In September, it was confirmed that 2,500 jobs would be axed at the primary steel making plant in Port Talbot. The existing blast furnace will be shut down and replaced with a new arc furnace by 2027, jointly funded by the government and the plant’s owners, Tata Steel.
Workers at the plant have known about this for a while, but the details of the deals being offered were only recently announced.
- An improved redundancy package (2.8 weeks of salary for every year of service up to 25 years, with a minimum payment of £15,000)
- A year-long training scheme, with full pay for the first month and the equivalent of a £27,000 salary for the remaining 11 months.
The redundancies will also be phased over the coming months as The Guardian explains:
“The last blast furnace will now close on 28 September, with most employees leaving before Christmas after working their notice periods. Tata predicts almost all of the Port Talbot staff will be gone by March next year.”
So why am I writing about this? Simple – over 2,000 workers have already put in for voluntary redundancy. A fair proportion of those may well be looking to retire rather than get another job in an area where jobs are already difficult to find. A lump sum payment for redundancy may look attractive, but if it is to fund retirement, there’s some planning to be done.
The redundancy deal
According to Indeed , the average wage for experienced skilled workers hovers at around £35,000 a year, with management roles around £40,000. So, let’s do a little maths.
£35,000 / 52 weeks = £673.00 per week
2.8 x £673 = £1884.00 for every year of service
Maximum of 25 years service = £47,000
Now, £47,000 is a considerable sum, but it’s also just £12,000 more than the annual wage the worker was receiving. So, if it is to help fund retirement, it needs to be used wisely as part of a detailed retirement plan.
Many long-term workers will have paid into the British Steel Pension Scheme (BSPS), which closed to future accrual in March 2017. According to the legal team , there are currently approx. 67,000 retired and deferred members of BSPS. So their private pensions/pension income also needs to be factored into any future retirement plan.
Then there are other savings, investments, and property to be included in the retirement pot, which in turn leads to a simple question:
Do they have enough to retire?
Like many of my clients, they may be surprised to find that the answer is ‘yes’, although this does depend on the retirement lifestyle they want to lead. For most of my clients, that’s possible too, enabling them to retire with a sense of purpose and enjoy a fulfilling and rewarding retirement for the next 30+ years.
This is crucial because retirement is not just about stopping work. As a retiree, you need to have a reason to get up in the morning, to engage with people, to make a difference and to stay fit, healthy and mentally stimulated.
In other words, you need a plan – in advance.
Time to plan
That’s the one thing I wish every employer making people redundant would provide; significant help in drawing up a detailed retirement plan that takes into consideration all those essential non-financial aspects before people leave.
At Port Talbot, for example, there is still time to do that. As The Guardian explained, most steel workers have until Christmas, if not March, before the wage cheques finally stop. That’s time for people to plan, prepare both mentally and physically, and start retirement with confidence and certainty.
It doesn’t matter whether you’re retiring from making steel, teaching kids, or from world class tennis like Rafael Nadal (aged 39), advance retirement planning is key to enjoying your retirement. As an experienced retirement coach with decades of experience as a former financial advisor, I’ve helped people with retirement pots of literally all sizes plan for a successful retirement.
If you’d like to do that too, get in touch. I offer a free initial 30-minute Discovery session to discuss your unique situation, your plans and dreams, and your timescales. Then you can decide how you might like to proceed, including 1-to-1 coaching to guide you every step of the way.
