Redundancy payments: Will they be affected by pension withdrawals? Tax rules explained | Personal Finance | Finance
Redundancy arrangements can have an impact on pensions.
If the person being made redundant wishes to do so, they can use part of their redundancy payment to make pension contributions, which could provide tax incentives.
In some instances, an employer may agree to allow the person involved to give up some of their redundancy payment as an employer contribution to a pension scheme, which is known as a “redundancy sacrifice”.
Additionally, if a person has been offered a tax-free cash sum on retirement from their workplace scheme, it will have no bearing on a redundancy settlement.