Joint planning could boost couples’ pension pots by £2m over 20 years – Rathbones

Couples who plan their finances together could add £2m to their pension pots over 20 years, according to findings from Rathbones.

The firm found that by coordinating pension contributions, tax planning and long-term goals, spouses can make the most of tax relief and investment growth.

Rathbones calculated that a married couple or civil partners could build a joint pension pot of about £2.6m in 20 years if one partner, an additional-rate taxpayer, pays the full £60,000 annual pension allowance and also puts £20,000 into their partner’s pension each year. 

With tax relief, this means net annual contributions of £33,000 for the additional-rate taxpayer and £12,000 for their higher-rate taxpayer partner. 

Nearly half of the uplift came from pension tax relief, when reinvested and compounded.

If only the additional-rate taxpayer pays in £60,000 a year, the total pot would be just under £2m after 20 years. 

These figures assumed the partner getting contributions is a higher-rate taxpayer, tax relief is reinvested, and investments grow at 5% a year. 

If the additional-rate taxpayer paid the full £60,000 annual allowance into both pots, the combined pension could hit £4m in 20 years.