Life Planning On Redundancy
These days there is no guarantee of a job for life with economic or business changes forcing many employers to re-evaluate their business strategies. Inevitably many people, with sometimes lifetime service, are given no option but to take a Redundancy Package.
Quite often these packages have linkages to pension scheme options as well as different ways in which any tax-free payments are calculated.
Understanding Pension Options On Redundancy
If you are a member of a Defined Benefit Scheme, you may need to weigh up whether the best option for you is to remain a member of the scheme (even though you may still be some years off retirement age).
Alternatively, should you take a transfer value to maximise your tax-free lump sum entitlements and maintain easier access to a pension pot that you could access from time to time?
Financial Issues On Redundancy
If it is relevant, do you need to consider using some of the tax-free payments to clear debt or finance children’s education and, if so, what are the financial consequences now and into the future?
All of these scenarios have long term implications and require serious consideration and experienced advice before anyone decides to accept an employer’s redundancy offer.
Questions you may have..
An employer must provide a minimum entitlement redundancy payment to an employee under the Redundancy Payments Act 1967 – 2014, but only when the employee has completed the statutory period of 2 years’ service with the employer and met the eligibility rules. The employer must also provide the employee with a minimum 2 weeks’ notice prior to dismissal. This notice period increases depending on the number of years’ service the employee has worked.
The eligibility rules state that the employee must be over 16, in insurable employment under the Social Welfare Acts, and have been in employment for at least 2 years.
The minimum statutory lump sum payment entitlement is Two weeks’ pay for every year of service and one further week’s pay subject to a maximum earnings limit of €600 per week.
It is important to note that you may reach an agreement with your employer to receive a redundancy payment above the statutory minimum sum and even in circumstances where the employee has worked less than the 2 year minimum requirement.
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Read Our Blogs On Dealing With Redundancy
Redundancy Options: Where From Here
Voluntary Redundancy and You
Redundancy and tax relief
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