A record 370,000 people were made redundant — or took voluntary redundancy — in the three months prior to October 2020, according to the Office for National Statistics.
If you are made redundant your employer will no longer contribute to your workplace pension. Depending on your circumstances, you may be able to:
– keep the pension where it is
– transfer it to a new employer’s workplace pension
– transfer it to a personal pension
You may also be able to take early retirement.
Should you leave it with the existing provider, it is important your personal details are up to date and that you keep any policy documents. This will help with managing your pension arrangements in the future.
Most providers offer online accounts for you to manage your pension plans too.
Up to £30,000 of a payment for loss of a job can be paid to you tax-free. However, amounts above this will normally be subject to a tax charge. It can therefore be tax efficient to request any excess redundancy payout over £30,000 to be paid into a pension scheme instead of receiving the money as cash.
It’s worth noting that you should be careful not to exceed the pension contribution annual allowance and any contributions paid into a pension will be tied up until the individual is at least 55 years old.