Financial checklist for changing jobs
When you're deciding whether to accept a new job, there are lots of things to think about, including the culture of the company and the opportunities for development.
But obviously the financial factors are important too: there's the salary you're offered of course, but there's also the benefit package, the pension arrangements and possibly even an equity offer to consider.
From weighing up the financial perks of a new job to P45 forms and sorting out your old pensions, here are seven financial things to work through when you?re changing jobs.
Pay, and when it'll be reviewed
When you're negotiating your pay package with your prospective employer, make sure you're well-informed about market rates (you can use Emolument's benchmarking tool to help) and think about the salary range you expect.
Importantly though, you should also ask the company to clarify when your pay will next be reviewed, and the criteria that they'll use to decide on any pay increase.
Normally, a pay review will take place once you've been in a job for 12 months, but you may be able to ask for a review sooner in certain circumstances.
Secondary financial benefits
It's important to remember that your remuneration package isn't all about the salary: what bonus scheme and benefits does the new company offer, and how do they stack up compared to your current organisation?
Take some time to think through the financial impact of particular benefits: a shiny gym membership may seem more appealing than daily free lunch, for example, but buying your own lunch each day may actually work out far more expensive than paying for your own gym membership.
You should also find out what the company's bonus scheme is based on and what you can expect to receive, plus (if relevant) how generous the maternity or paternity package is compared to that of your current employer.
Once you've taken all these things into account, will your move still leave you better off overall?
The pension package
Under auto-enrolment, companies are obliged to enrol their employees into a pension scheme and they must also make contributions to staff pension pots.
Although there are minimum contribution levels set by the government, some companies will opt to make much more generous contributions than others.
This is effectively free money from your employer - you could think of it as additional pay - and it could make a big difference to your retirement income, so it's a good idea to ask pension questions when you're considering your job offer.
Take your old pensions with you
While we're on the subject of pensions, moving jobs is a good time to deal with previous workplace pensions you've paid into that may now be gathering dust.
It's estimated that by 2050 there will be around £750bn in dormant pensions. Having several scattered pensions can make it difficult to keep track of your savings and keep on top of the fees you're paying.
As you start your new job, consider combining your previous pensions into a single pension plan. PensionBee can find your old pensions for you for free and you can choose to combine them into a new, online plan.
Consider any equity offer carefully
If your prospective employer is talking about equity as part of the offer package, this means you'll be given some kind of ownership interest in the company. This can take several different forms, and it's important that you dig into the details.
You've probably heard stories of early employees in tech companies making millions of pounds from their stock when the company is sold. However, if the company fails, or if it doesn't sell or go public, your equity may never turn into cash.
If there's an equity offer on the table, look over the equity plan carefully and ask about the company's exit strategy.
Take travel into account
If you'll be working in a different location, apply to get a refund of the remaining balance on your season ticket as soon as possible.
During negotiations, your new employer may offer to reimburse some of your commuting costs, especially if you've got a long journey into work.
Alternatively, your employer may offer season ticket loans. This usually means they give you the money to pay for an annual pass, which works out cheaper than buying tickets daily, weekly or monthly. You will then pay them back each month via deductions from your salary.
Hand over your P45
If you've decided to accept the new job and you've resigned from your current role, your ex-employer should give you a P45 form.
Part of this form is for your new employer, and you should give it to them as soon as possible. It will help HMRC to charge you the right amount of tax on your new salary.
If there's a delay, you may get saddled with an emergency tax code and end up paying more tax than you need to until things are straightened out.
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