HOW TO MANAGE REDUNDANCY
Firstly, a “genuine redundancy” applies if you are under age 65, your employment position no longer exists and is not replaced by another employee.
The types of payments that you could receive from your employer include:
- Genuine Redundancy payment
- An “Eligible Termination Payment” (ETP) including the part of the genuine redundancy that exceeds the tax free amount, unused sick leave, unused rostered days off, payments in lieu of notice and golden handshakes.
- Other payments such as accrued annual and long service leave.
All of these payments are taxed in different manner.
Financial Issues to Consider
How to meet living expenses? This could include:
- Using the redundancy money.
- Applying for Newstart Allowance: this payment is means tested by Centrelink and a qualifying period applies.
- For people age 57 or older during 2018/19, a superannuation supported income stream may be viable.
Should you Invest?
Depending upon your financial position and employment prospects, possibilities include:
- Repaying debt such as personal loans, credit card debt and the home mortgage.
- Setting up a mortgage offset account to retain access to your capital.
- Investing to create future wealth. (Remember that money invested into super is not accessible until a “condition of release” is met (e.g. retirement after “preservation age”).
Key decisions to make include:
Whether to retain the current fund (if permitted) or rollover to a new scheme?
Further, what happens to the super insurances and any group life insurances provided by the employer? You may be able to either retain, apply for personal policy cover or accept cover with a new employer scheme. These choices usually involve different policy conditions, cover amounts and costs.
Why is our Advice Valuable?
The implications of redundancy are complex. We can assist you to:
- Find the best ways to improve your cash flow, so that living expenses can be met.
- Manage your debt in a way that recognises your financial situation and career prospects.
- Apply for Centrelink benefits and maximise your entitlements.
- Invest surplus money (when appropriate to your situation) to grow an investment portfolio which will fund your future lifestyle.
- Get your estate plans in place to ensure that your affairs can be handled efficiently and in accordance with your intentions, should you die or be unable to handle.