Unexpected Changes: Redundancy and your pension

havenifa

havenifa


Posted on: 22nd August 2019

Redundancy is something no one wants to face. However, if you think redundancy may be on the cards for you, preparation is essential. There are many decisions to be made, including decisions regarding your pension. This week, we will explain these decisions to help you prepare for any career and financial setbacks.

Redundancy and your pension

The first thing to pop into anyone’s mind when being made redundant is to find a new job – and you may receive redundancy pay to get by until you eventually do. You will also be free to transfer your pension and you will be able to use any redundancy payment to make additional contributions. This is something you should be thinking about if you want to secure your future.

What you can do with your redundancy pay

For your pension, redundancy gives you a few choices. The first is that you can keep your pension benefits where they are and continue to pay into the pension scheme. Secondly, you can transfer what you have saved so far into a new pension scheme.

You can also use part of your taxable redundancy payment to make pension contributions, or you can give up some of your redundancy payment as an employer contribution to your pension. However, be aware that your employer must agree to this. This is known as a ‘redundancy sacrifice’.

Additional payments

If you choose to make additional payments into your pension, be aware that if you do arrange additional contributions, you don’t exceed the annual allowance. If you do, payments above this are subject to tax.

Speak with an Independent Financial Advisor

Of course, the decision-making process can be made easier with the help of an independent financial advisor. They can look at your options to help you decide what would be best given your personal situation. If you’re based near Altrincham or in Greater Manchester, Haven IFA is here to help. Get in touch to speak to one of our advisors and learn more about our services.