Retirement and redundancy: don’t rush, it’s complicated!

The reality of the past year has forced many to address later life decisions prematurely, as barely a day passes without news of fresh redundancies. With many thousands facing financial turmoil, the resounding narrative must be to seek advice before embarking on any potentially life-changing decisions.

Many in their 50s may have doubts about whether they will be re-employed after being made redundant and some may consider using a payout to make a dent in their mortgage. Most of us want to retire without a mortgage and paying down debt is a key cornerstone of financial planning.

People made redundant are also looking at is using their defined benefit, or final salary pension, as this can be a substantial asset. However, it is not always easy to access it.

The Financial Conduct Authority has repeatedly taken the stance that defined benefit transfers are not typically the best thing to do in the majority of cases. Transferring involves converting the benefits of a defined benefit scheme into a cash sum and investing it into another pension, losing potential benefits in the process.

This is a highly complex area of financial advice and, in our experience, there are many instances where people are advised to leave well alone. It is easy to look at a transfer value and be tempted to transfer. However, when you are already going through significant change (redundancy), it is dangerous to be making huge decisions about your future without advice as a transfer cannot be undone.

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