Facing Redundancy? Make Informed Financial Decisions
If you’re facing redundancy, understanding your financial entitlements is
crucial. Your redundancy package can significantly impact your pension and
future financial security. Our expert advisors help you navigate your options
to maximise tax-free benefits and secure your long-term financial well-being.
Your redundancy package typically includes:
Statutory Redundancy Entitlement
An additional, discretionary payment from your employer as a
goodwill gesture. A portion is tax-free, but the remaining balance is subject to tax at
your marginal rate.
There are three methods to calculate the tax-free portion of your Ex-Gratia payment:
The SCSB calculation differs slightly if you waive or retain your pension lump sum. These calculations are:
SCSB – waiving pension lump sum (average earnings over past 36 months x years of service) 15
SCSB – retaining pension lump sum (average earnings over past 36 months x years of service) 15 minus pension tax free lump sum
Tax-free amount: €10,160 + €765 per completed year of service + €10,000 (minus any previous redundancy or pension tax free lump sums received in past 10 years).
Tax-free amount: (Average earnings over the last 36 months × years of service) ÷ 15 .This method can offer a higher tax-free sum, but you must decide whether to retain or waive your tax-free pension lump sum.
Upon leaving employment, you have several pension transfer options. Each choice impacts your tax benefits and accessibility to funds.
If you choose an increased tax-free redundancy payment by waiving your pension lump sum, you can only regain a tax-free lump sum if you transfer
your pension into a PRSA. None of the other transfer options allow for a tax-free pension lump sum.
Transferring your pension into a PRSA ensures you retain your tax-free lump sum entitlement (25% of the transfer value).
Early access: From age 50, provided you are fully retired (i.e., no PAYE employment income).
Retiring your PRSA before re-employment ensures:
The remaining 75% can be transferred into an Approved Retirement Fund (ARF)
Flexibility to leave funds in the PRSA if immediate access isn’t required
Choosing the right redundancy and pension transfer option is essential to protect your financial future. Many redundancy package calculations overlook long-term pension implications, leading to costly mistakes. Our expert financial advisors provide personalised guidance to help you:
In today’s uncertain economic climate, redundancy has become a common concern for many employees. It often brings about questions regarding financial stability, future planning, and
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