Severance pay options

MrsLynnie1

Hi, I apologise in advance for being thick. Please dont assume any knowledge!
After becoming disabled. Unable to work. Long term sick, and now not able to return to the job I did for 30years I have been offered a severance amount, to take away, or to take and remain an unpaid employee, no pensions paid.
Why remain an employee? What benefit is that?
Before I do something hasty. Any thoughts?

Marcon

Check two things before going any further:

• are you eligible for any sort of ill health early retirement pension from your employer?
• does your employer offer a benefit called PHI (permanent health insurance, aka income replacement insurance)?

MrsLynnie1

No early retirement, PHI not heatd of that, and its not been offered.

xylophone

to take and remain an unpaid employee,

Are you a member of your employer's pension scheme?

Does remaining on the staff entitle you to any benefits (perhaps continued membership of the pension scheme)?

MrsLynnie1

Hi Xylophone.
Yes in the pension scheme. But my employer says they will Not be contributing any further if i stay an employee. I wont get any benefits in any way.
Its not even a help tax wise, i wont get £30k tax allowance. Why offer to keep me on the books and offer nothing?

xylophone

Why offer to keep me on the books and offer nothing?

I have no idea.

Are you aged 55 or over? Is your Pension scheme Defined Benefit or Defined Contribution?

Happier_Me

Do you get any life insurance through work? So if you were to die in service or 'on the books' would your family receive an additional payout?

Is it possible you could recover enough to return part time at some point in the future... if so, it might be easier to do that if you're still on the books.

Are you in a normal pension scheme, where both you and your employer pay into a pot (a DC scheme)? If you're in a defined benefit scheme, normally linked to public sector jobs nowadays, where you pay in in exchange for a guarantee of an amount of income in retirement, then staying on the books may increase your length of service in the pension scheme and therefore the amount of pension you're entitled to!

Other than that I'm stumped. I would ask your employer what the benefits are.