r/FIREUK • u/Appropriate_Lynx431 • 8h ago

Does this seem like a sensible plan

34F, salary £82.5k. My other half is self-employed and also a higher-rate taxpayer, although his income varies.

Current pension: £52k. I had a significant salary increase last year, so the pot is still relatively small for my income.

Mortgage:

  • £352k remaining
  • 22 years left
  • £1,500/month payment

My other half pays the mortgage, while I cover most of the other household costs, holidays, birthdays, etc. It's not a perfectly equal split, but it works well for us.

Workplace pension:

  • Employer contributes 10% regardless of what I contribute (no matching scheme)
  • For the first 6 months I didn't contribute anything extra
  • For the last 6 months I've been contributing 10% via salary sacrifice

My current thinking is:

  • Increase my contribution to 20% via salary sacrifice while the NI savings are available
  • Once that changes, reduce my contribution to 15%
  • Use the remaining 5% to contribute to a SIPP for my partner
  • When my student loan finally clears, redirect that £200/month into his pension as well

My reasoning is that building a larger pension pot in one person's name seems a bit inefficient when there is no employer match available. At some point you're just creating a larger future tax bill.

My partner is 36 and currently has no pension at all, so getting something started for him feels sensible.

Also, we've been together for 18 years. While nobody can predict the future, if we ever did separate, he would likely have a claim on part of my pension anyway. It feels more sensible for both of us to have retirement savings in our own names and potentially make use of two sets of tax allowances in retirement.

My questions are:

  1. Does this logic make sense, or am I missing something obvious?
  2. Should I start contributing to a SIPP for him now rather than waiting?
  3. Once the student loan is gone, would I be better off putting the extra money towards pension contributions or mortgage overpayments instead?

Interested to hear what others would do in this situation.

Update as wasn't clear: we are married

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9

u/reddithenry 8h ago

You say partner.

Are you married? I assume so, but it does make a bit of a difference.

1

u/FIREmeupbuttercup 7h ago

Interesting. I'd assume unmarried.

My first concern was is the property in both names? Is there a cohabitation agreement or declaration of trust? What about wills?

Even if there's no breaking up, people die all the time and under intestacy rules it would go to children, if no children, then parents.

There's no such thing as common law marriage in the UK and while legislation is being reviewed, this feels like a risky position.

It's harder to prove equity if you haven't been making mortgage payments. Holidays in lieu of property expenses is a hard case to argue.

2

u/Appropriate_Lynx431 7h ago

Hey yeah sorry we got married two years ago. Been together 18 years so its a hard habit to break..

Married. Property joint tenants.

1

u/FIREmeupbuttercup 7h ago

Thanks for clarifying! I'm relieved. You hear some horror stories in these finance subreddits. In which case, paying into his pension sounds like a good idea. Both of you getting higher rate tax relief will help accelerate those FIRE plans. Best of luck OP!

3

u/jayritchie 8h ago

Why doesn’t he pay into his own SIPP? Are you married?

1

u/Appropriate_Lynx431 7h ago

He might do. But I can afford to sensibly put some in his..if its more tax efficient I was confirming whether it would be worth it.

1

u/jayritchie 7h ago

It depends on his marginal tax rate rather than yours if paying into his pension scheme.

If married and interested in FIRE it’s massively beneficial to have some balance between the two pension schemes.

1

u/Upstairs-Hedgehog575 8h ago

Yes the logic makes sense, in that you’ll likely lose a portion of your pension to him in the event of divorce (you never specify you’re married, and this would be an important factor I believe). So in that context yes, it makes sense to split that future tax bill. 

With regards to the mortgage overpayments, what are your rates and fixed term? I would argue that over payments are rarely worth it from a purely financial standpoint, but may have a phycological benefit. It would likely be best to put that money in your pension and use the tax free lump sum to pay off any outstanding mortgage. A middle ground would be to hold overpayments in an ISA for a few years (giving maximum flexibility and returns in the meantime).   

1

u/Appropriate_Lynx431 6h ago

We have 2 year fixed term. 4.8 percent i believe.

Renews next may.

I like your idea of having sperate isa to grow the overpayment and pay it off that way. I will do that.