Furlough has offered support to workers and employers since March, but will come to a close on October 31 – mere days away. With costs spiralling, it is likely many people could sadly be losing their job with redundancy on the horizon. However, for those who are being made redundant, taking action with a redundancy payment could help in a number of areas of life.
Planning ahead to ensure a person has enough within their pension is key for a comfortable life after leaving the workforce permanently.
WEALTH at Work has explained a company pension can remain with a former employer and stay invested until retirement, but some may wish to change this to a new employer.
If so, checking any charges or fees which could be incurred is important to make sure no unnecessary costs are built up.
But for those who are looking to boost their retirement pot, paying some or all of a redundancy payment into a pension can be a valuable move.
If a person is approaching their retirement, then this could be particularly useful for a final increase to the pension.
Finally, people should be aware of scams which could potentially relate to their redundancy pay, as unscrupulous people attempt to exploit those in a vulnerable position.
Some people have been encouraged to “invest” their redundancy money with the promise of returns, or alter their pension contributions.
Those who believe they may have been scammed, or have spotted a scam, are encouraged to report the issue to Action Fraud.
Jonathan Watts-Lay, Director at WEALTH at Work, commented on the situation facing many Britons.
He said: “Redundancy can be a very difficult time and can be made worse if people don’t know their options.
“Some people don’t know that some of their redundancy pay may be taxed, while others don’t know what their monthly expenses are and therefore how long their redundancy pay needs to last if a new job isn’t around the corner.
“While paying off expensive debt may not be something that springs to mid, it can take the pressure off, and stop the debt from building up even more.”
However, for those looking to make large decisions, particularly as they relate to pensions or mortgage payments, financial advice is key.
This is because these professionals can often provide greater insight, and tailored help to fit a person’s individual circumstances.