Redundancy in Ireland: Implications and Entitlement

Pension & retirement

5 July 2024

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To be made redundant is a difficult and often stressful experience. If you you find yourself facing redundancy in Ireland, it is important that you know your rights and the financial implications involved such as how redundancy payments interact with your pension benefits. At Fairstone, we aim to give you clear guidance and useful advice in order to assist you through this challenging period with confidence and security. 

How does redundancy work in Ireland? 

You may receive different types of payments when you are made redundant, which are as follows: 

  • Statutory Redundancy Payments: 

    You are entitled to redundancy payment if you have been employed for more than two years. It is calculated at two weeks’ pay per year of service plus an additional week’s pay up to a maximum of €600 per week. 

  • Ex Gratia Payments:

    These are discretionary extra sums paid by employers, commonly found in voluntary redundancy packages; they can be substantial and occasionally have tax advantages. 

  • Pension Lump Sums:

    Should you be on the verge of retiring, your employer’s pension scheme could provide a lump sum, perhaps tax-free up to a certain level.

 

Redundancy in Ireland: Key Considerations 

When presented with redundancy options, it’s crucial not to make a rushed decision. Take the time to carefully evaluate your choices. Consulting with a financial advisor can provide valuable insights to help you understand which option suits you best.  

Consider these factors when deciding how you would receive your redundancy payment and pension: 

  • Immediate Vs Deferred Pension: 

    You may have to choose between getting a bigger redundancy payment now or retaining a sum of money upon retiring in the future. 

  • Lifetime Limits:

    There exists an amount of tax-free money that has limits over your lifetime which could influence your decision. 

  • Obtaining professional advice: 

    Discussing with a financial advisor will assist in exploring various options and deciding on what works best for you considering where you are today. 

Practical Steps at and After Redundancy 

  1. Analyse Your Financial Situation:

    This involves identifying your current expenditures and future financial goals in order to determine whether you will save your money, invest it, or use it for day-to-day expenses.

  2. Review Your Benefits:

    Ensure that you replace any lost benefits, such as health insurance, income protection, death and ife service (life insurance) or pension contributions. When you move from one job to another, ensure that the benefits offered by your new employer are the same as or better than those of your previous employer. 

  3. Review your Pension Leaving Service Options:

    Upon leaving your role, normally 4 to 5 weeks after you will receive a leaving service options letter (goodbye letter) from your pension provider. It’s critical to seek advice on your options as not making a decision could impact your future financial goals and objectives.  

  4. Plan for the Future:

    Use this opportunity to reassess your career and financial plans. Consider whether you can take time off, or if you need to find a new job immediately. 

 

How Fairstone’s Experts Can Help You 

At Fairstone, our expert advisors are here to help you understand the complexities of redundancy regarding pension schemes. 

Here are several ways we can support you in your financial journey: 

  • Understanding tax implications: we will explain how different payments are taxed and what measures you can take to reduce your tax liability. 
  • Evaluating your alternatives: we will assist you in evaluating whether or not it is in your best interests to keep or waive any rights to a lump sum payment from your pension. 
  • Preparing for tomorrow: we will help align your redundancy and pension options with your long-run financial goals. 

 

By following these steps, managing  your financial situation and making informed decisions during redundancy will help you to keep things on track and get back on your feet as quickly as possible.

At Fairstone, our financial services are specifically tailored to address the unique needs and concerns of individuals facing redundancy in Ireland. Whether you’re seeking assistance with investments or managing your pensions, we’re here to help. 

Book today your no obligation redundancy consultation.

Let’s Talk

Source: Gov.ie

  

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