Voluntary Severance

jamminca69

Hi all

Quick query - the Univeristy i work for has offered this to all staff in a bid to make some savings :rolleyes:

Only info i have on this is as follows

-The Voluntary Severance package is a year’s salary incorporating notice and annual leave
- Deductions will not be made in respect of National Insurance, or pension contributions; within NI and pension rules;
-There will be a tax free element in accordance with revenue rules;
-Any Voluntary Severance agreed will be the subject of a compromise agreement (i.e. by mutual agreement), and will take effect before 31 July 2010;

Could someone put these into plain english for me? Is there a 30k limit for tax? hence the words "tax free element"

Im after some more information particularly with regards to my pension which is the LGPS (Local Government Pension Scheme) what would happen with this? Can i freeze it until i move onto another job? If new job is not with local government will i have to to transfer the LGPS elsewhere? or will i just have to claim early?

Im only 28 earning 30k a year and have worked in current job for 7 years, any more info on this scheme and Voluntary Severances in general would be great. Dont want to lose out with pension but the lump sum of annual salary is very tempting.

I assume if i apply for this my employers will need to provide more information regarding this scheme? or is it a pretty straightforward process?

thanks

Debt_Free_Chick

You really must check the terms of the severance package with your employer as there are no "standard" terms for this type of thing.

Usually, the first £30k of severance is paid tax free, though.

As for the pension - you will be treated as a normal leaver so check the booklet or website for details of your options.

jamminca69

Hi just an update with this

I have read elsewhere about the effect on your tax threshold that a lump sum may have?

In simple terms the 30k may not be taxable but can anyone explain how this may affect my end of year tax? I have seen people mention it can take you over the threshold?

I have a meeting with HR this week where i assume ill get more info but as end of tax year is approaching what effect will it have on me if i accept this before April? Or wont it make a difference as lump sum will be just over 30k so only taxed on around £1500?

Andy_L

jamminca69 wrote: »

Im after some more information particularly with regards to my pension which is the LGPS (Local Government Pension Scheme) what would happen with this? Can i freeze it until i move onto another job? If new job is not with local government will i have to to transfer the LGPS elsewhere?

Yes,
No, although you can choose to if that is better than leaving it frozen

LindsayO

I work at a university where voluntary severance was offered and the lump sum was far less than a year, so it does sound like a good deal to me