Pension Conribution and Redundancy

immy1

Can anyone help with this I'm so confused. There is a fair chance that I may be made redundant at the end of this year. I would pay tax on any redundancy pay over £30,000. I was thinking of paying 10% of my salary into my pension this year instead of the default 5% minimum. I know that I would get 20% pension tax relief on my pension contributions but is it a good idea to increase my pension contribution percentage considering the prospect of redundancy? Thanks

squirrelpie

There is a fair chance that I may be made redundant at the end of this year.

Do you mean tax year or calendar year or some other year? If it's tax year I'm surprised you're not sure because you should be working your notice unless you've only been there a short time.

is it a good idea to increase my pension contribution percentage considering the prospect of redundancy?

You haven't really said enough for anybody to know. It depends how old you are and what your hopes and plans are; what your chances of finding another job quickly are; what savings you have etc etc


I would certainly wait until you know for sure (if it is this tax year you're talking about) before making a final decision, assuming the situation allows that.

Dox

immy1 wrote: »

Can anyone help with this I'm so confused. There is a fair chance that I may be made redundant at the end of this year. I would pay tax on any redundancy pay over £30,000. I was thinking of paying 10% of my salary into my pension this year instead of the default 5% minimum. I know that I would get 20% pension tax relief on my pension contributions but is it a good idea to increase my pension contribution percentage considering the prospect of redundancy? Thanks

What's your priority: minimising the tax you have to pay, or having cash to live on while you look for another job? If your redundancy package is over £30,000 and it sounds as if it will be, then paying more into your pension and getting the benefit of the tax break might make a lot of sense.

bluenose1

To answer your question would need to know -
How old are you?
Does your current employer offer salary sacrifice?
Can you afford not to have the money to live on now?
Do you intend to carry on working?