Having advised a number of people in the last year or two who have been directly affected by redundancies and empoyment changes, it’s worth mentioning a few things that often crop up that people are not fully aware of:
Pensions – If someone is contributing to a personal pension, it can only be from a source of "earned taxable income", so you are not eligible to contribute to a pension if your only income is either a benefit, rental income, investment income etc.
If you leave a company pension scheme following redundancy, not only will this effect your retirement benefits in the future but you may also be losing valuable protection benefits such as "death in service" life cover or "private health insurance". (I have seen some forget to switch their private health insurance to paying it themselves and only realised when a medical procedure was required that they had no cover in place!) Many people include the life cover in their jobs when calculating their requirements but forget to replace it when they leave those jobs!
Lump sums – People often leave redundancy lumps sums sitting in current accounts earning little or no interest at all (which means it is devalueing by inflation each year) especially when they have quickly commenced new employment and don’t have an urgent need. There are many options that can give far better returns than just leaving funds in a current account and many of these also have complete capital guarantees!
Mortgages – In some cases, people are lucky enough to be in a position to clear or partly clear their mortgage. For some, this may be a great idea but for others (especially those on tracker mortgages) it could be worth waiting while rates are still low as they could make more than they will save on a good deposit rate!
As ever, everybody’s circumstances are different and it is important to review your own specific financial planning requirements.