retirement fund can be worth as much as a property so it’s important that people know how much their retirement savings worth and the potential death benefits they offer.”

Here are LV’s pension tips for couples:

– Consider paying into the partner’s pension

A higher earning partner could pay additional contributions into their partner’s pension, so that the contributions attract tax relief.

– Do not forget the death benefits and inheritance tax benefits of pensions

Pensions will not normally form part of the estate for inheritance tax purposes and on death before age 75 they can usually be paid out tax-free.

It can make sense to discuss when and how to access a pensions and if it would be better to spend any other savings first.

– Avoid unnecessary large withdrawals from a pension fund

Couples should consider how much money they need to withdraw from their pension funds.

Drawing too much too quickly can lead to large tax bills

– Make sure your partner knows who to contact about your pensions if you die

You may have carefully arranged all your finances so that they can be passed to your loved ones in the most tax efficient way possible.

However, if your partner has not been part of the conversation, they may make uninformed decisions.

It is worth remembering that adviser/client relationships end on death.