• Understand the financial priorities after being made redundant such as drafting a new budget.
  • Understand your rights when being made redundant and wider support available when out of work.
  • Understand what being made redundant could mean for your pension.

Read time

13 mins

Chapter 1


Read time

2 mins

When you're between jobs, it can add strain to your finances. If you find yourself in this situation, there are several things you can do to help you keep your finances in check.


Rethink your budget

Your income and savings may fluctuate from time to time. To help make adjustments while you're out of work, you can draw up a budget. You may need to factor in expenses you haven't faced before, like transport to job interviews or increased utility bills. When considering your budget, make sure you keep up with tax payments – it will help you avoid unexpected payments due in future. You can always speak to HMRC if you have any concerns. This webpage contains a useful list of guidance and contact information to support anyone experiencing redundancy.

It could also be useful to check if you have any insurance that provides cover when you're out of work, such as payment or income protection on your mortgage or loans.

You should consider any money you received as part of your redundancy package and make a plan for what to do with it. You could consider paying off debts with any lump sum instead of putting the money in a savings account – especially if savings interest rates are low at the time.

The Budget Planner provided by MoneyHelper can help you estimate your outgoings, and let you know how much is left over after all your bills come out. You can also find out more about budgeting in our budgeting section.


Prioritise debt and spending

Once you've drawn up your budget and understand what money you have available, it's worth thinking about how you'll prioritise spending this money.

It can be overwhelming to acknowledge your debts, but it's an important step to keeping control of your finances – especially when you're out of work.

You should start off by being clear on your priorities. When setting your priorities, think about the necessities you could lose if you fall behind on payments, like priority debts and payments such as your mortgage, car insurance, utilities and pension payments. It may help to draw up a list of priorities, good to haves and payments you can stop for now.

You may be considering reducing your payments into your pension, watch our short film to learn more about this.

Chapter 2


Read time

3 mins

When a company makes redundancies, they have a legal requirement to select people fairly. They should make their selection criteria available to you if you ask for it.

If your employer hasn't provided this information, or if you need to address some particular questions, speak to them directly or get in touch with the Citizens Advice Bureau.

When you’re made redundant or take voluntary redundancy, you may be eligible to a statutory redundancy payment. It applies to each year of service you have been with the employer, as long as you worked there for two years or more.

The current rates (set in 2016 but still valid as of 2024/25) are:

  • 0.5 weeks' pay for each full year worked under the age of 22
  • 1 week of pay for each full year worked between the ages of 22-40
  • 1.5 weeks' pay for each full year worked at the age of 41 or over

The government's redundancy pay calculator is a useful tool to check the most current rates.

A maximum of 20 years' length of service can be applied to a redundancy pay calculation, and the weekly pay is capped at £571 per week. These amounts will be lower if you were made redundant before 6th April 2022.

Some employers provide additional benefits on top of the statutory benefits. Your employer should inform you if you meet their requirements for those additional benefits.

Even if you have less than two years' service – and so don't qualify for statutory redundancy pay – your organisation may have a policy to pay a redundancy benefit anyway.

Chapter 3


Read time

2 mins

If you lose your job, you can claim support from the government – the new style Jobseeker's Allowance (JSA). You can claim this allowance for up to six months, based upon your National Insurance contributions over the last two full tax years.

You may also be able to claim Universal Credit to help you with housing and childcare costs.

It can take up to five weeks for payments from Universal Credit to start coming through, so it's important to apply or update your status on as soon as you can.

For more information on applying for state support after redundancy, visit MoneyHelper.

Never hesitate to talk to someone if you're struggling with money – for free independent advice and help, you can reach out to:

Mental Health UK have created some guidance on managing mental health and money, visit this section for more support.

Chapter 4


Read time

3 mins

Given the stress that you may experience being between jobs, or just the focus you will have on the current day to day expenses and finding a new job, it's understandable that you might concentrate less on your long-term finances. Our short film explains what happens to your pension when you have been made redundant.

It is definitely important to address your current situation as soon as possible – but it's also worth giving thought to your retirement savings position after you’ve dealt with the immediate impact of redundancy. This could be to see if your pension can help with providing income or making decisions about ongoing contributions now that you and your employer are no longer contributing to your workplace pension.

If you're 55 or over, you can draw on any retirement savings you've built up – so you could consider using your pension funds to boost your current income. We would strongly recommend speaking to a financial adviser before making a decision which impacts your pension. You can find a financial adviser through Unbiased. You will usually pay for any advice they provide.

In our short film Andre explains things to consider when looking to take retirement benefits early to pay for bills and other expenses

You may receive a redundancy package, and you may choose to use redundancy sacrifice as a result. This means your former employment pays some of your redundancy pay as a lump sum into your pension organised through your new employer, which helps you save on tax. You still need to be mindful of the £60,000 annual allowance, however, as contributions over that allowance will be subject to tax.

If you later return to employment, you might want to consolidate your pension pot from your old employer into your new, active pension to make it easier to manage. Find out more about consolidating pensions in our pensions section. Our short film explains what happens to your pension when you start a new job.

If your period of unemployment or new career has impacted the date you want to retire, or how much you can retire with, it may be worth reconsidering your target retirement age. Use our Your Future Self tool to help you understand when you can consider retiring based on your income and your plans for your retirement.

Scottish Widows Be Money Well is committed to providing information in a way that is accessible and useful for our users. This information, however, is not in any way intended to amount to authority or advice on which reliance should be placed. You should seek professional advice as appropriate and required. Any sites, products or services named in this module are just examples of what's available. Scottish Widows does not endorse the services they provide. The information in this module was last updated on 09th August 2022.


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