Redundancy Toolkit

www.gmbreachout.org.uk

GMB Reach Out Redundancy Toolkit Being made redundant is a shock, both emotionally and financially. This handbook aims to give you the information you need to regain control of your career and your finances. It covers key steps you can take and suggests sources of advice and support. Your Rights Steps to consider now if you think your job may be under threat and your rights at work if you are going through redundancy.

Your Options Reviewing your CV and applying for new jobs, plus other options you might consider, from retraining or starting your own business to apprenticeships and early retirement. Entitlements How your state pension rights are protected and benefits you may be able to claim now, such as jobseeker‟s allowance, tax credits, housing benefit and council tax benefit. Managing Money Making sure you are claiming all the income and insurance pay-outs you are entitled to, dealing with bills and your rent or mortgage, and what to do if debts become a problem. Useful Contacts Phone and internet help with all types of redundancy-related issues, plus useful online tools, such as the government‟s statutory redundancy pay calculator.

GMB Reach Out has worked with redundancy situations right across the North West & Irish Region. From organising CV writing and IT courses to establishing local networks that enable people to stay in touch with former colleagues and hear about job opportunities.

This handbook aims to add to the help and support we offer to GMB Members, their familes and colleagues.

For continued support and advice from the GMB make sure you continue with your membership. If you have lost your job or are unemployed the fees maybe reduced to 5p a week as long as you are not being represented in a legal case.

Contents

Job Worries

Things to consider now if you think your job might be at risk. Your rights if your employer suggests short-time working, lay-offs or changes to your contract.

Redundancy Rights

Checking your redundancy is fair, your rights to redundancy pay and how much you should get. Other redundancy rights and what to do about any pension you have built up with your employer.

Next Steps

Brushing up your CV and applying for new jobs, updating your skills and learning new ones, thinking about starting your own business.

Managing Money

Making the most of your redundancy pay, reviewing your budget, insurance and benefits you might be able to claim, organising your household money.

Entitlements

National insurance credits to protect your entitlement to state pension. Your entitlement to jobseeker‟s allowance, other state benefits and tax credits and how to claim.

Your Home

Schemes and benefits to help if you have problems paying your mortgage, what to do if you fall behind with your rent, tied accommodation and moving home because of work.

Money Worries

Keeping up with bills and loan repayments. Insurance benefits an special tariffs that may help. What to do if debts become a problem and where to get advice.

Early Retirement

Things to consider if you are offered early retirement instead of redundancy, getting the best pension you can. What happens if you retire and then go back to work.

Useful Contacts

Where to find out more about the topics covered in this handbook, useful online tools and websites, where to get help and advice.

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Job Worries

If jobs may be under threat at your workplace, it is useful to

check your options and rights now, so you are better placed once any changes are announced.

Carrying on as usual in a w o r k p l a c e w h e r e redundancy rumours are rife is unsettling. You are probably worried about your own future. In addition, morale may be low, creating an unhappy and stressful work environment.

If there are vacancies in your area, you might want to think about moving on before any redundancies are announced. But leaving voluntarily could mean missing out on valuable redundancy rights - see the Redundancy Rights section of this toolkit. Also bear in mind - redundancy may not be the only option your employer will offer.

Alternatives to redundancy

If business is going through a downturn but this is expected to be temporary, your employer may offer

alternatives to redundancy. For example, you may be asked to cut the number of days or hours you work each week (called short time working), take whole days off (called a lay-off), or do a different job altogether.

Whatever the offer, it‟s worth considering and taking advice from your GMB Rep(s) before making up your mind. Short time working

You are asked to work fewer hours each day or fewer days each week on reduced pay.

Check whether your contract of employment already allows for this or check with your GMB Rep(s) if this has been agreed.

Check if your employment contract allows you to take on another paid job while working short time. Lay-offs

You are asked not to go into work and your pay is usually reduced. This arrangement is only permitted if your contract of employment allows lay-offs or it is customary in your line of work.

Your employer must pay you at least “statutory guarantee pay”.

This is payable for a maximum of 5 days in any three month period. Check your contract of employment or with your GMB Rep(s) what your employer must pay.

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Reducing the pay gap

Jobseeker’s allowance You may be able to claim if you are on short-time or you are laid off and not getting pay or statutory guarantee pay. Contact Jobcentre Plus for further details (see Useful Contacts).

Other State Benefits Short-time working, lay-offs or a change to your contract could affect other state benefit entitlements. Lower pay may mean you can get extra tax credits. Use the tax credit tables on the HM Revenue & Customs website (see Useful Contacts) for an idea of how much you might get.

How long can this last? There is no limit to how long

you can be laid-off or put on short time working. However, if you have been in this position for four weeks in a row or six non-consecutive weeks within a 13 week period, you may be able to claim redundancy. In that case you will be entitled to redundancy pay (see Redundancy Rights).

For more information, contact the Advisory, Conciliation and Arbitration Service (ACAS) or the Labour Relations Service if you live in Northern Ireland (see Useful Contacts).

Changes in your contract Your employer might want to

change the terms of your contract - for example, a cut in your pay or a switch to part-time employment. But your employer cannot do this without your consent.

Before agreeing to any change, check with your employer how it would affect pay-related benefits and rights, such as: Future redundancy pay Employer pension

contributions Sick pay entitlement

Discuss your options with your GMB Rep

Alternative work

Before making redundancies your employer should, if possible offer you a suitable alternative job.

What counts as suitable depends on, for example, your skills the pay, hours, location and status of the job. You can try out the job for a four week trial period. If during this time you decide it is unsuitable your redundancy rights will not be affected.

If your employer has suitable vacancies but does not offer them to you, this could count as unfair dismissal , in

which case you could make a complaint to an employment tribunal.

If you turn down any reasonable alternative employment, you could lose your right to redundancy pay. But, if you decide the job is unsuitable and your employer disagrees, you may have to ask an employment tribunal to decide.

For information and advice contact your GMB Rep, ACAS or, in Northern Ireland, the Labour Relations Service.

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Redundancy Rights

Whether you’re expecting it or not, redundancy can be a serious blow to your finances. Understanding what

is going on and what you are entitled to can help make the best of the situation.

Redundancy happens when your job disappears. It is not the same as getting the sack because you have done nothing wrong and your abilities are not being questioned. The most common reasons for employers making people redundant are because they need to cut their costs, close down, relocate or the need for a job no longer exists.

Redundancy Checklist

Challenge your redundancy if you suspect it is an unfair dismissal.

Check how much statutory redundancy pay you are entitled to.

Know your rights to a minimum period of notice and time off to look for another job.

Decide what to do about any pension rights.

How your employer decides who goes

Sometimes it is obvious which jobs will go. For example, new technology can make a particular type of work unnecessary. If a job still needs to be done, but with fewer people, it may be difficult to see why you have been chosen.

Before announcing any redundancies, your employer might look at other options. For example, you might be asked to transfer to different tasks or work shorter hours - see Job Worries for more information about

your rights in these situations.

Your employer may ask for voluntary redundancies and offer early retirement - see Early Retirement.

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Keeping you informed

Your employer must talk to everyone involved, including the GMB, about what is going to happen. You should be told why

there have to be redundancies and how people will be selected. For more details on the consultation process see the redundancy section online at www.direct.gov.uk

A fair process

If compulsory redundancies are necessary, then your employer must come up with a fair way of selecting people. It may look at some or all of the following:

Any redundancy procedure agreed with the GMB

Attendance records

Disciplinary record

Skills and experience (this can sometimes lead to people having to reapply for their jobs)

Standards of work

Unfair dismissal

By law, your employer must not discriminate against you for any of the following reasons:

your sex, race, age, sexual orientation, religion, marital status, disability, trade union membership or because you work part time or on a fixed term basis. If you suspect you have been chosen for any of these reasons, then you may have a case for unfair dismissal.

You should first appeal against the decision to your employer. Put your appeal in writing, explaining why you think you have been selected unfairly and what you want your employer to do to put the situation right.

If you are still not satisfied, you can take your employer to an employment tribunal. For advice on this contact your GMB Rep, ACAS or, in Northern Ireland, the Labour Relations Service - see Useful Contacts.

Maternity Leave If you are on maternity leave then your employer must still contact you and keep you informed of the situation if your role is at risk. You can still be made redundant if there is no job for you to come back to, but you receive some protection when you are on maternity leave in that if there are suitable alternative roles that will remain, then your employer must offer them to you.

Staff in, staff out

Just because your employer is making people redundant doesn‟t mean it cannot take on new staff. It may employ someone to do a different job where you work or to do your job at different location. If you think you should have been offered the job, first check your contract of employment and then get advice from your GMB Rep or a solicitor.

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Redundancy Timetable

Job

ends.

You must be given at least the statutory

notice period - one to 12 weeks

depending on the length of

your employment.

You receive redundancy

notice.

Employer considers objections and, if redundancy is to go

ahead, must confirm this to you in writing. You have a right to appeal and can ask for your appeal to be heard by an

independent person, for example arranged through ACAS.

Within a reasonable time

Employer must arrange a meeting with you to explain what is happening and why. You can raise objections and

suggest alternatives to redundancy.

Individual Redundancy

Collective Redundancies

Consultations take place and include consideration of ways to avoid

redundancies - for example, alternative

work, short-time working or lay-offs.

30 days before first dismissal if 20-99 or more

employees are to go over a period

of 90 days

Employer must start to consult with GMB

(and other trade unions).

Good practice to consult with

employees too.

90 days before first dismissal if

100 or more employees are to go over a period

of 90 days

Employer must start to consult with the GMB (and other trade unions).

Good practice to consult with

employees too.

Employer considers

redundancies

Employer considers

redundancies

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Redundancy pay You may be entitled to statutory redundancy pay -

a lump sum to compensate you for the loss of your job. This is the minimum required by law. Many employers offer more generous redundancy packages.

Your final pay packet is likely to include other payments as well as redundancy pay. If these are due to you under your contract of employment (rather than being compensation for losing your job), they will be taxable in the same way as your normal pay. Payments might include any of the following:

Wages owing and bonus payments Tax and national insurance contributions will have been deducted as usual from these payments before you get them.

Pay in lieu of notice If your employer does not want you to work out your notice period, you will be offered a lump sum instead. This is

Statutory redundancy pay

You are entitled to redundancy pay as long as you have worked continuously for your employer for at least two years. If you work on a casual basis and have no contract of employment, or you are an agency worker or temp, then you are unlikely to qualify for redundancy pay.

The amount of money you get depends on how long you have continuously worked for your employer, how old you are and how much

you are paid.

By law you are entitled to the following:

Half a week‟s pay for each full year of service while you were under age 22

One week‟s pay for each full year of service between the ages of 22 and 40

One and a half week‟s pay for each full year of service after your 41st birthday.

But the calculation above is based only on a maximum of 20 years service and pay up to a maximum of £400 per week.

To check how much statutory redundancy pay you are entitled to use the redundancy pay calculator on the DirectGov website see Useful Contacts.

called pay in lieu of notice (Pilon). This money is taxable if

your employment contract entitles you to this payment or it is normal practice where you work.

Holiday pay owing Your employer may ask you to take some holiday during your redundancy notice period. You only have to do this if your employment contract says you must. Otherwise, it is up to you. You may decide the money is more useful if you are about to become unemployed.

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When you get redundancy pay

You should be paid on your

last day at work although you can agree a later date. If you have problems receiving what you are owed, you can take your employer to an employment tribunal.

