Investing my redundancy money advice please

janeduffell · 25 March 2018 at 11:08AM

Hello

I have been made redundant whilst on maternity leave. Fortunately, I had an excellent legal advisor who helped me to get a settlement out of court given the dubious legal nature of this event.
My basic salary was GBP 52K plus a car allowance so I am a HRT. My employer is paying me GBP64,290 Gross, GBP45K of which is redundancy. I will receive GBP 52,555.20 net after tax. According to my P45 my total pay to date is just over GBP65K

Currently I have no pension scheme at all other than statutory.

Please can anyone advise me on my best options on what to do with this money? I am 45 years old, I have an 8 month old baby and am looking to return to work in July when he is 1 year old.

My only debt is a new mortgage of GBP150,000. My partner has a new business and is self employed earning circa GBP550 gross per week.

I would be really grateful for any advice

Many thanks

Jane

jonnygee2 · 25 March 2018 at 4:33PM

If you think you won't need it again until you are at least 55, a pension is the best place to put it (or up to 40K of it as that's the maximum contribution). You'll get your tax back through tax relief (!!!). Once 55 you'll be able to take a tax free lump sum back out, too, which is only 10 years away. As you are a higher rate tax payer this year, this looks like a no brainer to me in terms of return. There are online calculators for the tax relief,, but if you put in 40K you'd essentially have about 54k total just through tax relief.

The second place to put it might be overpayment of your mortgage, if this is allowed by your mortgage provider, to reduce interest payments. Assuming you have an interest rate of about 3%, again this is much higher than any risk-free savings return you'll probably get.

Before you do this I'd make sure that you have enough cash to live and also some spare savings (I like to stick to having about 6 months of essential expenditure saved in emergency supply) because both the above options put money in a place where it can be difficult to access.

I don't know your entire financial situation and am not a qualified financial advisor so please take this as friendly 'what I would do' advice only.

jonnygee2 · 25 March 2018 at 4:40PM

I also forgot to say well done for taking your unethical and discriminatory employer to the cleaners for making you redundant during maternity leave.

janeduffell · 25 March 2018 at 6:33PM

Hello

Thank you so much for your reply and the really useful information share. I am really grateful and appreciate your time and effort.

I will definitely invest as much as we can afford into a private pension .... looking at it it seems initially that some form of SIPP might be a good idea

We will also pay off our maximum allowed 10% overpayment of our mortgage for this year (maximum without penal charge)

I am very grateful for the idea on the amount of savings to put by too.

Very kind and thoughtful of you

Best wishes

Jane

Investing my redundancy money advice please

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