Research: How much people are relying on their partner’s pension

Nearly two thirds of people in a relationship need to share their partner’s pensions to afford a decent retirement, new research reveals. The level of financial dependence varies from total – as one in 20 don’t have any pension in their own right – to only slight, where they can afford to meet most bills from their own funds.

Some 27 per cent of people in a couple say they are not reliant at all on a partner’s pension, including 31 per cent of men and 22 per cent of women. ‘If you are planning for retirement together then, to an extent, there will be reliance on both people’s pension to make the plan work,’ says Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, which carried out the research. She adds: ‘If you both have decent pensions and remain together then it makes for a better retirement.

‘Both people having access to their own money also gives flexibility and independence and if you do split up, then at least you have your own savings to fall back on and don’t have to start from scratch.’ Women’s pensions typically start to lag significantly behind their male colleagues’ funds if they start a family, with lower pay the other main cause of the disparity.

There is a staggering 48 per cent gender divide in private pensions in the run-up to retirement, according to recent official data. However, the gender gap has now shrunk to 1 per cent for the state pension, which pays £12,000 a year at the current full rate. Hargreaves surveyed 1,300 adults, weighted to be representative of the UK population in age, income and geography, about their pensions – but single people were not covered in these figures.

Some 19 per cent said their pension was a similar size to their partner’s so they would need both to fund retirement. But 14 per cent said their partner had a bigger pension and 11 per cent a smaller one, so they would have to pool their resources. Another 14 per cent did not know if they needed to rely on their partner in old age, and 5 per cent had no pension of their own. Morrissey says it’s vital that couples plan together for their retirement.

‘Talking things through can mean you are both aligned with your goals and how to get there. However, it’s also important that one partner is not overly reliant on the other’s pension. ‘If the worst were to happen and you part ways, this could mean you are very close to retirement with little in the way of pension – unromantic but true.’ She says divorce is one reason why both partners need to be in a position where they could get by in retirement on their own if they had to, while another is death.

‘If you are married, then the surviving spouse would be accounted for, but if you are a cohabitee then this might not be the case,’ she points out. ‘You can live with your partner for years and raise a family together but there is no such thing as common law marriage and this means a cohabiting partner could be left with nothing.’

Couples who take a joint approach to pension saving can end up far better off in retirement, though there are some snags – particularly regarding tax. Read our guide to taking full advantage of pensions as a couple, to gain all the perks available and avoid the pitfalls. Helen Morrissey of Hargreaves Lansdown also offers the following tips. – More people are now saving into a pension, but it’s important to engage and get the most out of it.

– If you part ways with your spouse or civil partner, then it’s important that pensions are considered as part of any divorce settlement. Other assets such as the family home often take centre stage in discussions but pensions should also be included. There are several ways that pensions can be divided up between partners if needed. Read more on splitting pensions fairly if you get divorced.

– It’s hugely important that documents such as expression of wishes are kept up to date so administrators have a clear idea of what your circumstances are and can distribute benefits in line with your wishes. Not keeping these forms up to date risks an ex-partner getting the money at the expense of a current one. This can cause a lot of worry, upset and potential financial hardship. Read more on what happens to your pension if you die.