Wealth of Advice, Swale House, Mandale Business Park, Durham, DH1 1TH
In this episode of the Retire Well podcast, advisers Matthew and Joe explore how redundancy, whether voluntary or enforced, can impact your financial future - especially when it comes to pensions and retirement planning. With over 370,000 people made redundant in the UK in the past year, this timely discussion offers practical advice for navigating a potentially life-changing event.
Redundancy packages can include several components, such as:
Joe explains the importance of understanding your full package:
“You want to speak to a financial planner to discuss the how best to use the funds… we’ve had lots of people in the past who’ve made contributions into pensions to reduce their net adjusted income and maximise tax-efficiency.”
Although the first £30,000 of a redundancy package is generally tax-free allowance (usually just statutory and enhanced redundancy, large redundancy payments can have severe tax consequences.
Redundancy payments can push you into higher tax brackets or trigger the loss of benefits like child benefit or personal allowance. Strategic pension contributions, potentially facilitated via salary sacrifice, can help mitigate these effects.
The episode outlines carry forward pension rules which allows you to use previously unutilised annual allowances from previous tax years.
If you're not retiring immediately, your pension can act as a temporary income source. But timing and structure matter. Taking taxable income too early can trigger the Money Purchase Annual Allowance, limiting future pension contributions.
Matthew shares a cautionary tale:
“We’ve had people who get in touch where putting a large pension contribution makes sense and then suddenly a throwaway comment is, ‘Oh yeah, I did cash in a pension a few years ago.’ Suddenly those tax efficiencies and the options disappear.”
Redundancy can be a chance to reflect, reset, and even reinvent your career. Whether it’s retraining, taking a career break, or transitioning into retirement, the advisers stress the importance of balancing financial decisions with psychological wellbeing.
Beyond redundancy pay, you may be eligible for:
Redundancy can be unsettling, but it also presents a unique opportunity to reassess your financial goals. Whether you're considering early retirement, bridging a gap between jobs, or simply making the most of your redundancy payment, thoughtful planning is key.
As Joe and Matthew emphasise, combining financial strategy with personal reflection can help turn redundancy into a positive turning point.
If you want a better view of what your future could be, we'll have a chat and work out if we make a good fit for you and your financial picture.
Wealth of Advice are authorised and regulated by the Financial Conduct Authority, reference number 563909. This website is for information purposes only and is not personal advice.
We are committed to providing products and service of the very highest standards. If you feel that we haven't lived up to your expectations in any way, however, we would like to know so we can put things right for you. If you have a complaint, make sure you contact us directly. Accordingly, we will do all we can to resolve your complaint by the end of the next business day. However, if we can't do this, we will write to you within five working days to tell you what we have done to resolve the problem, or acknowledge your complaint and let you know when you can expect a full response. Furthermore, if we haven't issued our response within eight weeks from the date you first raised your complaint, or if you're dissatisfied with our response, you can ask the Financial Ombudsman Service - www.financial-ombudsman.org.uk - for an independent review. The Financial Ombudsman Service will only consider your complaint once you've tried to resolve it with us, so please take up your concerns with us first and we'll do all we can to help.
Wealth of Advice Ltd is a company registered in England and Wales, company number 07709624.
VAT Number: GB131946515