I often meet married couples where the pension plans are all in the husband’s name. For many this is the traditional way for retirement planning. However, they could be missing out on a simple piece of tax planning.
When the husband in our example retires, he will pay income tax on all pension income above his personal allowance. If half of the pension had been in his wife’s name, they would also benefit from her personal allowance and potentially receive twice the tax free income.
It is therefore very important to consider whose name a pension plan should be in. There is no such thing as a joint pension.
Other factors should also be considered. For instance, if one is a higher rate tax payer, it may be beneficial for the plan to be in his or her name.
If you would like advice on the most tax efficient way of planning for retirement, please contact us.
Please note that taxation is subject to change in the future.