Where to invest redundancy money?

M

maebee

Guest
I am shortly to be made redundant. I will be getting the whopping sum of just over €37,000 ,after 36 years in the same job. Luckily, I have something else lined up but am wondering where is the best place to invest the redundancy money. All ideas welcome. Many thanks.
 
If you weren't already maximising your pension contributions you could use it for that.
 
Redundancy payment

I looked into that one and as I understand it, I would have to be working in a company where the existing pension scheme exists. This will not be the case with me.
I'm open to correction on this one.
 
You don't need an existing company pension scheme. You can pay into a personal pension scheme and claim back the relief at the top rate of income tax.
 
One thing you could do with that money is buy a house abroad (even as close as England) and rent it out.
You can get some cheap council houses out there for somewhere around that price. While you would not want to live there yourself, there will be no shortage of people who would. You could even be lucky and get the coucil to rent it off you.
 
redundancy

Very soon my employer will be offering me a choice of relocation, early retirement or redundancy. The redundancy package is 3.5 years max ( approx €140,000) is partly taxable, and the early retirement package is approx €80,000 which is tax free. The redundancy package entails no further payments until I reach 60 and then a gratuity of €55,000 and a pension of approx €19,000 per annum from 60 onwards. The early retirement package has an immediate pension of approx €20,000 per annum. I am leaning towards the early retirement deal as there is annual income, however if I could reduce the taxable element of the redundancy package by investing in a personal pension scheme I would give it serious consideration. My employer/union have a avc scheme and I cashed in a dummy insurance policy and together with savings from the credit union I invested the max lump sum in this Avc last year for an over 50 year old (30% ofwhich equalled approx €12,000)
I am a member of a defined benefit scheme, normal retirement is age 60 and normal pension is 78 weeks gratuity and 50% of pay after that. As I have over 37 years employment with the company there is a long service payment which is included in the €80,000. All is not quite as rosy as appears though as I have a third level student in first year and a futher student doing the leaving cert next month, so there is a period of considerable expense approaching. All and any advice greatly appreciated, and I do appreciate that my employer is treating me better than a lot of others in this respect.
 
redundancy etc

I forgot to mention that I was 54 in late April, so I have approx 6 years until I am 60.
 
Re: redundancy

There are people who specialise in giving reduncy advice (e.g.
PHI Transition,Dublin 014966455) There are special tax arrangments e.g. Top slicing that may be of considerable benifit to you. Also class D prsi (civil servants) need to review there prsi position.There are isues such as change of status,mixed pro rata, credits, ect that may be worth exploring. Your company may pay for this advice.
 
redundancy etc

Thanks JohnDung. In 1989 my wife was made redundant and we got top slicing then, so I am not sure it applies twice, or indeed both spouses are entitled to one shot each. I will indeed check out your advise, though I cannot see any way my employer assist in this one.
I see you have copped that civil service standards apply to me even though I am not in the civil service. Thanks again.
 
Redundancy

Having looked at maebee's posting above, I think that some employers have a lot to answer for. €37,000 Redundancy after 36 years is pure This post will be deleted if not edited to remove bad language. Obviously you are over 50 maebee and you dont mention early retirement so I assume you wern't offered this either.
Some employers have no shame.
Good Luck in your new venture!
 
Re: redundancy

These deals are quite complicated. The early retirement deal seems the best for your situation. The reduncy deal would be a good option for lets say a single person in poor health, as the pension element may be non transferrable if he dies. Incidently, if you retire, be sure to ,at least, sign on annualy(I think) for class D prsi to preserve your wifes entitlement to contributary Widows Pension.Hopefully, this wont be an issue. Of cource,one could always take up work!
Incidently,people who retire in there 50s are suppose to live longer than people that retire at 65..
Anyhow best of luck. Advising someone on retirement is as accurate as giving marriage advice & a lot depends on how you feel.
 
Re: redundancy

My apoligies,Maybee,for wandering off topic with cucuhillin.I have been made reduntant in both the public & private sectors. Minimum reduncy has been increased to 2 weeks/year+1 bonus week with a weekly maximun so your figure seems right. In the past, I attended some retirement seminars where people have asked "what is best to do with my reduncy money". There is no exact answer.Bank managers & investment agents will, of course advise you to invest with themselves. My advice? Split it 3 ways. 1 Enjoy some of it now. 2 Put some of it away in relatively short term savings e.g. credit union.3 The remainder in long term(only if you want). Finally, remember its your money,you worked hard for it. Best of luck
 
early ret

Thanks again JD. Yep, complicated all right. The grapevine carried the news but when the actual details were given to me in Nov'02 with a deadline of Feby '03 it still came as a wake up call. The union then put the brakes on and I have used the 18 months to reduce a credit union car loan from €7,900 to €1,700 and to tidy up a few other odds and ends. Unfortunately cannot do anything about 3rd level expenses. I have been with the same employer since 1966, and no sick leave whatsoever since 1986 and then only a few weeks for a flu. Thank God for good health and hopefully it will continue. I intend to do absolutely nothing for 2 months just to get used to it and then I will start looking. Ideally 20 hours a week would suit but I will take what comes. Used to handling large amounts of cash, dealing with staff, dealing with health and safety and wtd, and inputting wages into computer etc etc, but whether anyone actually wants an over 50 etc is open to debate. Anyway thanks for the advice and I hope it works out good for maybee,who I feel is getting a bum deal.
 
Redundancy payment

Many thanks for the replies. I finished up last week and was told that the redundancy money won't be through for at least another 3 weeks. I faced the dreaded "Hatch" for the first time in my life on Monday morning, (not very pleasant) where I was told that it could take up to 3 weeks for my "dole" to be paid. I'm 51 years old with a wife and 2 teenagers. We're supposed to live on air for the next month. The departments never had a problem taking tax and prsi from me for the past 36 years. They didn't have to wait for it. PAYE workers are sitting ducks. Meanwhile, the company where I worked for 36 years is thriving. The work is up the walls. my (ex)Boss has told me that I will "probably" be taken back sometime in the Summer under a new contract. Better than nothing, I suppose. Listening to "Liveline" today about the "Independent Newspapers" workers. Very similar to my own story but at least they were offered a package. All I'm getting is statutory, €37,026. Sickening.
 
You must log in or register to reply here.
Back
Top