If your company has gone out of business or is unable to pay you, the Redundancy Payments Office (part of the

government‟s Insolvency Service) will pay you the statutory amount instead. The insolvency firm dealing with your employer should give you form RP1 to make a claim. Alternatively, you can download the form from the Insolvency Service website (see Useful Contacts). The Redundancy Payments Office Helpline can also help if you think your employer has made a mistake calculating your statutory redundancy pay.

Tax and redundancy pay

You do not pay tax on the first

£30,000 of redundancy pay. If you received any non-cash benefits as part of redundancy package, such as a company car or computer, this will be given a cash value and added to your redundancy pay for tax purposes. So if you take over a company car valued at £10,000 and you receive redundancy pay of £25,000 your

redundancy package will be worth £35,000 for tax purposes.

If you receive more than £30,000, you will have to pay tax at your highest rate on the excess. For example, a higher rate tax payer has to pay 40% tax (in year 2009-10) on any amount over the £30,000. but if you do not receive your redundancy pay or P45 until after you have left your employer, you will only pay basic rate tax on the excess at the time you receive it. You include the pay on your tax return and pay the remaining through the self assessment tax system.

If you receive more than £30,000, and you do not need the extra to meet your living expenses, you could consider paying the excess

into a pension scheme. In that case, you would get some or all of the tax back in the form of relief on the pension contribution - see Managing Money.

Other redundancy rights

Having been notified of your redundancy, you have various rights to help you adjust and find new work. You are also entitled to a minimum period of redundancy notice as set out in the table overleaf.

Redundancy notice The minimum period of notice you should be given is shown in the table over the page. But you must be given longer than the statutory minimum shown there if your contract of employment gives you the right to a longer period.

If you have been The minimum Example Employed: notice you should be given is:

At least one month One week If you have been employed up to two years 18 months, you should be given at least one week‟s notice

Over 2 years up to One week‟s notice If you have been employed 12 years for each year five years, you should be given worked at least five week‟s notice

More than 12 years 12 weeks notice If you have been employed 20 years you should be given at least 12 week‟s notice

Minimum Notice Period

Time off to look for work or training

You are entitled to time off to search for work or undergo training, provided you have worked continuously for your employer for at least two years.

The amount of time you can take off has to be reasonable and you are entitled to two-fifths of a week‟s pay while you are off. For example, if you work a five day week and take two days off in total to attend interviews, then your employer will pay you for this time. If you take

four days off in total you may only be paid for the first two days. Some employers are more generous so it‟s worth discussing when negotiating your redundancy.

If your employer refuses to give you reasonable time off, speak to your GMB Rep, ACAS or the Labour Relations Service in Northern Ireland - see Useful Contacts.

Gardening leave

Your employer might ask you to serve out your redundancy notice period away from work (called

“gardening leave”). As you are still legally employed you must stick to the rules of your contract, such as any confidentially clauses. Your employer may offer you gardening leave because you have access to confidential information or customers and it wants a lapse of time before you start working for a competitor.

If you are placed on gardening leave, your employer can call you back to work if you are needed. During this period you receive your normal salary and benefits but not allowed to start a job with a new employer.

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Leaving early

If you‟re offered a job and your new employer wants you to start before your redundancy notice ends, speak to your current

employer and see if you can leave early without losing redundancy pay. Put your request in writing saying when you want to leave. If your employer refuses, seek advice from the GMB, Citizens Advice Bureau or ACAS - see Useful Contacts. If you leave early without your employer‟s permission, you could lose some or

all of your redundancy pay.

Tied accommodation

If your home is provided through your work, being made redundant means you might lose your home along with your job.

Generally speaking, if your job includes a home where you have to live to do the work (such as landlord living on pub premises), then you will probably have to leave your home when the job ends. However, if you are employed and it is merely convenient for the job that you live in the accommodation provided, you may have more rights.

Whatever the situation, you must be

given some notice before you have to leave. The amount of notice you should be given may be set out in your employment contract or service occupancy agreement if you have one.

If you are an assured shorthold tenant (check your lease to see if this applies) and your tenancy is for a fixed period of six months or more, then you must be given at least two months notice.

If you are likely to lose your home as a result of being made redundant, contact your local housing authority and housing advice organisations for

advice. For more details see Your Home.

Last day checklist On your last day at work you should receive the following

Any redundancy pay, wages, holiday pay and other outstanding money due to you.

Job references from your employer.

A letter stating the date of your redundancy.

Your P45 (to give to a new employer so that you are taxed correctly)

Details of your pension arrangements (see overleaf).

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Pension rights If you are a member of an occupational pension scheme through work, you need to decide what to do with your pension once you leave the company. The choices you have depend partly on what type of scheme it is: defined contribution or defined benefit.

To find out what type of pension scheme you are in and what rights you have, contact your pensions or HR department at work. For further information on employer‟s pension schemes, visit the FSA‟s Moneymadeclear or The Pensions Advisory service websites - see Useful Contacts.

Defined contribution occupational scheme

These are also known as money purchase schemes. You and your employer make contributions to the scheme which are invested. This builds up a fund that you use at retirement to provide your pension. The amount you get depends on how much has been invested and how well your investments have performed. If you are made redundant you have the following options: Leave the fund in the scheme to carry on growing Transfer the fund from your current pension scheme into an-

other money purchase scheme. Transfer the fund into a defined benefit scheme if your new

employer runs one.

Speak to an independent financial adviser to be clear about your options

Defined benefit occupational scheme

You are promised a given amount of pension at retirement. Under the most common type of defined benefit scheme - final salary scheme - the amount is based on how long you have worked for your employer and your salary at retirement or when you leave if earlier. If you are made redundant you will have to do one of the following: Leave your pension with your employer and when you

retire you will receive a pension from that scheme Transfer your pension into a new employer‟s scheme

if it will allow you to. Unless your new job is in the public sector, it is unlikely to offer a similar scheme.

Transfer your pension contributions into your own personal pension.

If you are old enough you may be able to take early retirement - see Early Retirement.

In general, it is usually best to leave your contributions in the scheme. You should only transfer out of the scheme with good reason - for example, if you are concerned that the scheme is not adequately financed and your old employer might go out of business. In that situation, at least part of your pension would be protected by the Pension Protection Fund - see Useful Contacts.

Other schemes at work

A pension scheme you belong to through work is not necessarily an occupational scheme. It could be a group personal pension or stakeholder scheme - these are types of personal pension that are linked to you not a particular job. This means, following redundancy , you can carry on with the scheme as normal. However, any contributions your employer was paying to it will stop and, if your employer has negotiated special terms, such as reduced charges, these might no longer be available to you.

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Next Steps One of the next steps in life after redundancy is usually to look for a new job. But you might want to consider other options too, such as retraining or starting your own business.

It may seem a cliché, but, rather than a door closing, redundancy could be the chance to try something new and possibly more satisfying than your old job.

This section looks at organising your search for a new job, from brushing up your CV to attending interviews. But it also looks into the opportunities for retraining or setting up your own business and where you can help and advice.

Support from your employer

While you are working your redundancy notice, you are entitled to reasonable time off to look for a new job, provided you have worked continuously for your employer for two years or more. As long as the amount of time you take off is reasonable, you should be paid for most or all of this time - see Redundancy Rights. Check whether, as part of the

redundancy arrangements, your employer has arranged for any training and careers advice to help you find a new job - if not contact GMB Reach Out.

Brushing up your CV

Your CV - a brief history of your work achievements and qualifications - is your gateway to getting interviews.

Especially during a recession, there may be hundreds of applicants for a single vacancy. Recruiters will not have time to look in detail at each application.

Therefore your CV has two main aims:

Grab the recruiter‟s attention with a few key facts about your suitability.

Quickly deliver relevant information to back up that first impression.

It is worth spending some time working on your CV to make sure it fulfils these aims. GMB Reach Out can help with CV writing - check to see if your employer is providing careers advice including CV writing as part of the redundancy arrangements.

You can find other sources of guidance on CV writing at your local library or online at www.directgov.uk or www.redundancyhelp.co.uk.

CV tips

Start with a short “personal profile” tailored to the particular job.

Keep your CV to two sides of A4 if you can

Focus on the last ten years

Include dates for each job. Do not leave gaps

Check and correct spelling and grammatical errors

To make a better impression, typed is better than handwritten

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Where to look for jobs Jobs are advertised in all sorts of places including the sources in the table below. It is also worth contacting employers direct, because companies don’t always advertise their vacancies - an advantage of doing this is that fewer people will know about the vacancy which can mean less competition for the job.

Jobcentre Plus This has the UK‟s largest database of job vacancies. You can find out about jobs on the internet, by phone or by textphone if you are hard of hearing or have speech difficulties. You can search for jobs in Europe as well as in the UK

Shop windows Local shops, businesses and supermarkets often put a card in their window or on a notice board inside

Work contacts Don‟t feel embarrassed to mention to people that you‟re looking for a new job. Ask if they know of any potential openings that may be suitable for you either at their company or another firm.

Source Type of help

Recruitment For agencies in your area look in your local phone book or contact the Recruitment and agencies Employment Confederation - see Useful Contacts. For agencies which cover particular job sectors try business directories and the internet.

The internet Many employers and newspapers advertise jobs on their websites. There are also online

employment agencies such as www.monster.co.uk and www.totaljobs.com as well local recruitment agency websites. You can use the internet at public libraries and cybercafés if you don‟t have your own access.

Newspapers Many local newspapers advertise jobs and national newspapers often cover different types of jobs on different days . Your newsagent or public library should be able to tell you about any special trade journals which advertise jobs you may be interested in.

Professional & If you are looking for work in a particular field, check what relevant journals exist - your public trade journals library can advise. Journals often carry job advertisements.

Friends & They may hear of job opportunities which they can tell you about. If they are working they family may even know of vacancies at their own firm and may be able to put in a good word for you.

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Interviews

Most people find interviews nerve-wracking. But good preparation can help you feel more confident and can improve your chance of getting the job.

Your former employer may offer interview training and, if you signed up with a recruitment agency, it will give you advice. There is also guidance on the internet at www.directgov.uk - go to the “Back to work” section

and select “Jobcoach”. You may be able to get help improving your interview skills through a Jobcentre Plus programme centre. To find out whether there‟s a centre near you and if you are eligible to use it‟s services please contact Jobcentre Plus - see Useful Contacts.

Help with the costs of getting a job.

Check whether the organisation interviewing

you will refund your travelling costs and how to claim these.

If you are getting state benefits and have to travel a long way to an interview, you may be entitled to help with travel and overnight expenses. Ask your local

Jobcentre Plus for details.

If you have been unemployed and claiming benefits for 26 weeks or more, your local Jobcentre Plus may be able to set up work trials for you. This scheme enables you to try out a job to see if it‟s right for you. Any state benefits you receive continue throughout the trial, which can be up to 30 working days, you may be offered the job. If not, your benefits are not affected.

Interview tips

Find out something about the organisation.

Plan how you will get there and allow extra time.

Check what to take with you: contact and location details; copy of your CV; copy of any test you have been asked to bring; examples of your previous work experience; any identification or proof of entitlement to work in the UK if needed.

Prepare for questions you might be asked, for example: why you want the job; what you can bring to it; your strengths and weaknesses.

Retraining Redundancy may be a time to reassess your job ambitions and prospects. You might decide to update your skills or learn new ones to improve your chances of getting a job or open up new work opportunities.

