By Team SalaryCalculate · 1/7/2026
Pension Transfer Options After Redundancy: Making the Right Choice
If you've recently been made redundant, it's essential to consider your pension and how to best handle it. Redundancy can be a stressful time, and it's crucial to make informed decisions about your pension pot. This article will guide you through the different pension transfer options, helping you make the right choice for your financial future.
The Basics of Redundancy and Pensions
When you're made redundant, your employer might pay you a redundancy payment, which is capped at a maximum weekly pay of £719 and a maximum total payment of £21,570. These figures are reviewed annually in April. However, what happens to your pension?
Redundancy Pension Payments
Your pension depends on the kind of scheme you have:
Defined contribution schemes: Your pension pot will remain invested, but you can stop contributing.
Defined benefit schemes: Your pension is based on your salary and how long you've been with your employer, not your contributions.
You can estimate your redundancy pension using our [redundancy pension calculator](/tools/uk/england/redundancy-pension-calculator).
Pension Transfer Options After Redundancy
When you're made redundant, you have several options for your pension:
1. **Leave it where it is:** You can keep your pension in your current scheme. Your pension will continue to be invested and hopefully grow over time.
2. **Transfer it to a new employer's scheme:** If you find a new job, you might be able to transfer your pension to your new employer's scheme.
3. **Transfer it to a personal pension:** You can transfer your pension to a personal or stakeholder pension. This gives you more control over your money but can be risky if you're not experienced with investing.
4. **Take the money out of your pension:** You can usually take 25% of your pension tax-free from the age of 55. The rest is taxed as income. This option should be considered carefully.
For more information, check out our guide on [redundancy-pension-options](/blog/redundancy-pension-options).
Making the Right Choice
When deciding what to do with your pension after redundancy, consider your age, health, financial situation, and future employment prospects. Use our [redundancy budget planner](/tools/uk/england/redundancy-budget-planner) to help make your decision.
Frequently Asked Questions
**1. What happens to my pension when I'm made redundant?**
Your pension depends on your scheme. With defined contribution schemes, your pension remains invested. With defined benefit schemes, your pension is based on your salary and length of service.
**2. Can I take my pension early if I'm made redundant?**
You can usually take 25% of your pension tax-free from age 55. The rest is taxed as income.
**3. Can I transfer my pension to a new employer's scheme?**
Yes, if your new employer allows it, you can transfer your pension to their scheme.
**4. Can I leave my pension where it is after redundancy?**
Yes, you can leave your pension in your current scheme, where it will continue to be invested.
**5. What is the maximum redundancy payment I can receive?**
The maximum weekly pay cap for redundancy is £719, and the maximum total payment is £21,570.
Remember, redundancy can be a challenging time, but making informed decisions about your pension can help secure your financial future.
