Pensions  

Rising redundancies prompt drive to access final salary pensions

“Check with your employer to see if you can sacrifice some of your redundancy and have an employer’s contribution into the pension instead,” she said.

The nest egg

Another option that people made redundant are looking at is using their defined benefit, or final salary-style pension, as this can be a substantial asset. However, it is not always easy to access it.

The Financial Conduct Authority has repeatedly taken the stance that defined benefit transfers, or cashing in one’s “gold-plated” pension, are not actually suitable in the vast majority of cases.

It follows an avalanche of cases in recent years in which people were incorrectly advised to leave the schemes often favoured for their guaranteed income.

A transfer involves converting the benefits of a defined benefit scheme into a cash sum, known as the transfer value, and investing it into another pension.

Mr Moles said: “The whole world of defined benefit pensions is a difficult one, because in our experience there are very few instances where people benefit from actually transferring. It’s easy to look at a transfer value and be tempted by the cash value.

“But at a time when you are already going through significant change in being made redundant, it is dangerous to be making huge decisions about your future. Transfers cannot be undone.”

But the exodus of advisers from the defined benefit transfer market, following the FCA’s crackdown, has also triggered warning bells over a potential advice gap in the sector, either by consumers being priced out or a lack of supply.

And so what of those, albeit a minority, for whom a transfer would be most suitable when faced with the prospect of redundancy?

Nick Byrd, proprietor at independent financial advisers GN Byrd and Co, said: “The question advisers will be asking for clients is: do they stay put in the final salary scheme and let the benefits accrue under the scheme rules or do they look at the viability of a transfer out?

“We are in a bit of a perfect storm here, because at the moment with quantitative easing, gilt yields have been pushed way down, which means transfer values are more attractive than they were certainly two years ago.

“So it is worth those guys seeking advice on what they do with their existing defined benefit scheme.”

Many high-profile organisations are making redundancies, where those departing have been paying into a defined benefit pension.

Aston Martin, for example, announced last June it was laying off 500 people.