Formal training courses are just one way of improving your skills or learning new ones. There are several other things you can do to gain valuable experience which can help you feel more confident and improve your chances of getting a job. These may include

taking on part-time or temporary work, volunteering or getting involved in a local community group. However, you should first check if this could affect any benefits you are claiming - contact Jobcentre Plus or a benefits adviser.

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Retraining (cont)

Training courses There are literally hundreds of training courses held at local and private training colleges. Some courses are during

the day while others are in the evening. You have to pay for most courses, but if you are unemployed they may be free or at reduced rates. To find courses available in your area contact your GMB Union Learning Rep (ULR) or the GMB Reach Out team.

If you are interested in distance learning, Learn Direct offers a wide range of courses which you can do at your own pace over the internet or you could consider courses offered by the \open University - see Useful Contacts.

Your local Jobcentre Plus can also offer advice and help with retraining. For example, it may be able to put you in touch with a local employer who is looking to recruit new staff and train them. GMB Reach Out can provide you with information on training courses that will improve your chances of getting a job. This could be basic skills courses or academic, professional, job-specific and vocational courses.

Apprenticeships and internships Apprenticeships are training schemes where you learn on the job. As an apprentice, you earn a wage while you are being trained and may eventually gain a qualification. For more details contact your GMB ULR or the GMB Reach Out team.

Another option is to work as an intern. This is a good way to gain valuable experience which you can then include on your CV. Interns who work rather than observe should be paid at least the minimum wage, but this is not always the case. For example, if an employer is offering work experience you may have to work for free or only be offered expenses such as the cost of your fares to work and a lunch allowance. Internships are advertised in various places including the national and local press, trade journals and on the internet.

Help with training costs

If you want to go on a training course but cannot afford it, you may be able to get a career development loan. Eligibility does not depend on your income or savings. This can help pay for up to 80% of your course fees as well as giving you help towards other costs. You do not have to repay the loan until you finish studying and you may be able to borrow between £300 and £10,000. For information, talk to Careers Advice, Learn Direct, Jobcentre Plus or directly to the training provider.

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Starting a business Rather than getting a new job, you might consider starting your own business, either building on your previous experience, skills and contacts or something entirely new. You could start a business from scratch, buy an existing one that’s up for sale or consider buying a franchise - see Useful Contacts.

It‟s essential to be realistic about the market for your products or services and your prospects for success. And do not underestimate the time and energy involved in setting up and running a business.

Getting started

You might already have an idea for a business, in which case your next step is to develop this into a viable business plan, thinking through who will buy, what competition you would face, how you could market your products or services, the costs involved, the prices you could charge, what finance you would need, whether you have all the required skills, whether you would need to pay for help in some areas and so on. If you will need funding from, say, a bank, you will

need to work up a formal business plan including projections of your cash flow and profits during the first few years. Even if you do not need to borrow any money, it is still important to work out a detailed business plan to test the feasibility of your idea and highlight any

problems you need to address.

You should go through a similar process if you buy an existing business or franchise, but you will have more information to go on from the previous owner or franchise seller.

You can get detailed guides to starting a business from your local public library and bookshops. If you are interested in buying a franchise contact the British Franchise Association - see Useful Contacts.

Help and advice Contact your local Business Link (or equivalent organisation) for guidance on all aspects of setting up and running your own business - see Useful Contacts.

Financing a business

Any redundancy pay you receive could provide the capital you need to set up your own business and tide you over until you start to make some money. Otherwise, you may need to seek funding from a bank or other source your local Business Link or equivalent can of-fer advice on sourcing funding.

If you have been unem-ployed for six months or more and have claimed Jobseeker‟s Allowance, you may be entitled to a self-employment credit of £50 a week for up to 16 weeks if you become self-

employed or set up a new business. For more details contact Jobcentre plus.

Registration and tax

If you‟ll be self-employed, you just start trading, but must register with HM Revenue & Customs. Do this as soon as you can, because you may have to pay interest and penalties if you are late paying tax in connection with your business.

The alternative is to set up as a company. You must then comply with more for-mal arrangements. For more information contact Companies House - see Useful Contacts.

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Managing Money Losing an income can be daunting, but any redundancy pay with careful money management can help you cope until you get another job. Use the budget calculator at the end of this section to help you check and organise your money. If you prefer, use the FSA’s online budget calculator on the Moneymadeclear website - see Useful Contacts.

The ideas in this section will help you to make the most of your income and to cope with reorganising the household money. Other sections of this toolkit you may find useful are: Your Home for help meeting

rent or mortgage payments.

Entitlements while you are out of work and if your income and savings are low.

Money Worries if you are struggling to meet regular bills and repayments or have problem debts

Making the most of redundancy pay You may have received a lump sum redundancy payment, While you are deciding the best way to use this pay, deposit the money in an easy access savings account where you can get at it quickly and conveniently. There are

various ways you could use the money and the table over the page suggests some points to consider.

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Using your redundancy pay

Use Points to consider

Supplement your income until you get a new job

Use the budget calculator at the end of this section to work out how much you‟ll need to draw off each week or month and therefore how long the money will last.

Keep money handy in an easy access account.

Consider whether to use your ISA allowance - see later in this section for more details.

Replace essential benefits that went with your job

Check whether your employer will include non-cash benefits, such as former company car, as part of your redundancy package.

Clear debts if this will bring spending down to a more manageable level.

Use the budget calculator at the end of this section to work out the weekly or monthly saving on repayments

Interest charged on debts is nearly always higher than the interest paid on savings. As far as possible, aim to clear more expensive debts, such as store cards, before cheap ones.

Check if there are any early repayment penalties on debts you are thinking of paying off. If debts are a problem see the Money Worries section

Pay for retraining to broaden your skills

Bear in mind this could make you unavailable for paid work and so may affect state benefits you claim.

See the Next Steps and Entitlements sections.

Boost your pension savings

You get tax relief on the amount you pay into a pension scheme (up to certain limits - see Saving and investing later in this section.

Consider getting advice from an independent financial adviser

Invest in other ways See Saving and investing later in this section.

Consider getting advice from an independent financial adviser

Use as capital to start your own business

See the Next Steps section.

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Warning!

Make sure you understand an investment before you hand over any money and beware of scams. If a deal sounds too good to be true, be on the alert for hidden charges, hidden risks or even fraud.

Saving or investing redundancy pay You may find that your redundancy pay is used for meeting bills and paying debts - see Money Worries for advice and help in this situation.

If your redundancy money is not immediately used up in these ways, you may want to save or invest it. Deciding on the best home for your money will depend on how long you plan to save, how quickly you want to be able to get at your money and how much risk you are prepared to take.

Short-term and low-risk saving

If you will need to draw on the money to help you now or you are setting aside for less than five years, a savings account is likely to be suitable. For example, you might consider:

Cash individual savings accounts (ISAs). Interest is tax free and many give you easy access. You can invest up to £5,100 in cash in an ISA each tax year (increasing to £5,340 from 6th April 2011). Bear in mind - if you invest the full amount then withdraw it, your ISA allowance for the year will have been used up and you will be bale to replace that money if you are in a position to

restart saving later in the same tax year.

Term account. If you are confident

you will not need the money for now, you can often get a better rate of interest by agreeing to leave your money untouched for a set period, usually between one and five years.

Savings accounts are offered by banks, building societies, National Savings & Investments and credit unions. To shop

around, contact any credit union direct and, for other accounts, see the best buy tables in newspapers and on comparison websites.

Emergencies

During a period of unemployment, you are likely to be drawing on any emergency fund you have previously built up. If possible, try to keep some of that fund or some of your redundancy pay available to meet unexpected costs such as fixing your car if it goes wrong.

Once you have a new job, make rebuilding your emergency fund a top priority. Many experts recommend you aim to save an amount equal to three months salary.

Saving or investing redundancy pay

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Longer term investing

If you don‟t need your

redundancy pay for immediate expenses, you might consider investing it. But if you‟re not sure how long you‟ll be out of work, investing you redundancy pay may not be the best thing to do.

Over periods of ten years or more, investments in shares have tended to give higher returns than savings accounts. But share

-based investments are more risky because the value of your investment can fall as well as rise.

Investment funds, such sa unit trusts, pool your money with that of many other investors and let you invest in a broad range of different shares and often other investments too. This helps to spread the risk.

If you are new to investing or you have a sizeable sum, consider getting help from an independent financial adviser.

Boosting your pension

If you are thinking about early

retirement as an alternative to redundancy, you might want to put your redundancy pay into your pension scheme at work to boost the pension you are about to draw - discuss this possibility with your human resources department. If retirement is still some way off, you might be thinking about investing your redundancy pay in a personal pension scheme to increase your eventual pension. The amount you pay in, up to a limit, qualifies for tax relief. The limit, which applies to all your pension contributions for the relevant tax year, is set equal to the higher of £3,600 or the amount of taxable UK earnings you have. For example, if you earn £20,000 in total during the tax year, you can get tax relief on up to £20,000 of pension contributions.

The way you get tax

relief will depend on the type of scheme you pay into. If you pay into a personal pension the scheme provider claims and adds relief at the basic rate (even if you are a non-taxpayer). For example, if the basic rate is 20%, for each £100 you pay, a total of £120 goes into your scheme. You can claim extra relief through your

tax return if you are a higher-rate taxpayer.

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Managing on less

You may need to budget carefully until you get a new job. Make sure you claim all the insurance and state benefits you are entitled to and think about other ways to give your income a temporary boost.

Insurance pay-outs

You may have insurance policies which you can claim on because you have been made redundant:

Mortgage payment protection insurance. If you have bought your own home, you may have taken out this type of insurance along with your mortgage. It typically starts to pay your mortgage repayments one month after your earnings stop and continues to pay out

for up to 12 months.

Payment protection insurance. You may have taken out this insurance with a personal loan or credit card. It helps you keep up your loan repayments by paying out a set amount for up to 12 or 24 months. Pay-outs usually start one month after your earnings stop.

Payment protection insurance is also called credit insurance, loan protection insurance and accident, sickness and unemployment (ASU) insurance.

These types of insurance typically have many exclusions - for example, come do not cover part-time work or temporary contracts - and have sometimes been sold to people for whom they were not suitable. If you think you have been sold an unsuitable policy complain to the firm which made the sale, or if you‟re unhappy with how your

claim is handled for other reasons, complain to the insurance provider. If that does not produce results, take your case to the Financial Ombudsman Service, a free, independent complaints body - see Useful Contacts.

State benefits.

If you have recently been paying national insurance contributions, you may be able to claim contribution based jobseeker‟s allowance (£65.45 per week in 2010-11or £51.85 if you are under 25.) It is payable for a maximum of 182 days. You will have to attend a Jobcentre on a regular basis to show you are available for work and actively seek work. To claim, contact Jobcentre Plus (or

equivalent office in Northern Ireland).

If your income is low, you may qualify for other benefits and council tax benefit. When your contribution-based jobseeker‟s allowance stops, or if you do not qualify for it, you may get income-based jobseeker‟s allowance instead which is based on your needs and whether you, or your partner if you have one, have savings or not. It is paid for as long as you satisfy the conditions of entitlement.

If you have been getting tax credits, you must tell the Tax Credits Office that you are no longer working as this may affect your eligibility. But a reduction in your income may mean your credits go up. Contact the Tax Credits Helpline - see Useful Contacts. For more information see the Entitlements section.

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Other income

Check with your tax office to see if you are due a tax rebate now that your income is lower. Most people have a personal allowance - an amount of income you can have each tax year before you start to pay tax. When you are working, you usually get an equal fraction of this allowance each pay period - for example, one-twelfth of your allowance each month if you are paid monthly. This means, if your earnings stop part-way through the year, you may have some unused

allowance for then year that you can claim now and so receive a tax rebate. However, national insurance is worked out on a different basis and cannot be reclaimed.

