Can someone else can pay into your pension plan? I’m here to answer that question.
If you have a defined contribution pension plan – the most common type – you normally pay into it. If you got your plan through your job, your employer usually pays in as well.
But if your pension scheme allows for it, someone else – like a loved one – can put money into it too.
For example, a person who’s working might want to pay into their partner’s plan if their partner has taken a career break to look after family.
These payments into your plan are known as “third-party contributions”.
If someone else pays into your plan, you’ll still be the one who gets the pension tax benefits – not them. And the tax benefits you do get will be based on your tax situation, not theirs.
Here are some more things to keep in mind.
Third-party contributions count towards your “pension annual allowance”. This is the amount that can be paid in across all your pension plans in a tax year before you could face a tax charge.
Finally, third-party contributions are usually counted as a “gift”, and there could be inheritance tax implications. So it’s important to do your research on what this could mean for you.
