Christmas is under two weeks away as I write. And I have never been as unprepared at this stage in the game as I am now. Maybe it’s because the “children” are no longer children. Maybe it’s because the nearly-there, nearly-there, nearly-there, back-to-the-beginning-again tease of that pesky virus with mutant tendencies is making me think that no plans will ever come to pass again. Or maybe it’s because, well into my fifties, I am finding it increasingly hard to get worked up about making bread sauce.
Playing it safe with your own presents
Don’t get me wrong, I love the festive season. Just maybe not as much as I did when it merely ‘happened’ – as opposed to being the one who makes it happen now. When it comes to presents, I know many women who purchase something they like in the run-up to Christmas and hand it over to an appropriate gift-giver to wrap up and present back to them on The Morn. I get that. There is some appeal in playing it safe so as to avoid disappointment, arguments or trips back to the shops (sorry, how old-fashioned of me. I mean trips back to the local collection point).
The excitement of a surprise
As I say, I get it. Nonetheless, it so isn’t me (“What? I buy the presents for everyone else and I have to get my own as well?!”). Despite the barely-disguised jaded-ness in the above paragraphs, I do still want the excitement of a wrapped-up surprise.
Leaving it wrapped up in its simplicity…
There’s a mystery to anything that is wrapped up – and an even-handedness that appeals to those of us who like a level playing field. While a gift is wrapped in paper, it remains just that – a gift. And it won’t be called anything but a gift until it is opened. Only then will it become the thing inside, with all sorts of judgements attached: is it nice, do I like it, does it do the job well enough, was it costly or good value, did a lot of thought go into it or was it plucked carelessly with a slide of a mouse and tossed into a virtual basket with a quick clickety-click? Sometimes it is tempting to leave it wrapped up in all its simplicity and leave the prospect of complicated thoughts and emotions firmly on the outside.
…In case it becomes more complicated
Which is exactly why, I think, many people refer to their pension or their ISA by the ‘wrapper’ name and resist looking inside in case it becomes more complicated. (Yes, I really did make that link. Sorry). People will say that their pension is “doing well”, or that the ISA has been “disappointing” and what they mean is that the investments inside them have performed in a certain way – investments that can be picked and chosen and changed either by the individual themselves or a professional investment manager to give the best chance of the right sort of returns for the amount for risk that you want to take.
Wrapped in the same coloured paper
The only point of the wrapper (regardless of what the investments choices are inside) is to tell the Tax Person that the investments inside are to be taxed according to the correct rules. So investments inside a pension are taxed according to pension rules. And investments inside a Stocks & Shares ISA are taxed according to ISA rules. If I may reinvoke Christmas for a moment – everything that is wrapped up in paper from the same roll gets taxed in the same way, but what is inside can be very different: in other words, my pension is not the same as yours.
Do you know what’s inside?
With that in mind, your pension is not the same as your partner’s. Nor is your ISA. If you were to take a good look under your household’s financial tree you might just find some wrapped-up products that have your partner’s name on them. To those of you who are in any kind of committed relationship that you intend to last into retirement and to the end of time, I ask this: do you know what’s inside?
Why does it matter?
We ran a news article on this last month based on a survey that suggested that 78% of married people have no idea what their spouse’s pension is even worth – let alone how the investments inside are arranged. (If you’ve got a spare five minutes in between door-to-door carolling and woodland wreath making, this link will take you there: How much does your partner have in their pension?). So, why does this matter?
Keeping gifts under the tree
As I’m fond of telling the young women who are polite enough to listen to what I’ve got to say on the matter, if you make the very big and grown-up decision to share your life, your sofa, taking the bins out and – potentially – children, surely you would also share the money. In an ideal world, you are a team and, while you might each have personal aims within that team, you are also both working towards the common goal of keeping the lights burning, food on the table and gifts under the tree at Christmas (or whichever celebration is traditional for you).
Children: no small ask
Further to that, if you have made a family together, one of you will likely have forfeited some earnings and pension along the way in pursuit of the additional goal of ‘keeping the children alive’. No small ask.
No surprises, please
So, does it matter what’s inside your partner’s pension? Ho ho hell, yeah. For both of you. You both need to know what’s coming so you can plan for it. “Oh, surprise me!” might be okay at Christmas (for some of us, anyway) – but surely not at Retirement. Even a good surprise at that point might feel like a betrayal (“What? So I sent the children up the chimney until they turned 30 while all along you were sitting on a mountain of pension value?”)
Money is not a plan in itself
Money, like energy and time, is a resource. When it is in reasonable supply, it facilitates your plans. And when it is in short supply, it derails your plans. But it is not a plan in itself. So, I encourage you all, with as much Christmas spirit as you can muster, to grub around in the wrapped-up items in your lives and lay them bare. Working out the current value of everything you have that will contribute to your later lives is a great starting point.
Is what’s inside right for you?
And then, much as you would with anything else wrapped up, you need to take the wrapper off your collective pensions or ISAs and work out if what’s inside is right for you – that is, your feelings about investment risk, where you are in your lives and what your values are. You can always talk to a friendly financial adviser if the idea of doing this yourself is daunting, but the concept won’t be alien to you: if you don’t like what’s inside the wrapper, you can always change it.
And on that note, I bid you all Happy Unwrapping. Bread sauce anyone?
Talking Finances is a trading name of Talking Finances Ltd. Talking Finances Ltd is an appointed representative of Beaufort Financial Planning Limited, Kingsgate, 62 High Street, Redhill, Surrey, RH1 1SH, which is authorised and regulated by the Financial Conduct Authority, FCA Registration No. 583233
This article represents the personal opinion of Carole Haswell only and does not represent any opinion of Beaufort Financial Planning Limited. Financial decisions should not be made on the basis of this article