The Government’s Coronavirus Job Retention Scheme comes to an end on 31 October 2020 in which a third of the UK workforce were furloughed. Given the global impact of the coronavirus crisis along with many recent redundancy announcements, it is an inevitable and an unfortunate fact that more redundancies are likely.
In fact, the National Institute of Economic and Social Research (NIESR) has predicted that 10% of the UK workforce could be facing unemployment by the end of the year. Jonathan Watts-Lay, Director, WEALTH at work comments, “It is sad to see that many redundancies have already been announced and that many more are predicted.
It is imperative that employees are given the redundancy support required. Providing financial education and guidance on redundancy issues will help those affected to understand their redundancy package and the ways in which to support their finances. It can also help them avoid common tax mistakes in order to make the most of their redundancy pay, as they may not understand that they can reduce the overall tax impact.
For those employees who are approaching retirement, it is an especially daunting time but specialist retirement support can be provided to help employees understand how their redundancy pay can directly boost their pension savings and help to consider affordability issues, should they choose not to seek work again.”
Jonathan Watts-Lay adds, “Instead of using their pension pot as a source of income, many employees would probably be better off by looking at other taxable savings and investments first rather than the tax-free environment of their pension. This would allow their pension savings to benefit from a longer period untouched.
Of course, others may wonder if they can afford to actually retire. Regulated financial advice can help employees put a financial plan together based on their needs. Therefore, providing redundancy support with access to financial advice is crucial to understand if retirement is a real possibility.”