Is your pension protected when your employment or financial status change?

Many individuals set up a pension to ensure that they are protected throughout their lifetimes and are financially supported when they retire. However, there are a number of different events that can influence the status of your pension over time and have unexpected results. To ensure that you know the outcome of such events, this article compiles answers about what will happen in the event of redundancy, bankruptcy or working part-time, and the effect of these on your pension and retirement fund.

Does redundancy affect your pension?

No, your redundancy does not affect your pension in any way. When you have been made redundant, there are steps that you should take to continue your pension pot and ensure that it can support you in the future. Although the amount and its status do not change, to continue to pay into it, you can either leave it in your workplace fund or transfer it to your new workplace pension scheme or a private company. Your past employer can also pay into your employment fund rather than give you a redundancy payout, through a redundancy sacrifice, if you think you are in the right financial situation.

Does bankruptcy diminish your pension?

Yes, it is possible that your bankruptcy can diminish your pension. This is because when you are bankrupt, you must pay off creditors with any of your existing assets, a process that the government arranges depending on the date on which you went bankrupt. Before May 29th, 2000, you would have had to appoint a Trustee (TIB) who would have paid off your debts and outstanding payments with your pension, whereas after this date, your Trustee can protect claims against your pension. In fact, you can even recover some of this amount in an out of court agreement between you and your Trustee for a short time only. Your pension can still be diminished in this process though, as your Trustee can recover funds if they can provide evidence that you have paid in a highly unusual or excessive amount in the time before your bankruptcy.

Does working part-time have an effect on your pension?

No, working part-time does not have an effect on your current pension or the money which you could save towards your retirement in the future. Instead, pensions for people who work part-time is just the same as those for people working full time. In fact, by law, your employer must offer you an opt-out pension scheme which they must pay an equal amount into, with an annual percentage of their income going towards their employee’s pension scheme. The only effect that working part-time may have is that your reduced income may lead to you putting less money away for retirement.

Want to find out more information? Portafina specialise in offering pension advice, find out more about them here. Alternatively, you can contact and follow Portafina, a financial advisory service, on their social media accounts: Facebook, LinkedIn, YouTube and Twitter.

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