Your pension options if you’re made redundant

Money Advice Service

Facing redundancy is stressful enough without worrying about what will happen to your workplace pension. So it’ll be a relief to know that help is at hand, and you’ve got options open to you. Here are some simple steps you can take to start sorting your pension out in case of redundancy.

What type of workplace pension do you have?

Different pensions work in different ways.

So, before you can decide what to do with your pension when you’ve been made redundant, you’ll need to be clear about which type you have.

There are two main types of workplace pensions:

  • Defined benefit (also known as salary-related or final salary schemes) – these are always occupational schemes, which means they are specific to your work for a particular employer.
  • Defined contribution (also known as money purchase schemes) – these might take the form of an occupational scheme, a group personal pension or a group stakeholder scheme.

If you’re unsure, start off by asking your employer what type of pension you’ve got.

Check out your pension options

Once you know what kind of pension you’ve got, you need to decide whether to leave it where it is or transfer it somewhere else.

Here’s a quick guide to your options.

Defined benefit pensions

If you are made redundant, you will have to stop paying into it and do one of the following:

  • Leave your pension in the scheme and when you retire you will receive a pension from that scheme.
  • Transfer your pension into a new employer’s scheme, if it will allow you to – unless your new job is in the public sector, it is unlikely to offer a similar scheme.
  • Transfer your pension contributions into your own personal pension.
  • If you are old enough, you might be able to take early retirement.

In most cases, it is usually better to leave your pension in the scheme.

You should only transfer out of the scheme with good reason.

For example if you are concerned that the scheme is not adequately financed and your old employer might go out of business.

If your ex-employer goes out of business (or you’re worried they might), and you’ve left your pension in their scheme, check out the scheme members section on the Pension Protection Fund website to see what compensation you might get.

Defined contribution pensions

Group personal pensions and group stakeholder schemes are linked to you, not your job. Some people choose to keep paying into them after they’ve been made redundant. If you want to do this contact your pension provider directly.

If your employer has enrolled you in NEST (the National Employment Savings Trust), this is also linked to you not the job, so you can carry on paying into it if you want to.

If you are made redundant and this is an occupational scheme, you have to stop paying into it and have the option to either:

  • Leave your pension where it is to carry on growing until you retire.
  • Transfer it to another defined contribution scheme – either a personal pension or a new employer’s scheme when you start working again.

You might be allowed to transfer your fund to a salary-related scheme with a new employer, but you’ll need to check if they’re okay with that.

You should also find out how much the transfer will cost to see if it’s worth your while.

Speak to an independent financial adviser

Pensions are complicated.

You might want to speak to an independent financial adviser (IFA) who can talk with you about your options.

Read our guide on Choosing a financial adviser.

This article is provided by the Money Advice Service.

Some important information about Rest Less Money

We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.

When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.

Key things to remember when using Rest Less Money:

We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.

No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.

 

Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
Whilst we work hard to try and provide accurate information, deals and prices can change, so whilst they may be correct at the time of writing, providers may subsequently decide to alter them later – so always double check first.

A final note on the Rest Less Community Forums – always remember that anyone can post their opinion on the Rest Less Community Forums, so it can be very different from our own opinion and may not be factual or well researched. Always be wary of any content posted on the forums and be sure to do your own research and due diligence on anything suggested. 

We hope you find Rest Less Money a useful resource and we would welcome your feedback at [email protected] on how to make it even better. For more information on any of the above you can read our full terms and conditions.

Some important information about Rest Less Money

We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.

When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.

Key things to remember when using Rest Less Money:

We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.

No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.

 

Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
Whilst we work hard to try and provide accurate information, deals and prices can change, so whilst they may be correct at the time of writing, providers may subsequently decide to alter them later – so always double check first.

A final note on the Rest Less Community Forums – always remember that anyone can post their opinion on the Rest Less Community Forums, so it can be very different from our own opinion and may not be factual or well researched. Always be wary of any content posted on the forums and be sure to do your own research and due diligence on anything suggested. 

We hope you find Rest Less Money a useful resource and we would welcome your feedback at [email protected] on how to make it even better. For more information on any of the above you can read our full terms and conditions.

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Join Rest Less Money Club

Helpful tips and guidance for making the most of your money – straight to your inbox

By providing us your email address you agree to receive emails and communications from us and acknowledge that your personal data will be used in accordance with our Privacy Policy and Terms and Conditions. You can unsubscribe at any time by following the link in our emails.

Join the Rest Less Money Club

Helpful tips and guidance for making the most of your money – straight to your inbox

Good luck with your application

Before you go, we’d love to stay in touch to find out how you get on. Sign up to Rest Less today to get free job alerts and inspiring content sent straight to your inbox.
By providing your email you agree to receive emails and communications from us and acknowledge that your personal data will be used in accordance with our Privacy Policy and Terms and Conditions. You can unsubscribe at any time through the link in our emails.