Wealth of Advice, Swale House, Mandale Business Park, Durham, DH1 1TH
Over three quarters (76%) of people are unaware you can pay into someone else’s pension, according to research by financial group Nucleus.
Of those who did not know about the possibility of third-party pension contributions, 55% said they would not consider making any.
However, 21% of the same group were more inclined to think about adding to another person’s pension instead of or in addition to their own.
Nucleus said: “Third-party contributions can be a useful financial planning tool, particularly for someone who has taken a career break – such as to raise young children or care for elderly relatives.”
Current rules allow for up to £2,880 per year to be paid into a pension of a non-earning person, with tax relief topping up the amount to £3,600.
Additionally, contributions can also be made even if the partner is working, as long as the amount remains below their annual allowance.
Parents or guardians can also set up a pension for a child, with other family members allowed to contribute in a tax-efficient way.
More women (79%) than men (74%) were unaware that you can pay into someone else’s pension.
Just under a quarter of men (24%) who did not know said they would consider making third-party contributions, while only 19% of women from the same group said the same.
Nucleus director of business development Laura Barnes said: “Sadly, third-party pension contributions appear to be a closely guarded secret.
“Families could be missing out on a more comfortable retirement if they are not aware of the possibility of paying into someone else’s pension or receiving contributions from another person.
“Generally speaking, a greater number of women could see their retirement prospects improve if the family unit considers third-party contributions. Often, caring roles have fallen to women in the past and this has impacted their earning power, either because of working part-time or giving up work entirely.
“If these women were to receive pension contributions from a partner, it could go some way to reduce the gender pensions gap, which currently stands at 35%.”
If you want a better view of what your future could be, we'll have a chat over a cup of coffee in our Durham office and work out if we can add any value to your financial picture.
Wealth of Advice are authorised and regulated by the Financial Conduct Authority, reference number 563909. This website is for information purposes only and is not personal advice.
We are committed to providing products and service of the very highest standards. If you feel that we haven't lived up to your expectations in any way, however, we would like to know so we can put things right for you. If you have a complaint, make sure you contact us directly. Accordingly, we will do all we can to resolve your complaint by the end of the next business day. However, if we can't do this, we will write to you within five working days to tell you what we have done to resolve the problem, or acknowledge your complaint and let you know when you can expect a full response. Furthermore, if we haven't issued our response within eight weeks from the date you first raised your complaint, or if you're dissatisfied with our response, you can ask the Financial Ombudsman Service - www.financial-ombudsman.org.uk - for an independent review. The Financial Ombudsman Service will only consider your complaint once you've tried to resolve it with us, so please take up your concerns with us first and we'll do all we can to help.
Wealth of Advice Ltd is a company registered in England and Wales, company number 07709624.
VAT Number: GB131946515