There are many myths centered around your pension and the way that it is affected by your employment status, such as bankruptcy, redundancy, and working part-time. These myths can make it difficult for you to find the bare facts about your pension and what you should do in a crisis or when your employment status changes.
1. You will Lose your Pension if you are made Redundant
Many people believe that if you are made redundant, you will automatically lose the pension pot that you have been paying into over the years. However, not only will you be able to keep this pension, but you can even continue to pay into it. If you would like to cut your ties to your old workplace, you can transfer this pension to another pension scheme on either a private or workplace level. There are also other options when it comes to redundancy and your pension, including choosing to contribute some of your redundancy pay into your fund and asking your employer to donate some of your redundancy money into your pension.
2. Bankruptcy Can Stop you from Accessing your Pension
Bankruptcy is one of the largest financial fears that families have, and this means that certain myths have grown up around it. However, the effect of bankruptcy on your pension changes depends on when you become bankrupt. If you became bankrupt before May 29th, 2000, you would have a Trustee in Bankruptcy to whom the government will give access to all of your monetary assets, including that of your pension. They will then proceed to pay off all of your creditors with this. However, if you have been made redundant after May 29th, 2000, your Trustee in Beneficiary can protect your assets against claims. They can only withdraw money from this through court if an unusually large donation was given to your pension before bankruptcy, and you can reach an out-of-court settlement with them to access some of your funds for a limited time.
3. Working Part-time Takes Away your Rights to a Pension
Working part-time is often thought to take away some of your rights to a pension, especially if this alters the amount of money that you are earning drastically. However, every employer working within a workplace must be offered a workplace pension by their employer, including those who work part-time. This will still include voluntary contributions and employer contributions. The only change will be the amount of money which you will be paying into this fund, as a reduced income will mean that the growth of your pension may become smaller, which can diminish your final funds when you receive your pension.
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Pensions can be incredibly stressful and elusive when it comes to distinguishing the myths from the fact. This article has covered the main myths behind employment and pensions and the common issues which you are able to sort out. However, if you would like more information, you can find this on Portofino’s social media accounts such as their Twitter, Facebook, YouTube, and LinkedIn.