People 'in a couple' can increase pension by £2,880 thanks to little-known rule

Helen Morrissey, head of retirement analysis, Hargreaves Lansdown, explained how it is possible to boost pension pots by a staggering £67k amid the Cost of Living crisis.

People with a partner can boost their pensions by an eye-watering £2,880 a year. Helen Morrissey, head of retirement analysis, Hargreaves Lansdown, explained how it is possible to boost pension pots by a staggering £67k amid the Cost of Living crisis.

You can also make contributions to your spouse or partner’s pension. These contributions will count towards their annual allowance, not yours - so it’s important to make sure they have enough allowance left before making any payments on their behalf. You can contribute up to £2,880 a year to the pension of a non-earning spouse, partner or child.

Helen Morrissey, head of retirement analysis, Hargreaves Lansdown: “It makes an enormous difference with the person receiving partner contributions ending up with a pension pot of more than £398,000 by age 68. The person who didn’t ends up with more like £331,000 - a massive £67,000 difference.“

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She added: “This planning idea will also improve tax-free income at retirement. Splitting income across partners is important to make the best use of tax-free personal allowances. A couple can receive up to £25,140 pension between them before paying income tax.

“Even relatively small contributions can make a huge difference. The time those extra contributions spend invested in the market keeps up the momentum of building your pension over the long term. It can not only significantly strengthen your own retirement resilience but that of your family overall as well.”

You’ll only get tax relief on personal pension contributions up to 100% of your UK earnings, or £3,600 if this is greater. How much tax relief you receive will depend on your earnings and tax band. You must also be 74 or younger, and normally be a UK resident for tax purposes.

From 6 April 2024, the lifetime allowance was abolished and replaced with three new allowances.