Voluntary separation?

BarleyGB

Im hoping for some advise regarding a difficult decision I need to make.

Last week I was offered voluntary separation from where I have worked for 4 years.  Total package is £32k.  There is an insinuation that if the cost savings are not met then compulsory redundancies may follow.

Im 58 and about 3-4 years from planned retirement, £45k base salary (near £55k inc bonus and pension), I also have healthcare.  

Employment in my sector seems fairly buoyant, id be fairly confident of finding another job in 3-4 months (based on past experiences).

Whilst the amount seems good I think i'm going to decline

Pros

I like my job and where I work, at my age id not relish starting afresh with a new company.  I also I benefit from a good degree of WFH, im also wary that I may not find another role paying as much as im on at present, and/or with more travel.

Alternatives

I could potentially bank £15-20k towards my retirement, and take some extended leave between jobs.


Have any of you been faced with a similar decision, what did you decide and why, are there other factors that I should consider.

Many thanks

gwynlas

If you continue to enjoy your job then you should stay as long as is practical. As you say you have the benefit of WFH a  reasonable salary and do not relish change

A couple of friends have recently partially retired having access to pensions but have taken on minimum paid roles to supplement income. 

If it looks likely that you will be made redundant it is often easier to find another job before finishing rather than taking a break.

Ayr_Rage

The VR terms may well be better than those offered it it comes to a compulsory redundancy.

I would certainly investigate that, preferably through a union rep if you have one.

BarleyGB

The company have implied redundancy would be along statutory terms which im assuming would be around £22k (most is contractual 3 months notice, PILON).  Im also assuming that if I decline VR that it'll be 3-6 months more (earnings) before compulsory redundancy takes place.

No union where I work. 

Hoenir

I'd stick it out in that case. Doesn't appear an overly generous offer. 

While using the time to explore future opportunties. 

BarleyGB

gwynlas said:

If you continue to enjoy your job then you should stay as long as is practical. As you say you have the benefit of WFH a  reasonable salary and do not relish change

A couple of friends have recently partially retired having access to pensions but have taken on minimum paid roles to supplement income. 

If it looks likely that you will be made redundant it is often easier to find another job before finishing rather than taking a break.

That’s what I don’t get, nor want to do, I.e. I could earn in 6 months what I’d get working 2 years part time in a low paid, minimum wage job.  When I retire it should be on the basis of financial freedom (albeit the option of voluntary, self fulfilling ‘work’)

Cobbler_tone

£30k tax free? 18 months net pay? 

I’d be inclined to take it, unless you are confident you won’t be in the pool and/or selected. Get a lower paid job to see you over the line. 

It does however read as though you are quite a way from actually getting made redundant, so maybe best to stick and let it play out. It’s a relatively low risk gamble.

BarleyGB

Cobbler_tone said:

£30k tax free? 18 months net pay? 

I’d be inclined to take it, unless you are confident you won’t be in the pool and/or selected. Get a lower paid job to see you over the line. 

It does however read as though you are quite a way from actually getting made redundant, so maybe best to stick and let it play out. It’s a relatively low risk gamble.

I agree that it could be some time before being made redundant, if at all, but that’s the unknown.  Probably depends if they achieve the cost savings from others accepting voluntary separation.

Also if unknown re job prospects if I take the separation.

£30k is only about 10 months net pay.  If it was 2027 onwards the timing would be ideal.

Hoenir

How much does your employer contribute towards your pension every month? 

saajan_12

I'd take it. 
Based on a £50k salary (as bonuses may be lower if they're making major cuts and you mention part is pension), then income tax is ~7.5k, NI is ~3.5k, so you net £39k. 

Comparing to £32k for a redundancy which is mostly tax free (just the last 2k isn't). So that's effectively 82% ie 10 months of pay while you don't actually work. 

Within those 10 months, you could be up for a compulsory redundancy, and the statutory amounts would be significantly lower.. 6 weeks of a capped pay, so ~£4k. That could 'run out' before the next 10 months that you're effectively paid for with a voluntary redundancy starting now. 

Do you really think you can't find another job in 10 months (or longer if you can find a part time role during that time)? Remembering that it might well become decision that's forced on you with worse terms..

BarleyGB

With regard to the package, half of it (£16000) is contractual 90 days notice (pay and benefits) that im assuming would not change if compulsory redundancy was to take place,

The redundancy compensation element would be  £4300 (instead of £16000) £11700 lower than the current offer overall doesn't seem like a huge £amount at risk vs best case scenario of continued employment or the prospect of staying another 3,6,12 months.

Some other factors:

Company pension contribution is 12% (about £500 per month) which is pretty good, also a factor which forms part of my thinking.

There have been 1-2 previous rounds of voluntary separation, I think the company are hoping to avoid compulsory redundancies and could initiate another round of voluntary separation before taking this approach.

Annual bonus (which I believe is likely to take place in some form) would be £3-4k in July)

Non financial considerations are important, i.e. current flexibility, acceptable level of pressure in current roll, professionalism and friendliness of colleagues, comfort in roll (knowing the job and expectations).  

Small chance that rejecting the offer could result in a higher offer in future?

I am confident I could find another role in 3-4 months, but based on some job search this week I think the likelihood of replacing my current salary and benefits is low.  Job search is time consuming, a lot of uncertainties.


Overall

I just don't feel inclined to accept the offer, it doesn't seem attractive enough, all along my gut feel is to reject it.  I think id regret taking it more than id regret staying and facing compulsory redundancy.