Bonus/Redundancy sacrifice and benefits.

unlikely_2

Hi there, I work part-time 21hrs pw and my partner is unable to work due to ill health. We have 2 children 12 and 17 and receive child tax credits, housing/CT benefit, and working tax credit due to my partner's incapacity. My partner has an open income related ESA claim, however we don't receive any of this, due to my income. They are part of the support group, so entitled to the disability premium, which is used as part on the calculations on the disregarded amount on our Housing benefit (it's complicated!) We have not been migrated to UC yet, but soon I guess. 
The business I work for will be closing soon and I will be made redundant. I may be offered a redundancy package well above statutory, due to my long-served loyalty to the company and wondered I could sacrifice this to my pension and whether this would affect benefits. It would mean I could benefit from it being tax-free and having more pension, come the time. But also mean that we would have benefits while looking for another job. I'm 52, so a while off claiming pension. Would this be considered intentional deprivation? 

Brie

First thing to do is to ask your employer/HR if redundancy can be paid directly into your pension.  Depending on the pension you might be able to start collecting it at 55 so maybe not that far off.  

Working on the basis that anything over £16k stops some benefits have a look at how much redundancy money you have and how much savings you have currently.  Are there things that really need to be replaced - new washing machine for instance?  There's nothing to stop you clearing down your savings making legitimate needed purchases to give you the head room to have a lump sum payment into your savings.  (so normal pracitcal items, not sports cars and round the world cruises)

unlikely_2

Brie said:

First thing to do is to ask your employer/HR if redundancy can be paid directly into your pension.  Depending on the pension you might be able to start collecting it at 55 so maybe not that far off.  

Working on the basis that anything over £16k stops some benefits have a look at how much redundancy money you have and how much savings you have currently.  Are there things that really need to be replaced - new washing machine for instance?  There's nothing to stop you clearing down your savings making legitimate needed purchases to give you the head room to have a lump sum payment into your savings.  (so normal pracitcal items, not sports cars and round the world cruises)

Thanks Brie. Yes my employer is happy to pay direct to pension and yes my provider has a starting pension age of 55, so that's good. It could be around 60k though, (bonus/enhancement/thank you as I've earned the business large sums through fundraising over the years) and my thought was whether HMRC/DWP etc would consider this payment into pension as deprivation of capital in order to claim benefits. In reality my pension is tiny and this would really help things once I reach pension age. I'm also conscious that as a female at this age, trying to get a job in my field is extremely difficult and could take a long time, if at all. At present I probably have around 5k savings.