If your home is suitable, you might consider taking in a lodger, but be aware that getting rent will be taken into account in working out your entitlement to any means tested state benefits, such as income-based jobseeker‟s allowance and council tax benefit. you will need permission from your mortgage provider or landlord. You should tell your home insurer too as having a lodger may affect your

cover or premium. You can have up to £4,250 a year of rental income tax-free under the rent-a-room relief scheme - see Useful Contacts.

You might be able to get some temporary or casual work. However, this will affect your entitlement to state benefits. If you need to restart income-based jobseeker‟s allowance within 26 weeks of ceasing to claim, you can use a rapid reclaim system. This is a complex area - seek advice from a benefits adviser.

Spending Less

To make sure you are getting the best deals on your utility and other bills you could check out the following:

the Energy Help and Advice section on the Consumer Focus website - (see Useful

Contacts) for the cheapest gas and electricity suppliers in your area.

comparison websites (see Useful Contacts) to see if you can save on phone, credit card and other bills.

For more money saving ideas, visit the CFEB Moneymadeclear website at www.moneymadeclear.org.uk

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Organising household money

A drop in income may mean you need to rethink the way you meet your household expenses. If you have a partner, this could mean agreeing to change your spending habits and the way you split the bills until you get a new job. There are various ways you could do this, for example:

Income pooling. You could combine your incomes, regardless of source, and jointly pay al expenses and bills from the pool.

Splitting the bills. You could each keep your own income and split bills between you based on how much you can each afford.

Personal allowance. Whichever of you has the larger income could transfer part to your partner. This would become their own income to cover any household expenses they are responsible for and their personal spending.

Changing Roles

Redundancy may mean spending more time at home and taking on tasks previously done by other members of your family or someone you paid. This could include cooking, cleaning, shopping and looking after children.

Taking on these jobs will help your household finances if you used to pay someone else to do them or it may free up your partner to do some paid work. But taking on a different role at home can be

difficult - not only for you but also for other members of your family. If you feel frustrated or are unhappy with your changing role, experts recommend talking to someone. This could be a family member or someone neutral outside the situation, such as Relate (see Useful Contacts). Relate offers advice by phone as well as face-to-face and you can discuss matters either on your own or with your partner, whichever you feel comfortable doing.

Budget calculator

Complete the calculator over the page for either yourself or your household. Decide whether to work out a weekly or monthly budget. If weekly, divide monthly expenses by 4 (as a rough guide), quarterly bills by 13 and annual bills by 52. If monthly, multiply weekly sums by 4, divide quarterly bills by 3 and yearly bills by 12 to find the monthly equivalents.

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Your income £

State benefits (jobseeker‟s allowance, tax credits, housing benefit, council tax benefit, other)

Income from insurance policies

Household bills (electricity, gas, oil/solid fuel, water, phone, broadband, TV)

Insurance (buildings, contents, car, life, health, pets)

Housing costs (rent or mortgage, service charge/ground rent, council tax, rates in Northern Ireland, maintenance/repairs)

Wages from any jobs or profits from self employment

Other income (for example rental income)

Income from savings and investments (which could include redundancy pay)

TOTAL INCOME A

Your spending £

Transport costs (petrol/diesel, road tax, car maintenance and MOT, parking, bus, train, tram, other)

Leisure (eating out, cinema, theatre, trips, holidays, hobbies, healthclub, courses)

Alcohol and tobacco

Healthcare (medicines, dentist, eyecare, hearing aids)

Pets (food, vet bills)

Clothing

Food and general shopping (groceries, cleaning items, toiletries)

Loan repayments (other than mortgage)

Regular savings

Extra costs of job search (newspapers, using internet, phone calls, photocopying, postage, travel to interviews

Other (eg. gifts, donations)

TOTAL SPENDING B

SURPLUS OR SHORTFALL

A - B

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State Entitlements You may be eligible for a range of state benefits if you have been made redundant.

The main benefit you may be able to claim while out of work is jobseeker’s allowance. But, if your income is low, you may be able to claim a range of other benefits as well, such as council tax benefit and housing benefit.

There are also special schemes to help homeowners facing problems meeting their mortgage payments - for details, see the Your Home section.

If you have been claiming tax credits, you will need to report the change in your circumstances and the amount you get is likely to change - it may go up or down depending on your circumstances.

National insurance credits

The amount of state retirement pension you eventually get (and also state bereavement benefits) depends on your record of national insurance contributions. Usually you are paying contributions while you are working.

In some situations, for example while unemployed, you are credited as if you had paid contributions. You get these credits automatically if you are unemployed and actively seeking work while claiming jobseeker‟s allowance. If you are an unemployed man who has reached a qualifying age (set equal to women‟s state pension age), you automatically get national insurance credits without having to seek work or claim benefits.

You can get further information about

all state benefits and how to claim them by visiting the DirectGov website - see Useful Contacts.

Getting advice

The UK benefit system is complicated, so this toolkit only offers an outline of what you might be able to claim. For more information and guidance based on your own personal situation, contact Jobcentre Plus or, in Northern Ireland, your local Jobs and Benefits Office or Social Security Office, or a specialist benefits adviser.

Type of state benefit

There are broadly two types of benefit:

Contribution-based (non-means-tested). You get these if you have paid enough national insurance contributions while working (or been credited with contributions, for example while on maternity leave). You are entitled to these benefits regardless of your household savings, but some types of income - such as pension payments or earnings from part-time wor - may affect the amount you get.

Income-based (means-tested). Your eligibility for these depends on your household income and savings being low and not your national insurance contribution record.

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Out-of-work benefits Jobseeker’s allowance (JSA) is the main benefit for people who are out of work. To qualify, you must be under state pension age and available for, and actively seeking work. You will not count for as available for work if you are studying full time. If you are on short-time work (see Job Worries) or laid-off, you are treated for a maximum of 13 weeks as if you are available for work.

There are two types of JSA: contribution-based and income-based.

Contribution-based JSA

You will normally be able to claim this if you have been paying national insurance contributions as an employee for the last two complete tax years. (A tax year runs from 6 April one year to 5 April of the next).

Contribution-based JSA is paid for up to 6 months and is not affected by your household savings. In 2010-11 JSA is

paid at a flat rate of £65.45 a week or £51.85 a week if you‟re under 25.

The amount of JSA you get is reduced by any earnings you have in excess of £5 a week and any occupations or personal pension of more than £50 a week. Other income - for example interest from savings - does not affect the amount of JSA you get. The earnings of your partner, if you have one, do not affect your contribution based JSA.

If your partner is also unemployed, they may be able to make their own claim for contribution-based JSA.

Income-based JSA

This is a means tested benefit, based on your household rather than individual circumstances. This means that income-based JSA is affected by the income and savings of your partner, if applicable, as well as you. One person

makes a claim for the whole household.

If you have a partner who works this will affect how much you get. If your partner works 24 hours or more a week you are unlikely to qualify for income-based JSA.

You may get income-based JSA if you have not paid enough national insurance contributions to be entitled to contribution-based JSA or if your six months‟ entitlement

to it has come to an end. Income-based JSA is payable for as long as you satisfy the entitlement conditions.

The amount you get depends on your household‟s deemed income needs (called an „applicable amount‟) less any income you have. Although savings are not taken into account directly, you are treated as receiving income from them. In 2010-11, savings of £16,000 or more disqualify you from getting income-based JSA at all. Otherwise, the first £6,000 of your household savings are disregarded. Savings between £6,00 and £16,000 are deemed to provide you with income of £1 a week for each £250 of savings - see table over page for examples.

In 2010-11 the applicable amount for single people aged 25 is £65.45 a week and for couples, both aged 18 or over, £102.75 a week.

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Examples of the income you are deemed to get from your savings for income-based JSA purposes

If you have savings of: You are treated as having this much weekly income from them:

£6,000 or less £0

£7,000 £4

£7,100 £5

£10,000 £16

£16,000 or more Not applicable - you cannot get income based JSA

Working and claiming JSA

Provided you are still available for work and seeking work, you may work under 16 hours a week while claiming either contribution-based or income-based JSA.

Whatever you earn over £5 reduces the JSA you get. For example, if you have a part-time job and earn £25 a week, your contribution-based JSA would be reduced to £64.30 - (£25-£5) = £44.30 a week.

If your part-time earnings are high enough, your JSA may be reduced to zero but you still remain technically eligible and your JSA can increase when your earnings fall or stop.

If you take on work for 16 or more hours a week, you must tell your local Jobcentre Plus and your JSA will stop. However, if this work finishes, provided there has been no change in your circumstances and you are returning to the same benefits within 26 weeks of your entitlement ending, you can reclaim by a simpler, shorter method. This is either by telephone or a shorter claim form, which enables you to reclaim your JSA and other benefits, such as housing benefit and council tax benefit.

Benefits to help with housing costs

The following benefits are means-tested

Help with rent - housing benefit If you live in private rented housing the full rate of housing benefit is currently based on average rents for homes in your area. From April 2011, it will be based on the cheapest three-tenths of rents and capped according to the number of bedrooms you have. You may get less than the full rate depending on your income and savings. You have to make up the difference yourself or negotiate a rent reduction with your landlord.

If you rent from a housing association or council, full housing benefit will meet your total rent bill. But you may get less, depending on your income and savings.

Housing benefit only covers the cost of accommodation and any service charges, such as for lifts and communal play areas. So if your rent includes heating, lighting and water bills you will not get housing benefit for these.

From April 2013, your housing benefit will be restricted if your home is considered larger than you need and cut by 10% if you have been on jobseeker‟s allowance for 12 months or more.

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Benefits to help with housing costs (cont’d)

Council tax benefit Full council tax benefit meets your whole council tax bill. if you do not qualify for the full amount, you may still get benefit to meet part of your bill. Claiming housing benefit and/or council tax benefit If you qualify for income-based JSA, you will automatically also qualify for council tax benefit and, if applicable, housing benefit. You can make a combined claim through Jobcentre Plus (or Jobs and Benefits Office in Northern Ireland). Jobcentre Plus can also pass on your details so that you do not have to make a separate claim for tax credits.

If you are not getting income-based JSA but your income is low, you may still qualify for council tax benefit and can claim through your local authority. Your local authority will use a means test very similar to that used for income based JSA to decide whether your household is eligible and for how much.

You can continue to claim council tax benefit and housing benefit while working, if your income and savings are low enough. Help with Mortgage costs Homeowners on certain means-tested benefits, including income-based JSA, may be able to get help with their mortgage interest payments, called Support for Mortgage Interest (SMI). However, SMI is not paid for the first 13 weeks of your claim - check whether you have any

mortgage payment protection insurance to cover this gap - see Managing Money.

SMI covers only mortgage interest. It will not meet your capital repayments, any insurance you took out with your loan or any mortgage arrears. You can normally claim for mortgage interest payments on up to £200,000 of your mortgage.

If you are claiming JSA, SMI is paid for a maximum of two years. There are other government initiatives to help you pay your mortgage if you lose your job. For more details see Your Home.

Benefits to help with other costs

If you are claiming income-based JSA, you may be eligible for these other means-tested benefits.

Social Fund This can help you by making loans and grants to cover emergency expenses and large one-off payments. However, some of this help comes from a cash-limited fund, which means that even if you have a valid claim, there will not necessarily be any money available.

