Pensions and redundancy

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Tony Jones from Source explains the practice of outplacement arrangements as part of a severance package in a redundancy. (30654000)
Tony Jones from Source explains the practice of outplacement arrangements as part of a severance package in a redundancy. (30654000)

My employer is cutting costs and I’ve been told that I’m at risk of being made redundant. I’ve only been there three years so I am expecting that I will lose my job soon, but how will it affect my pension?

Mike Freer, of BWCI, replies:

I EXPECT that you have a defined-contribution pension arrangement. If that is the case, then you have your own ‘pension pot’, which is invested separately from your employer. Therefore, even if your employer ceased to trade, your pension pot should be protected.

If you are made redundant and there are no special arrangements with your pension, you would be treated in the same way as someone who left employment voluntarily. There would be several options available to you and you don’t need to make a decision about what to do straight away.

However, you may want to request an illustration of the options available now, so that you can starting thinking about it and get an idea of the figures.

When you get another job, if your new employer has a pension scheme, you could consider transferring your pension pot into the new pension scheme. However, you should take financial advice before making any decisions.

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