Pension and Redundancy

mcnicm20

HI

I may be being made redundant and I am over 55. I am receiving conflicting advice. I have been told by some people that I can ask my employer to pay some of my redundancy into my pension to get to my pension allowance limit for the last 3 years, the salary is a final salary one. This will reduce the tax I have to pay on my redundancy payment. Other people are telling me this is not possible ?

Thank you

PeacefulWaters

What do the scheme rules allow?

kidmugsy

mcnicm20 wrote: »

I have been told by some people that I can ask my employer to pay some of my redundancy into my pension to get to my pension allowance limit for the last 3 years

You'll be limited by the size of your earnings in 18/19, but - the good news - that includes the part of your redundancy payment greater than £30k.

If the employer/DB scheme rules aren't accommodating, you could also play the same game by opening a personal pension of some sort and using contributions to it to avoid higher rate tax. (Or indeed if you want to, to avoid basic rate tax). You would need the DB scheme to tell you how much of your 18/19 annual allowance will have been consumed by your contributions to that scheme.

Does your employer offer "salary sacrifice", sometimes called a "smart" pension?

xylophone

https://www.usdaw.org.uk/CMSPages/GetFile.aspx?guid=91785e00-5095-43a7-87e1-28d1921d8770

may be worth a look.

Reluctantpensioner

Will depend on your company and the pension scheme. Ask.
If it is defined contribution it costs the company nothing to let you do this - I put was able to sacrifice everything above the tax free £30K - including my last month's salary.
Defined Benefits are more expensive to the company so they may not be able to do it. Do they have an AVC scheme, maybe they can sacrifice into that?