20 March 2020
There is no doubt that this is a very scary and uncertain time for the world, Britain and her businesses.
Understandably, much of our day to day business at Corinthian currently involves dealing with clients desperately seeking answers to their financial questions. As the situation across the world changes on an almost hourly basis we are doing our best to keep our customers updated.
Redundancy and your pension contributions – what should you do?
One of the main concerns for people is whether they will still have a job in a few months and what may happen to their pension if redundancy becomes a reality. If the unthinkable does happen, you have a number of options:
- Continue to keep paying contributions from your bank account.
- Transfer to another pension with no penalty charge
- Cease contributions but remain invested
- If you’re over 55 you could start taking your pension benefits
Even if your employment continues you may have to make the difficult decision of reducing your outgoings; in which case you can choose to stop making pension contributions. Though if you do stop your employer contribution will also probably stop.
Likewise, if you are asked to work reduced hours or a shorter week your pension contributions will be adjusted accordingly.
What if I have to claim SSP?
Given the current situation the likelihood of having to take time off due to illness is higher than ever. Unless your contract of employment states otherwise both employer and employee contributions decrease if sick pay is less than normal pay.
If salary exchange is used, employers must follow the varied contract of employment set up at the outset of salary exchange and maintain the agreed level of pension contributions during any form of paid sick leave. Employer contributions will be based on the employee’s actual earnings during sick leave. SSP must be paid in full in cash and cannot be reduced by the salary exchange agreement.
What about my debts?
On 17th March the Government announced that those suffering financial hardship could be given a 3-month holiday on mortgage payments; (most providers will adjust your monthly payments after the 3-month period).
No specific provision was made for loans and credit cards, but should you have issues in making payments talk to your provider as soon as possible.
Is this potentially a good time for investing?
Whilst the immediate value of many investments has fallen there is always the argument that investments should be viewed as a long-term option and so will hopefully rise again.
DON’T PANIC! If you are concerned about your investments – it’s what we’re here for.
The knee-jerk reaction is to stop paying into your fund but when stock markets are low it can in fact be a great time to invest as when they recover your pension value will increase.
What is the long-term outlook?
We really don’t know what the final outcome of all this will be. All we know is that we will continue to tailor our advice and recommendations to our individual clients and give the best options for each personal situation.
