What will happen to my pension when I'm made redundant?

If you have a job where your employer runs a pension scheme and you are a member, it is important to understand what will happen to your pension.

If you are old enough, your employer, or the rules of your pension scheme, may allow you to retire early with a reduced pension. In some cases as part of a redundancy package you may be offered a deal more generous than normally on offer for those taking early retirement from your pension scheme. You may still be entitled to redundancy pay in addition - you should not confuse this with the lump sum offered by most pension schemes on retirement.

If you are not old enough to take early retirement you should be offered some or all of the following options:

• You should be allowed to take your "pension pot" and transfer it to a scheme run by a new employer or invest it in your own private pension scheme.
• You should be allowed to keep the pension with the employer who is making you redundant. When you retire you will receive a pension from this scheme. This is known as a deferred pension.
• You may be offered a refund of your contributions if you have only been a member of the scheme for a short period.
• You may be offered a transfer to a "buy-out" policy. You get a lump sum invested, and a pension that will depend on how well the fund does. You are often guaranteed at least a minimum pension, but certain constraints may be imposed relating to the benefits accrued under your employer's scheme. You should take advice if you are offered a 'buy-out' policy.

Members should be told as soon as possible:

• What the value of their deferred pension would be;
• The value of a transfer payment to another pension scheme;
• Their entitlement to a refund of contributions; if any;
• The value of an early retirement pension and lump sum.

Don't forget that if you are made redundant and you are due to receive a payment under an occupational pension scheme within 90 weeks of the dismissal, your redundancy payment may be reduced. See above. Deciding the best thing to do with your pension is often very difficult, and is another area where an independent financial advisor would be able to help.