Social Fund help can include:

Maternity grant. You can get £500 to help with the cost of clothes and equipment needed for a new baby. From April 2011, this is restricted to your first child.

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Cold weather payments. These aim to help you

meet extra fuel costs during spells of very cold weather. If the temperature in the area where you live falls to 0 degrees centigrade or lower for seven consecutive days you will automatically be sent £25 (in winter 2010-11) for this period.

Funeral costs. If you are responsible for paying for a funeral you may get money to pay for necessary costs such as burial or cremation, plus up to £700 for all other expenses.

Budgeting loan. This is an interest-free loan of a lump sum to pay for essentials such as furniture and

household equipment, clothing and footwear. You must have been receiving a means-tested benefit, such as income-based JSA for at least six months to qualify.

Crisis loan. This is an interest-free loan if you need money in a hurry for an emergency and have no other way of getting cash.

For further information and to claim any of these grants and loans, contact Jobcentre Plus (or the Jobs and Benefits Office in Northern Ireland) or a benefits adviser. Free school meals, school clothing grants and bus passes If you are on a low income and receiving certain benefits you may be able to get help with the cost of school meals, school uniforms and travel to school for your children. Contact your local education authority to find out more.

Healthy Start free vitamins and vouchers for milk, fruit and vegetables Expectant mothers and families with children under four are entitled to free vitamins and vouchers for milk, fruit and vegetables if they are on certain benefits. Your midwife or doctor can tell you more about this. NHS costs If you are on a low income and receiving certain benefits you may be entitled to free prescriptions, dental treatment, eye tests and vouchers for glasses. You can get a form for these from Jobcentre Plus.

Prescriptions are free in Wales and Northern Ireland. This

is also due to apply in Scotland from 2011.

Tax credits Tax credits are benefits for households that have children (child tax credit and the childcare element of working tax credit) and/or households in work but on a low income (working tax credit). They are means-tested so that the lower your income the more you are likely to get. In 2010-11, families with incomes over £50,000 can qualify for at least some child tax credit but eligibility is being cut back from April 2011.

If you have been getting tax credits, you (or your partner if you have one and they are the main claimant) must tell the Tax Credits Office (see Useful Contacts) that you are no longer working. This may affect your eligibility for working tax credit - see table over page. However your

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Tax credits (cont’d)

reduced household income may mean you can claim extra.

You can get a rough idea of how much your tax credits

might change by using the tax credit tables on the HM Revenue & Customs website - see Useful Contacts.

From April 2011, eligibility for tax credits is being restricted. They will not normally be available for families with an income of more than £41,329 and will be cut back further in 2012-13. Also from April 2011, extra credit to help over-50s returning to work will be abolished. These are two of several changes that may reduce your eligibility or the amount of tax credits you can claim.

Example

John and Shivani have two children. At the start of 2010-11, they were both working full-time and had a joint income before tax of £825 a week and had childcare costs of £120 a week. Their income was too high to qualify for working tax credit but they received £10 a week in child tax credit.

When John was made redundant, the household income fell to £288 a week, including £65.45 that john could claim in contribution-based JSA. Although the couple were not entitled to help with childcare costs (because they were not both working at least 16 hours a week), they qualified for £24 a week in working tax credit because of the family‟s low earnings and their child tax credit rose to £99 a week.

Type of tax credit What it does Main groups who can claim*

Working tax credit Tops up low earnings from work

Age 16 or over, lone parent or couple with child(ren). Claimant or partner working at least 16 hours a week.

Aged 25 or over, single person or couple without children. Claimant or partner working at least 30 hours a week.

Aged 60 or over working at least 16 hours a week.

Aged 50 or over, returning to work after at least six months claiming means-tested state benefit.**

Working tax credit childcare element

Helps with the cost of childcare so you can go to work

Lone parent working at least 16 hours a week.

Couple with children, both working at least 16 hours a week.

Child tax credit Helps with the cost of raising children

Nine out of ten families with children in 2010-11, but fewer from April 2011 onwards

Eligibility for tax credits

*People with disabilities may qualify under different rules. The rules are complex and only an outline is given here.

**This entitlement is due to be abolished from April 2011

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What happens at Jobcentre Plus

As soon as you stop work you should contact Jobcentre Plus or the Jobs and Benefits Office in Northern Ireland. This is the government agency which helps people find work and handles benefit claims.

If you phone, expect the call to take about 40 minutes. During your call you will be asked to provide information including: Your national insurance number

Your rent or mortgage

Your past employer

Any income and savings you have

The person you speak to will tell you

what will happen next with your claim.

If you are claiming JSA, you will need to attend an interview at the Jobcentre. This is called a “new jobseeker interview”. A personal adviser will help you draw up a “jobseeker‟s agreement”. This sets out the steps you agree to take to find work.

You will have to confirm your benefits claim in person every two weeks, and your situation will be reviewed at regular interviews. You will have a longer review if you have been getting benefit for 13 weeks.

As well as providing help and advice on claiming any benefits you may be

entitled to, your personal adviser can also offer support in helping you find a new job and can tell you about training opportunities. State help finding and starting a job Your local Jobcentre Plus will give you help and advice on getting back to work. This includes:

Job vacancies. Jobcentre Plus has

the UK‟s largest database of job vacancies.

Help and advice on writing a CV, applying for jobs, filling application forms and preparing for interviews.

Your Jobcentre Plus (or Jobs and Benefits Office in Northern Ireland) personal adviser can also talk to you about the extra help that may be available to you if you need help with your reading, maths or English.

If you are still unemployed after six months, Jobcentre Plus (Jobs and Benefits Office in Northern Ireland) will ask you to attend a “restart interview”. As well as looking at what you are doing to find work and whether

Jobcentre Plus is giving you all the help you need, your adviser will be able to tell you about the extra help that is available. This can include: help to set up your own business or

become self-employed.

Training that is available if you need to improve your skills or develop new ones to increase your chances of getting a job.

Voluntary work you could do to help improve your skills and experience so that you have more chance of finding a job.

Access to jobs where an employer receives a £1,000 recruitment subsidy and in-work training support in some areas.

Jobcentre Plus may also be able to arrange a work trail for you where you get to try out a job to see if you‟re the right person for the vacancy. Work trial can last fro up to 30 working days and your benefits continue throughout this period. If the trail doesn‟t work out and you are not offered the job, this won‟t affect your benefits.

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Your Home

One of the biggest concerns if you lose your job is how to keep up any rent or mortgage payments. Take stock, keep calm and get expert advice and help.

If you lose your job you may be worried about losing your home as well. Paying your rent or mortgage (or any other loan secured on your home) has to be treated as a top priority and it is important to take action and get advice quickly.

If you are having problems paying your rent or mortgage, don‟t suffer in silence - help is available. There are several organisations which offer housing advice and which can help you claim any state benefits you are entitled to. You also having housing rights which ensure you cannot be turned out of your home without warning. This section looks at these issues and the sources of help available.

Housing rights

Your housing rights will depend on a range of factors such as whether you rent or have bought your home or if your home comes with your job. If you are a tenant, then your rights will depend on the type of tenancy agreement you have and who you rent your home from. This is a complex area. get advice form Shelter or an equivalent organisation - see Useful Contacts.

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Problems paying a mortgage

If you are a homeowner and having difficulty paying your mortgage, there are a number of things you can do. First, check if you have any insurance policies, such as mortgage payment protection insurance (MPPI) that you can claim on to help with your mortgage repayments (see Managing Money for more details). Also check if you are entitled to any state benefits to help with your mortgage interest repayments (see Entitlements).

If you think you will not be able to carry on meeting your mortgage payments, contact your lender straight away. Lenders must explore ways of helping you, so that losing your home is the last resort. Your lender should discuss with you ways to make your repayments more affordable. These could include:

Reducing your monthly repayments by lengthening the term of your mortgage or switching from a repayment mortgage to an interest-only loan.

Taking a payment holiday or agreeing a temporary reduction in your payments until you are back on a firm financial footing

Renting out your property for now while you move somewhere cheaper.

Adding any mortgage arrears to your outstanding mortgage, which spreads the debt over the rest of the term but will increase your monthly repayments.

Giving you time to sell your home yourself, as you are likely to get a better price than if your lender repossess your home and sells it.

There are also various government-sponsored schemes to help homeowners who are having difficulty paying their mortgages - see table over the page. The schemes are available throughout England, Northern Ireland, Scotland and Wales, although in some cases details vary from one country to another and from one lender to another.

Do not confuse government mortgage rescue schemes with “sale-and-rent-back” schemes offered by commercial firms. With these, you sell your home at a discount to a firm and remain living there as a tenant.

If you deal with a firm regulated by the Financial Services Authority (FSA) - they must meet certain standards, for example if you sell your home you must receive a fixed term tenancy

agreement of at least five years. However, there are still drawbacks, for example: you may have to pay a full

commercial rent

your rent could go up both during and after the fixed term of your tenancy

you could find the landlord does not renew the agreement or you cannot afford any rent rise.

Before entering into one of these commercial schemes check:

the firm is regulated by the FSA

you understand the cost and risks involved

you have considered all other options such as government-backed scheme (see over page).

If you approach a regulated firm, they should give you CFEB‟s Sale-and-rent-back schemes factsheet but you can order a copy from CFEB or read it online - see Useful Contacts.

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Help for homeowners

Scheme How it works

Support for Mortgage Interest (SMI)

If your income and savings are low, you may qualify for this state benefit which can help to cover part or all of your interest payments. You claim through Jobcentre Plus or, in Northern Ireland, Jobs and Benefits Office. See Entitlements for more details.

Homeowners Mortgage Support

Under this scheme, if you are struggling to pay your mortgage, you may be able to defer paying part of the interest on your loan for up to two years. Any interest you do not pay during this deferral period is added to your outstanding mortgage and will need to be repaid eventually. For more details contact your local council or lender.

Government mortgage rescue scheme

If you are in danger of becoming homeless, you may be able to sell part or all of your home to your local council or a housing association, and instead pay a subsidised rent. To be eligible for this scheme, you must have someone in your household who is in priority need such as a child, pregnant woman, an elderly person or a disabled person. For details, talk to your lender or local council.

Problems paying rent

If you are having problems paying your rent, check whether you might qualify for any state benefits. This might include housing benefit to help directly with your rent payments, or other benefits, such as council tax benefit or tax credits which could help ease the strain on your budget - see Entitlements and Money Worries.

If you have fallen behind with your rent because your housing benefit claim has been delayed, contact your local housing benefit office to check that you have filled in all the necessary paperwork and keep a note of anyone you speak to there.

If your housing benefit will not be enough to cover your rent arrears you will have to find the extra money from elsewhere, unless you can negotiate a reduction with your landlord.

As soon as you find you have difficulty paying your rent, contact your landlord and explain what is going on. You may be able to come to some arrangement with them to pay back any money owing in instalments each week on top of your normal rent. If you are a council tenant, your local authority will have a policy about how it collects rent arrears.

If your landlord wants to evict you because you are behind with your rent, don‟t panic. You cannot simply be thrown out on the street. Your landlord will have to follow set procedures if they want to evict you, and while this is happening, you have breathing space within which to get advice and help with finding a new home.

If you do fall behind with your rent or receive a written notice from your landlord, you should immediately contact a housing adviser either through a Shelter advice centre, Citizens Advice or a law centre, or contact a solicitor. The faster you respond, the more chance there is of keeping your home.

