If you’re made redundant, there are different options depending on how old you are.
What’s the process?
1. You and HR discuss your options and figures
2. HR gives you a form to complete if you want to divert any of your redundancy payment (in excess of £30,000 only, and up to certain limits) in to your pension
3. Return this form before your leaving date if applicable
Under age 50?
4. HR will notify you that you are leaving the business in either your month of leaving or the following month
5. On leaving the Scheme you become a deferred member
6. Once they receive confirmation of your redundancy, the team will write to you with your deferred benefits
Age 50 or over?
4. The pension team will provide you with a retirement quote and the necessary forms
5. Complete and return your forms with a copy of your birth certificate plus marriage certificate or decree of divorce if applicable
6. We pay your pension on the 15th of the month
7. If you decide to take a tax-free lump sum, this will be paid into your bank account on the first Friday after your retirement date.
You might be able to take your pension earlier, as follows:
|Age at date of redundancy||Your pension may be payable from:|
|50 or over||Immediately, without a reduction|
|45-49||From age 50 without a reduction|
|40-44||From 50 – reduced for early payment|
|Under 40||From 60; or from 55 with a reduction for early payment|
The younger you are, the greater the reduction will be.
You can also choose to transfer your benefits to another registered pension scheme.
If I’m made redundant before age 55 and start to take my pension, can I be re-employed by the Company or a connected employer at a later date?
You can, but you may have to pay a tax charge to HMRC if you don’t meet one of these conditions:
- There has been at least a six-month break in employment
- There has been at least a one-month break and the new employment is ‘materially different’ from before
If neither of these conditions are met, any pension payments you’ve received will be treated by HMRC as unauthorised and they usually charge you at least 40% of the value of those payments and any lump sum you received.
Can the Company increase my pension?
If your redundancy pay is more than £30,000, you could give up some, or all, of it in exchange for additional pension. You must ask to do this before you leave employment and before entitlement to redundancy pay has been agreed. Before you do so, make sure you’re not going over the pension allowances.
If you receive pay in lieu of notice, or other compensation, this can’t be exchanged for additional pension and doesn’t count towards the £30,000 limit.
If you need advice, you should contact an Independent Financial Adviser.