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How does combining spouses' pensions work?

15/06/2019 Posted by IAPF | Comments(0)

Question: I have been married for over 20 years and am conscious that, while we generally operate our finances jointly, we cannot combine our pension savings. My partner's savings are far bigger than mine as her employer pays a more generous level of contributions. Should I be worried about this or will each of us always be entitled to half of the other's pension when we retire?

Answer: In theory, every adult should be financially independent, even those in long-term, committed relationships.

However many factors - some within our control, some not - mean that we are financially dependent on others in one way or another, according to Jerry Moriarty, chief executive of the Irish Association of Pension Funds.

The law dictates that all pension savings are made in an individual's name. Even post-retirement, just like a salary, the income is paid out to one person.

However, in the case of pension annuities, the owner of the pension can specifically request that a lower level of benefits continues to be paid to a spouse in the event of the death of the pension-holder.

If your partner's employer is more generous than yours, it makes sense for you both, as a unit, to maximise that pension as a financial priority. The idea is to share the proceeds when you both retire.

In terms of being entitled to half of each other's pension, the law addresses that issue only in the event of a separation or divorce, when a pension adjustment order can be made.

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