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Tied accommodation Tied accommodation is a home provided by your employer in connection with your job. Therefore the risk of losing your home is directly linked to the loss of your job. Your rights in this situation depend on whether you are a “service occupier” or a “service tenant”.

Service occupiers This is where you are required to live in the accommodation provided by your employer as part of your job. This can include live-in nannies, hotel and pub workers who live on the premises, caretakers, boarding-school teachers who supervise children at night and nursing home workers. You usually have to leave your

home when your job ends. The amount of notice you are entitled to should be set out in your employment contract and is usually at least four weeks. Service tenants In this case, accommodation is provided by your employer but merely because it is convenient for the job that you live there. As a service tenant you have the same rights as tenants in non-tied accommodation. Your housing rights will depend on who you work for (for example, a private or public sector organisation), the type of accommodation provided, the type of tenancy agreement you have and how long you have lived in your home.

If you are made redundant, you may be entitled to stay in your accommodation or to be re-housed. But if your

employer wants to evict you, then they must follow set procedures and must give you the correct amount of notice, usually two months. Special types of employment Different rules apply to members of the Armed Forces (see Useful Contacts under Housing Advice) and agricultural workers. many farm workers living in tied accommodation have extra housing rights. These rights will depend on the type of tenancy agreement they have. This is a complicated legal area and agricultural workers may want to contact their local Citizens Advice Bureau or housing aid centre for guidance. Shelter has also produced a useful guide on this called Agricultural

Tenancies.

If you have any worries about losing your home call the Shelter Helpline on 0808 800 4444. You can check that your landlord is acting lawfully using the Shelter eviction checker at www.shelter.org.uk

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Moving home

If you get work in another area you may decide to move home. Relocating can be a big upheaval especially if you have to sell your home and buy another.

In a housing downturn, there is no guarantee that you can sell your current home at a price that will enable you to buy elsewhere, so you may need to consider other options. For example, you could think about renting out your property until the market picks up. The rental income you receive may help you to rent a home near your new job.

If you have a partner who also works or you are tied to a particular area, for example, through caring for elderly parents, you may need to look at the viability of temporary

accommodation while working away - for example, lodging with friends or relatives - while keeping your current home.

If you think these arrangements are likely to put a strain on your family life, you may want to talk through all the options with your partner, if you have one, before coming to any decision.

Tips if you are relocating

Moving costs. Apart from the cost of a new

home, work out how much extra you will need for other expenses such as solicitors fees, surveys, removal firm, stamp duty and so on.

Selling costs. Unless you can sell your home privately, you will need to pay an estate agent. Consider getting a few quotes. Home Information Packs (in England and Wales) have been abolished since 21 May 2010, but you will still need a Home Report in Scotland, which the estate agent can arrange.

Relocation expenses. Check if your new employer offers a relocation package. This might include help with the costs of moving and finding a new home. Tax laws allow maximum tax-free help of £8,000.

Your budget. Work out how much money you can afford to spend on a new home. Unless you have enough cash to buy outright, you will need a mortgage. See the Mortgages and Homes section at www.moneymadeclear.org.uk for information on types of mortgage, how much you might be able to borrow and how much your repayments might be.

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Money worries

One of the biggest headaches of redundancy is how to keep up with regular bills and loan repayments. If you are struggling, don’t despair. There are straightforward steps you can take, and free independent advice is also available.

Bills, borrowing and credit are part of everyday life, whether a mortgage to buy a home, council tax instalments, a car loan, paying quarterly for fuel or phone, or shopping with a credit card. Such payments are standard items of spending when you have money coming in, but can become a problem if you lose your job.

There are a variety of strategies that might help, for example, claiming on insurance, reviewing your budget and switching to different fuel and phone tariffs. If you are still struggling, there are standard procedures for tackling problem debt and free, independent advice organisations that can help.

Keeping up repayments

Despite a fall in income, you may find you have enough resources to keep up with bills and credit repayments.

Loan insurance policies In the past, salespeople, lenders and credit card providers have simply bundled insurance with borrowing, so many customers do not realise they have cover. Check whether you have any of these insurance policies that you could now claim against:

Payment protection insurance

(PPI). This is also called credit insurance, loan protection insurance and accident, sickness and unemployment (ASU) cover. You may have been sold this with loans, credit cards or store cards. It should pay some or all of your loan repayments when you have been made redundant. Typically, policies start to pay out after a set amount of time, usually one month after your income stops and continue to pay out

for up to 12 or 24 months.

Mortgage payment protection

insurance (MPPI). This is PPI that covers your mortgage repayments while you are out of work. Some policies include extra to cover other household bills, such as buildings insurance. Typically you have to wait

30, 60 or 90 days after being made redundant before the policy starts to pay out. Your repayments will be paid for a maximum period, typically 12 months.

Claim turned down?

Payment protection insurance policies tend to have many exclusions. For example, some policies do not over part-time or temporary contracts and most will not cover you if you already

suspected that our job was at risk at the time the policy started. The last exclusion is vague and some insurers are turning down claims on the basis that a downturn in your employer‟s business means you must have realised your job was at risk. If you have been sold an unsuitable policy, complain to the firm that made the sale, or if you are unhappy with how your claim is handled, complain to the insurance provider. If that does not produce results, take your case to the Financial Ombudsman Service, a free, independent complaints body - see Useful Contacts.

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Redundancy pay

If you have received a lump sum as a result of being made redundant , be wary of splashing out. Putting the money in an easy access savings account and drawing on it gradually can help you keep up with bills until you get another job. However, consider using some of your redundancy pay to clear your credit cards or pay off other loans. This will reduce the repayments and ease the pressure on your budget.

However, be aware that paying off

debts could affect a claim for means-tested state benefits if you did not have to repay the debts and did so at least in part to increase your benefits. Paying off priority debts (see later in this section) is very unlikely to affect your benefits. This is a complex area - get advice from a benefits or debt adviser.

Savings

If you have built up savings in the past as an emergency fund, now may be the time to draw on them. As with any redundancy pay, you might use up your savings to help you meet regular bills. Alternatively, consider paying off

outstanding credit and loans. Since savings usually earn less interest than is charged on loans, this will usually improve your budget. But try to leave yourself with some savings to cover other emergencies.

State entitlements

While working, most employees are building up a right to claim contribution-based jobseeker‟s allowance if they become unemployed. You qualify on the basis of your

national insurance record, regardless of your income or savings. A fall in income may mean you qualify for a higher amount of tax credit. If your income and savings are low, you may qualify for other benefits, such as help with housing costs.

See Entitlements for more information.

Special tariffs for bills

All energy suppliers must offer “social tariffs” for vulnerable customers. Switching to a social tariff means you pay for fuel at the lowest available price. The definition of vulnerable

customer varies from one company to another. Your income must be low, but you may need to meet other conditions too, such as having children or an elderly or disabled person as part of your household. For information see the Energy Choices website - see Useful Contacts or contact your fuel supplier. .

If you are a BT customer on a low income, you may be able to reduce your phone bills by switching to a low-cost service, BT Basic. To be eligible,

you must be claiming means-tested state benefits (other than tax credits). Contact BT for details see Useful Contacts.

Working out a budget

Drawing up a budget will help you to take stock of where your income is coming from and how you spend it. This may help you spot areas where you could cut your spending temporarily. For help working out your budget see Managing Money. If you prefer to use an online tool, see the CFEB Moneymadeclear budget calculator (see Useful Contacts)

Debts - your rights Although you have a responsibility to repay money you borrow, you also have rights.

Unlicensed lenders It is illegal to lend in the UK without having a licence from the Office of Fair Trading (OFT). You can check online whether a lender is licensed - see Useful Contacts under Lenders.

Unlicensed lenders - loan sharks - often make contact as “friends

of friends” so you may not realise you are dealing with an illegal lender. As well as charging very high rates of interest, if you cannot keep up the repayments, such lenders tend to add exorbitant charges and use bullying tactics to make you pay. But the loan is illegal. You are a victim of crime and do not have to pay. For help and support if you have been targeted by an illegal lender, contact the Illegal Lending Team Hotline (see Useful Contacts ).

Licensed lenders If you miss any repayments, licensed lenders should abide by the OFT‟s Debt Collection Guidance. Lenders and their agents should not, for example:

Use misleading or unclear communications - for example, letters steeped in legal jargon.

Misrepresent their position - for example, falsely implying that a court has ordered action.

Use harassment - for example, contacting you at unreasonable intervals, or using threats.

For a copy of the Guidance, and to report lenders who breach it, contact the OFT

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Debt consolidation

Debt consolidation schemes are heavily advertised on TV and in newspapers. They offer you a single new loan to pay off all your existing credit cards and other debts. The interest rate may seem relatively low but this is because the new loan is secured against your home. While consolidation loans may seem convenient, if you can‟t keep up the payments, you could lose your home. For that reason be very wary of using these schemes.

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Dealing with problem debts

Debt problems generally get worse if you ignore them. So the sooner you tackle them the better. If you are not sure where to start, get advice.

The informal debt payment plan below sets out steps you can follow if you are sorting out your debts yourself. An adviser will also take this approach if at all possible. For more detail, you can get a free, printed guide and template letters to send to creditors (the people to whom you owe money) from National Debtline (see Useful Contacts under debt advice)

Informal debt payment plan

Step 1. Work out a budget to see how much money you have left after paying for essentials. This is the amount you can put towards paying off your debts.

Step 2. Divide what you owe into priority debts and other debts. Negotiate with the organisations with which you have priority debts to pay what you can afford.

Step 3. Divide any money left between your other debts, based on how much you owe each creditor. Offer each creditor the relevant sum.

Step 4. Write to your creditors stating how much you are offering them, include a copy of your budget and ask them to stop making interest and late payment charges. While you are waiting to hear from them, start paying what you have offered.

Many creditors will accept your offer and you can increase your payments when your circumstances improve. However, a creditor can refuse or might start court action later. In either case, get advice.

Priority and non-priority debts Priority debts Non-priority debts

These are a priority because the consequences of not paying them are severe - for example, you could lose your home, have services cut off or essential goods repossessed. With some debts you owe to the government, you could in extreme cases be sent to prison, but this would be the very last resort.

If you do not pay these, you could be taken to court and this could lead to bail-iffs being sent to your home to take away your belongings

Examples Examples

Rent, mortgage or other loan secured on your home

Fuel bills

Essential items bought on hire purchase such as a car you need for work

Council tax arrears

Court fines and maintenance payments

TV licence

Tax Debts

Credit debts, such as overdrafts, loans, hire purchase on non-essentials, credit cards and catalogue debts.

Student loans. (Repayments should stop if your income falls below £15,000 a year in 2010-11)

Money borrowed from friends and family

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Other debt remedies If your debts are large or complicated an informal debt payment plan may not be suitable. Other, more formal remedies may be needed and in that case you should contact one of the advice agencies listed over the page. All the remedies listed below will appear for six years on the files kept about you by credit reference agencies and could affect your ability to get credit in future.

Possible remedy Main Features

England, Wales and Northern Ireland

Administration order

Debt relief order (DRO)

Individual voluntary arrangement

Your debts total less than £5,000 and at least one creditor has taken you to court. You make a single monthly payment to the court which distributes this between your creditors.

Your debts are written off after 12 months. To apply you must have less than £50 a month spare income, debts under £15,000, assets worth less than £300 and your car, if any, must be worth less than £1,000. The order costs £90

A legal agreement between you and your creditors to pay off an agreed amount of your debts. The agreement is usually for five years and after that there is no more to pay. Because of the costs involved this is only worth considering if you have debts of more than £15,000.

