In short
- Molly Haylett, 30, a financial adviser from Essex, and her husband Taylor Haylett, 33, a train driver, agreed he would pay into her pension while she took time off work for their children.
- Research by Octopus Money found more than a third of parents reduced or paused pension contributions during parental leave, and 63% did not know their partner could contribute on their behalf.
- A partner can make a third-party pension contribution of up to £2,880 per tax year for someone with no or low earnings, with basic-rate tax relief raising that to £3,600.
- Katie Guild, co-founder of the financial community Nugget Savings, says the pension gap can begin during maternity leave as an employee’s own contributions fall with their pay.
- Molly and Taylor Haylett each earn around £60,000 and have two children, aged two and five.
Molly Haylett, 30, a financial adviser from Essex, and her husband Taylor Haylett, 33, a train driver, agreed that he would pay into her pension while she took time off work to look after their children. The couple say the arrangement protected both their futures after Molly Haylett’s earnings and her own pension contributions fell during parental leave.
Why did the couple share pension payments?
Molly Haylett says the couple were earning similar amounts before their first child, and the balance shifted once she spent more time at home. “Taylor’s career propelled and mine took a step back,” she says. “There’s an unintended impact on the person who spends more time at home with the kids.”
The Hayletts decided that Taylor Haylett would contribute to Molly Haylett’s pension while she was not working. “We were looking after both our futures, not just Taylor’s,” she says.
How many parents pause pension contributions during parental leave?
Research by Octopus Money found more than a third of parents reduced or paused pension contributions during parental leave, while 63% did not know their partner could contribute on their behalf.
Can one partner pay into the other’s pension?
A partner can make what is known as a third-party pension contribution. For someone with no or low earnings, up to £2,880 can be paid in each tax year, and basic-rate tax relief increases that to £3,600. For someone who is still earning, a partner can also contribute, subject to the recipient’s pension limits.
Why does the pension gap start during maternity leave?
Katie Guild, co-founder of the financial community Nugget Savings, says the pension gap can begin during maternity leave because an employee’s own contributions can fall as their pay drops, and contributions may stop altogether during periods of unpaid leave. She says couples should consider whether the partner who keeps working could help make up some of that shortfall, and that these conversations are easier before a baby arrives than when parents are sleep-deprived and adjusting to life with a newborn.
The advice comes as the Fed and Bank of England weigh rate rises as oil prices surge.
What else do the Hayletts do with their money?
Molly and Taylor Haylett, who each earn around £60,000, have two children, aged two and five. They keep their own bank accounts alongside a joint account for bills and adjust how much each contributes when their circumstances change; during Molly Haylett’s maternity leave they changed the split. She says it helped to “view finances as a household”.
The couple set up pensions for both children when they were born and pay in through a monthly direct debit. Molly Haylett says: “It’s like a gift for the future as they can’t touch that money until they’re in their 60s and we won’t be there to see that.” They also use Junior ISAs. Taylor Haylett says he still wants to understand where the money goes: “I don’t just give her money and let her do what she wants. We have open conversations and she’ll talk me through it.” He adds that their five-year-old is given small jobs to earn a couple of pounds, and that they are introducing the idea that she can spend a pound now or hold on to it and potentially have more later.
Frequently asked questions
Can I pay into my partner’s pension while they are on maternity leave?
Yes. A partner can make a third-party pension contribution. For someone with no or low earnings, up to £2,880 can be paid in each tax year, and basic-rate tax relief increases that to £3,600.
How many parents stop pension contributions during parental leave?
Research by Octopus Money found more than a third of parents reduced or paused pension contributions during parental leave, and 63% did not know their partner could contribute on their behalf.
When does the pension gap start?
Katie Guild, co-founder of Nugget Savings, says the pension gap can begin during maternity leave because an employee’s own contributions can fall as their pay drops, and may stop altogether during unpaid leave.
With reporting from BBC News.
Stock image, not from the events described. Adult couple holding hands — Alice Donovan Rouse (@alicekat) / Wikimedia Commons (CC0)