Scotland

Debt arrangement scheme

Trust deed

Like a debt payment plan, except you make the plan through an approved money adviser and your creditors must stop any recovery action against you and freeze interest payments. You make a single monthly payment to an approved distributor who deals with your creditors.

Your assets, including your home, are transferred to a trustee whose job is to pay off as much as possible of what you owe. Usually any remaining debts are written off after three years. The advantage over bankruptcy is that your job is not usually affected.

Throughout the UK

Bankruptcy (sequestration)

Bankruptcy lasts one year after which all your debts are written off. Your home, if you own one, is likely to be sold. Your job may also be affected: the police force, Armed Forces, local council and government offices, accountancy firms and solicitors may refuse to employ you while you are bankrupt.

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Where to get advice

You can get free independent advice and help if your debts become a problem from: Citizens Advice Bureau, National Debtline, Consumer Credit Counselling Service, PayPlan, your local Credit Union or other money advice centres - see Useful Contacts under Debt advice. These organisations can look at your situation, suggest appropriate action and , if necessary, help you deal with your creditors.

Debt management companies offer a similar service but for a fee. Their advice is usually free but you pay for them to negotiate and deal with your creditors. You make one payment a month to the company which deducts a fee (usually 15%), dividing up the remainder to pass on to each creditor. Think carefully about using a debt management company. It is unlikely to do more for you than the free organisations listed above and will cost you money that could be better spent reducing your debts.

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t Early Retirement

Employers may offer an early retirement package to avoid compulsory

redundancies. If you are tempted by this, you should think carefully about how you will manage financially if you give up work and what you will do in the future. This section looks at the facts about retiring early, early retirement incentives offered by employers and your pension options.

Early retirement basics

The earliest age at which you can start drawing on occupational or personal pensions is 55. However, most occupational pension schemes have a higher normal pension age of 65. Usually your occupational pension will be lower if you start to draw it early, but may be enhanced in redundancy situations.

The earlier you draw a personal pension, the lower it will be.

You cannot get your state pension before age 65 if you are a man or shortly after 60 if you are a woman. The state pension age for women is gradually increasing to 65 for women reaching state pension age by April 2020. In future, the state pension age for both mane and women is set to increase in stages to 66, 67 and then 68 and the government is consulting on when these changes should happen.

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Early retirement packages Taking early retirement is very different from being made redundant: you may have no redundancy rights and do not receive any redundancy pay. If you decide to retire early, you are likely to receive a smaller pension than if you had worked until your normal retirement age. Just how much your pension will be affected will depend on the terms of your early retirement package and the type of pension scheme you are in.

Early retirement packages are likely

to include incentives, such as:

If you are in a defined contribution scheme, a lump-sum payment into your pension fund to boost the value of your fund.

If you are in a defined benefit scheme your employer may offer you a pension which includes benefits worked out as if you had worked up until normal pension age.

Both of these incentives would result in you getting a better pension than you would otherwise be entitled to if you took early retirement without the package.

Different types of pension scheme

There are two different types of work-based pension schemes:

Defined contribution scheme (also called a money purchase scheme). You build up your own pot of savings - your pension fund. The size of your fund depends on how much is paid in, how (and whether) the invested contributions grow and charges. At retirement you can shop around to buy the best pension with your fund. All personal pension schemes work on a defined contribution basis. Defined benefit scheme (also called a final salary scheme). Your pension is usually based on your salary and the length of time you have been in the scheme. For example, your scheme may pay one-sixtieth of your pre-retirement pay for each year: if you have earned £30,000 and had been in the scheme for 20 years, you would get 1/60 x £30,000 x 20 = £10,000 a year pension. Other defined benefit schemes work out your pension in different ways. If you are not sure how your scheme works contact your GMB Rep or pension scheme administrator.

Work-based defined contribution schemes

A defined contribution scheme that you belong to through work may be an occupational pension scheme which is a benefit that comes with your job. Alternatively, it may be a group personal pension scheme or stakeholder pension - although your employer has set up this pension arrangement, the scheme is personal to you and stays with you even when your job ends.

In either case, early retirement will normally result in you receiving a

smaller pension because: You will have had fewer years to pay

into your pension scheme so your pension fund will be smaller

Your pension fund will have had less time to grow

The yearly pension you can buy with your fund is lower the younger you are at the time of purchase.

However, just how much your pension will be affected will depend on the terms of any retirement package that your employer offers.

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t Work-based final salary schemes

If you are in an occupational final salary scheme, retiring early is likely to result in you getting a smaller pension because:

The pension formula is based on fewer years in the scheme than if you had worked on until normal pension age.

The pension formula may be adjusted (called an “actuarial reduction”) to reflect the extra cost of paying your pension for longer and based on fewer contributions. Typically, the pension might be decreased by 3 to 6% for each year you retire early. But in some schemes, there is no reduction for, say, the last five years before normal pension age.

In a redundancy situation, your employer might waive any actuarial reduction and possibly work out your pension as if you had worked until normal pension age.

If you are interested in taking up an early retirement package, ask your employer or GMB rep for an illustration of the pension you would get.

Bridging pensions

If you take early retirement you may have to wait some years before you receive your state pension. To help employees retire early, some companies offer a bridging pension as part of the early retirement package. This is an additional pension which you receive from the time you

retire until your state pension kicks in.

Once you reach state pension age, your employer stops paying the bridging pension but your income should remain steady as you will then receive state pension instead.

Your pension options

If you take early retirement, you need to decide what you want to do with your pension fund. Usually you can take up to a quarter of the fund as a tax-free lump sum. The remainder of the fund must be taken as pension income, which is taxable.

Taking a lump sum reduces the pension you get. In a money purchase scheme, the trade-off is neutral - so taking the maximum lump sum would reduce your pension by a quarter. But, in

most final salary schemes, you would get a worse deal and would have to give up more than a quarter of your pension, so think carefully before you decide what to do.

Occupational pension schemes often offer you a pension paid direct from the scheme. You do not have to accept this, but can shop around for a better pension from elsewhere (called using your “open market option”). In general, it is hard to beat a final salary pension, so you will normally be better off accepting what the scheme offers.

If you are in a money purchase scheme, you have a choice of ways to provide your pension and you may do better shopping around than accepting the scheme pension.

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Your main choices are:

Buy a lifetime annuity. This is an investment where you exchange your pension fund for a pension payable for life, regardless of how long you live. Most people choose this option. Your employer‟s scheme usually offers you this type of pension or you can buy an annuity from another provider - annuities are sold by insurance companies.

Choose income withdrawal. This is where you leave your pension fund invested and draw an income direct from the fund. Employer‟s schemes do not usually offer this option, but check with your scheme. If it doesn‟t, you would need to transfer to a personal pension scheme that does allow this option. Income withdrawal is suitable only if you have a large pension fund and are comfortable with a pension which may go up and down. It is a complex choice - get advice from an independent financial adviser.

Enhanced and impaired life annuities

Some companies offer annuities that pay a higher than normal income if your life expectancy is lower than usual. You might qualify for an enhanced

annuity if you smoke or you are overweight. You might get an impaired life annuity if you have a health problem that threatens to reduce your lifespan. If you think you might qualify for a higher than normal income, shop around to find a provider specialising in this type of annuity.

Lifetime annuity

There is more than one type of annuity to choose from - see the table over the page. The type which is best for you will depend on your circumstances. If you have access to the internet, you can use the Pensions Advisory Service‟s online annuity planner to help you choose a suitable type of annuity.

Annuity rates are based on the size of your pension fund and the annuity rate offered by the annuity provider. Annuity rates are based on factors such as general life expectancy, interest rates, your age, sex and sometimes your health. In general, the older you are the higher the annuity rate you are likely to get because your life expectancy is less. But annuity rates fluctuate (and have tended to fall over the last 20 years) so there is no guarantee that putting off the start of your pension to a later age will result in a higher pension.

Shop around The pension deal you find now will affect the income you get for the rest of your life. You are strongly recommended to check what other providers offer - the CFEB Moneymadeclear comparison tables can help you do this - see Useful Contacts.

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t Common types of annuity

Do you need a pension for a partner as well as yourself?

Choose a joint-life-last-survivor annuity. This pays out until the last of you and your partner die

Choose a single-life annuity. This pays out until you die.

YES

NO

Are you worried an annuity will be poor value if you die soon?

Consider, for example, an annuity with guarantee. It pays the promised income for a set number of years - say 5 or 10 - even if you die before then (your heirs receive the income). Example (single): £624 *^ Example (joint): £552 *^~

YES

Do you want an income that increases each year? NO

Consider an RPI-linked annuity. It increase each year in line with inflation (and may fall if prices fall - deflation) Example (single): £384 * Example (joint): £312 *~

Consider an escalating annuity. It increases by a fixed amount each year. Example (single): £444 * Example (joint): £372

Consider a level annuity. It pays a fixed amount of income each year. Example (single): £636 * Example (joint): £552 *~

YES

YES

NO

* Rates from CFEB Moneymadeclear Compare Products, 23 June 2010. Amount per £10,000 of pension fund for a man aged 65, non-smoker, no guarantee unless stated otherwise. Escalating annuity increase by 3% a year. For escalating and RPI-linked annuities, starting income shown.

^ 10-year guarantee period

~ Female partner, two years younger, income falls by one-third on first death.

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Pensions and work

Normally, you can start an occupational pension early and it is not affected if you carry on or return to work. The exception is where your pension starts early or is enhanced on the grounds of ill health - in that case, the pension may stop if you find later you are well enough to resume work.

Phased retirement

Many people like to wind down o retirement before giving up work altogether. There is nothing to stop you taking your employer‟s early retirement deal and then looking for another job, perhaps a part-time post.

If you transfer your pension fund out of your employer‟s scheme and into a personal pension scheme, instead of using all your pension fund to but

annuity, you can use just part of it to but an annuity now and leave the rest of the fund to carry on building up. You can later use another portion of your fund to buy another annuity. This is known as phased retirement.

Each time you use part of your fund to buy an annuity, you can also take up to a quarter of that part as tax-free cash. For example, if you bought an annuity once a year, you could use the annuity plus the tax-free cash to provide your income. Bear in mind that the minimum purchase for an annuity is often £10,000.

Returning to work

There is nothing to stop you from retiring and drawing your pension and then returning to work. But you should consider your tax position, particularly if you receive a good pension and are thinking of taking on a full time job. You could find this extra income tips you into a higher-rate tax band.

Tax and benefits

If you decide to return to work after receiving your pension, any income-related benefits you re-ceive such as pension credit are likely to be affected. Your local Jobcentre Plus (Jobs and Benefits Office in Northern Ireland) or a benefits adviser can tell you how any extra income from working may affect your entitlements.

Similarly, adding earnings to your pension and other income will normally increase your tax bill and could take you into a higher tax band.

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Useful Contacts This section contains contact details for organisations and websites that can tell you more about the topics covered in this toolkit, have useful aids to help you assess your situation and/or provide help and advice.

The GMB Reach Out team are also available to offer further advice and guidance either directly or through your on site ULR - contact the team to find out what support we can offer. GMB Reach Out - Tel: 0161 877 9439 or 01254 238443 e-mail info@gmbreachout.org.uk web www.gmbreachout.org.uk

A

Accountant - finding one Look in Yellow Pages under “Accountants”, or for a list of members in your area contact:

Association of Chartered Certified Accountants Tel: 0207 059 5000 www.acca.co.uk

Institute of Chartered Accountants in England in England and Wales Tel: 0207 920 8100 www.icaew.co.uk

Institute of Chartered Accountants in Ireland Tel: +353 1 637 7200 www.icai.ie

Institute of Chartered Accountants of Scotland Tel: 0131 347 0100 www.icas.org.uk

Act Centre GMB Reach Out Office in Lancashire Tel: 01254 238 443 www.actcentre.org.uk Annuities Online annuity planner The Pensions

Advisory Service www.pensionsadvisoryservice.org.uk

To shop around for an annuity CFEB Moneymadeclear Comparison www.moneymadeclear.org.uk/tables

Apprenticeship schemes England

www.apprenticeships.org.uk

Wales www.wales.gov.uk/topics/educationandskills/foremployers

Scotland www.modernapprenticeships.com

Northern Ireland www.delni.gov.uk/apprenticeshipsni

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Benefits advice Age UK (formerly Age Concern and

Help the Aged) Tel: 0800 169 6565 www.ageuk.org.uk

Citizens Advice Bureau (England, Wales and Northern Ireland) See phone book www.citizensadvice.org.uk (England and Wales) www.citizensadvice.co.uk (Northern Ireland)

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Citizens Advice Scotland See phone book www.cas.org.uk

Community Legal Advice (England and Wales) Tel: 0845 345 4345 www.communitylegaladvice.org.uk

Money Advice Scotland Tel: 0141 572 0237 www.moneyadvicescotland.org.uk

Advice NI (Northern Ireland) Tel: 0289 064 5919 www.adviceni.net

Government benefits adviser tool www.direct.gov/benefitsadvisor

Budgeting tool (online) Budget calculator

www.moneymadeclear.org.uk/budget

Cut-back calculator www.moneymadeclear.org.uk/cutback

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Careers, retraining and learning GMB Reach Out

Tel: 0161 8779439 or 01254 238443 www.gmbreachout.org.uk

The Careers Advice Service (UK) Tel: 0800 100 900 www.careersadvice.direct.gov.uk

Careers Wales Tel: 0800 100 9000 www.careerswales.com

Skills Development Scotland (has replaced Careers Scotland and Learn Direct Scotland) Tel: 0141 285 6000 www.skillsdevelopmementscotland.co.uk

/our-services/services-for-individuals/redundancy-help-and-advice

ILA Scotland Tel: 0808 100 1090 www.ilascotland.org.uk

The Open University 0845 300 60 90

Comparison websites - some examples CFEB Moneymadeclear Comparison

tables www.moneymadeclear.org.uk/tables

www.uswitch.com

www.moneyfacts.co.uk

www.moneysupermarket.com

Consumer Focus www.consumerfocus.org.uk (UK fuel deals)

www.cheapestoil.co.uk (Northern Ireland)

Credit Union - finding one Ace Credit Union Services

Tel 0191 224 4061 www.acecus.org.uk

Association of British Credit Unions (ABCUL) Tel: 0161 832 3694 www.abcul.org)

UKCreditUnions Tel: 01706 215082 www.ukcu.co.uk

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Debt advice - free and independent Citizens Advice Bureau (England, Wales

and Northern Ireland) See phone book www.citizensadvice.org.uk (England and Wales) www.citizensadvice.co.uk (Northern Ireland)

Citizens Advice Scotland See phone book www.cas.org.uk

National Debtline Tel: 0800 808 4000 www.nationaldebtline.co.uk

Consumer Credit Counselling Service Tel: 0800 138 1111 www.cccs.co.uk

PayPlan Tel: 0800 280 2916 www.payplan.com

Debt Advice Network Tel: 0300 011 2340 www.debtadvicenetwork.org

Community Legal Advice (England and Wales) Tel: 0845 345 4345 www.communitylegaladvice.org.uk

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Money Advice Scotland

Tel: 0141 572 0237 www.moneyadvicescotland.org.uk

Advice NI (Northern Ireland) Tel: 0289 064 5919 www.adviceni.net

DirectGov www.direct.gov.uk State benefits

www.direct.gov.uk/en/moneyTaxAndBenefits/index.htm

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Financial Ombudsman Service Tel: 0300 123 9 123 or 08000 234 567 www.financial-ombudsman.org.uk Financial Service Authority (FSA) Register Tel: 0845 606 1234 www.fsa.gov.uk/Pages/consumerinformation/checkourregister/index.shtml Fuel deals - to compare www.consumerfocus.org.uk (UK)

www.cheapestoil.co.uk (Northern Ireland)

Fuel and phone social tariffs BT Basic Tel: 0800 800 864

www.btplc.com/inclusion/Needhelp/BTBasic/apply.htm

Energy Choices www.energychoices.co.uk/social-tariffs.html

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Healthy Start Tel: 0845 607 6823 www.healthystart.nhs.uk Housing advice Shelter (England and Scotland)

Tel: 0808 800 4444 www.shelter.org.uk

Shelter Cymru (Wales) Tel: 0845 075 5005 www.sheltercymru.org.uk

Housing Advice NI (Northern Ireland) Tel: 0289 024 5640 www.housingadviceni.org

Citizens Advice Bureau (England, Wales and Northern Ireland) See phone book www.citizensadvice.org.uk (England and Wales) www.citizensadvice.co.uk (Northern Ireland)

Citizens Advice Scotland See phone book www.cas.org.uk

Housing advice for members of the Armed Forces Joint Services Housing Advice Office

Tel: 01722 436575

www.mod.uk/DefenceInternet/DefenceFor/ServiceCommunity/Housing

Soldiers, Sailors, Airmen and Families Association (SSAFA) Forces Help Tel: 0845 1300 975 www.ssafa.org.uk

Army Families Federation (AFF) Tel: 01980 615525 www.aff.org.uk

Housing benefit and council tax benefit Your local authority. See letters you

have had from the paying authority or phone book

To find your local council www.direct.gov.uk/en/dl1/directories/localcouncils/index.htm

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Illegal Lending Teams Hotline - 0300 555 2222 Independent Financial Adviser - finding one Unbiased.co.uk

www.unbiased.co.uk

The Institute of Financial Planning Tel: 0117 9345 2470 www.financialplanning.org.uk

Personal Finance Society (PFS) www.findanadviser.org/find_an_adviser.aspx

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Jobcentre Plus Jobcentre Plus (Great Britain)

See phone book www.direct.gov.uk

Job and Benefits Office or Social Security Office (Northern Ireland) See phone book www.dsdni.gov.uk/index/ssa.htm

Jobs - guidance on applying www.backtowork.direct.gov.uk/

index.html

www.direct.gov.uk/en/Employment/Jobseekers/LookingForWork/index.htm

www.direct.gov.uk/en/Employment/Jobseekers/index.htm

www.redundancyhelp.co.uk Job vacancies Jobcentre Plus

Tel: 0845 6060 234 www.jobcentreplus.gov.uk

www.direct.gov.uk/en/Employment/Jobseekers/LookingForWork/DG_10030134

Jobs in Europe International Jobsearch Advice Team, Jobcentre Plus Tel: 0113 307 8090 email: europarc.ija@jobcentreplus.gsi.gov.uk www.eures.europa.eu

Recruitment and Employment Confederation Tel: 0207 009 2100 www.rec.uk.com

Online recruitment agencies, for example: www.monster.co.uk www.totaljobs.com www.jobsite.co.uk

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Lenders - to check if licensed Office of Fair Trading (OFT)

www.oft.gov.uk/consumercreditregister

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Money saving ideas www.moneymadeclear.org.uk/guides/everyday/managing_your_money.html#spending

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Pension Credit Pension Credit Helpline: 0800 99 1234 www.direct.gov.uk/PensionCredit Pensions - how they work and your rights The Pensions Advisory Service Tel: 0845 601 2923 www.pensionsadvisoryservice.org.uk

Pension Protection Fund Tel: 0845 600 2541 www.pensionprotectionfund.org.uk

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Redundancy pay - forms and advice Redundancy Payments Office

Helpline: 0845 145 0004

Insolvency Service www.insolvency.co.uk Form RP1 www.insolvency.gov.uk/forms/rpforms.htm

Redundancy, short-time working and lay-offs Advisory, Conciliation and Arbitration

Service (ACAS) Tel: 08457 47 47 47 www.acas.org.uk

Labour Relations Service (Northern Ireland) Tel: 028 9032 1442 www.LRA.org.uk

Trades Union Congress (TUC) Tel: 0870 600 4882 www.tuc.org.uk

Citizens Advice Bureau (England, Wales and Northern Ireland) See phone book www.citizensadvice.org.uk (England and Wales) www.citizensadvice.co.uk (Northern Ireland)

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Citizens Advice Scotland See phone book www.cas.org.uk

Relate Tel: 0300 100 1234 www.relate.org.uk www.relateforparents.org.uk Rent-a-room relief scheme HM Revenue & Customs See phone book or tax correspondence for your local office www.hmrc.gov.uk/individuals/tmarent-a-room-scheme.shtml

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Savings - accounts to compare CFEB Moneymadeclear

www.moneymadeclear.org.uk/tables

Comparison websites, for example www.moneyfacts.co.uk www.moneysupermarket.com www.comparethemarket.com

Skills Development Scotland Tel: 0141 285 6000 www.skillsdevelopmentscotland.co.uk/our-services/services-for-individulas.aspx Stamp duty calculator www.hmrc.gov.uk/so/new-sdlt-calculators.htm

Starting a business Business Link (England)

Tel: 0845 600 9006 www.businesslink.gov.uk

Flexible Support for Business (Wales) Tel: 0300 060 3000 wwwfs4b-wales.gov.uk

Business Gateway (Scotland) Tel: 0845 609 6611 www.bgateway.com

InvestNI (Northern Ireland) See phone book www.invetni.com

NI Business Info (Northern Ireland) Tel: 0800 027 0639 wwwnibusinessinfo.co.uk

Enterprise UK www.enterpriseuk.org

CFEB Moneymadear www.moneymadeclear.org.uk/guides/working_for_yoursel.html

Businesses for sale www.businessforsale.com www.daltonbusiness.com www.nationwidebusiness.co.uk

British Franchise Association Tel: 01865 379892 www.thebfa.org

Register as self-employed HM Revenue & Customs Tel: 0845 915 4515 www.hmrc.gov.uk/startingup/index.htm

Register a company - Companies House Tel: 0303 1234 500 www.companieshouse.gov.uk

Statutory guarantee pay www.direct.gov.uk/en/Employment/Understandinyourworkstatus/Temporarylayoff/DG_177591 Statutory redundancy pay calculator www.direct.gov.uk/en/Diol1/DoltOnline/DG_4017972

T Tax credits HM Revenue & Customs

Tel: 0845 300 3900 www.hmrc.gov.uk/taxcredits

Tax credit tables www..hrmc.gov.uk/taxcredits/people-advise-others/entitlement-tables/get-started/htm#3

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Unfair dismissal or discrimination Contact the GMB North West & Irish Regional Office on 0151 727 0077 or your local GMB Branch or Shop Steward for advice and support.

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We have tried to make sure that the information contained within is correct at time of printing. It is possible, that some of it is oversimplified, or may become inaccurate over time because of changes to UK law. You are advised to always check the current position before taking action. For further information please refer to the Money Advice Service Redundancy Handbook distributed with this copy of the GMB Reach Out Redundancy Toolkit.

GMB Reach Out c/o St Antony’s Centre

Eleventh Street Trafford Park Manchester

M17 1JF

Tel: 0161 877 9439

Email: info@gmbreachout.org.uk

Web: www.gmbreachout.org.uk