Redundancy: Digesting the big news

Transcription

1 Redundancy: Digesting the big news

2 Try to remain positive 4 Check your payments 6 Make a new budget 8 Stop unnecessary outgoings 10 Review your loans 12 It s not all about the mortgage 14 Government benefits 16 Insurance 18 Super 20 Think about investing 22 Register for work 24 Review your financial plans 26 Enjoy a break 28

3 You re not generally planning for redundancy so when you get the news you are often unprepared. Don t underestimate the effect that this has on your whole being. On one hand, there s a lot to do which might include finding another job, telling family and friends and emotionally moving on. On the other hand, this is a tumultuous event and you need to look after yourself. So be kind, try not to stress more than necessary, and just work through a checklist to make sure you are doing all the right things. For many, it is a great opportunity. People often find they are re-employed in the industry that retrenched them and their job is equal or even better in many cases. 3

4 1 Try to remain positive 4

5 Redundancy can hit hard and affect you in many ways. Your health, your ability to move into a new role and those around you will all be better off if you can remain positive. Talk to others about the experience. You will likely find that more people than you think have been affected by redundancy it hits most industries. Many people look at redundancy as an opportunity to re-evaluate what they are doing and perhaps choose to do something quite different for work. See people that can help you. A counsellor or career guide may be a good place to start. 5

6 2 Check your payments 6

7 You are leaving, you may have warning or you may have to leave the building immediately. At this time your payout should be your major focus. Make sure you have all your entitlements, check carefully that your payout is correct. Your payout will generally include unpaid salary, unused annual and long service leave (if eligible) and a severance payment, which is typically relates to the period you were employed. You may also receive an age based payment reflecting the additional time an older person may take to find suitable work. For instance, if you are aged over 45 you may be entitled to more redundancy pay as someone aged under-45. You should also check your contract. If you don t have a copy ask HR. For those under age 65, some or all of the severance portion of the redundancy payment will be tax-free. With regard to the remainder, your former employer has an obligation to withhold a level of tax from this payment but check too that if you have any additional tax liability on this money that you put it aside for tax time. 7

8 3 Make a new budget 8

9 How long can you may your redundancy payment stretch? Work out a weekly budget and divide your lump sum by this amount. Don t forget your bills quarterly, annual and six-monthly and make sure you can cover these. Can you earn supplementary income? Can you cut any expenses? If you can, you will feel more at ease in your new circumstances. 9

10 4 Stop unnecessary outgoings 10

11 If your income has stopped you will need to re-evaluate all your expenses. Your fixed costs will be hard to cut but you should try to stop unnecessary outgoings. Not only will this help your financial bottom line but it also means that you will be less stressed worrying about your money running out. You might have to stretch this money for a while. 11

12 5 Review your loans 12

13 You may have a mortgage or a personal loan or margin loan. You will need to assess your ability to meet the repayments at this time if you are going to find it hard, talk to your lender and try to work something out. You may be able to suspend payments for a short time. Many financial institutions offer assistance at times like this. Ensure your bank is aware of your situation before finding yourself in arrears. 13

14 6 It s not all about the mortgage 14

15 Your redundancy will arrive in a lump sum and it may be tempting to put it into your mortgage but before you do anything, consider your needs. Your redundancy money is your income for the foreseeable future. You will need cashflow to meet your weekly expenses. While putting it into your mortgage might seem like a good idea, losing cash flow may provide stress to your finances later as you may not be eligible for Government benefits straight away. By all means put the money in an offset account against your mortgage to reduce the interest you are paying on your mortgage if you have the ability. Just make sure you are able to redraw this money if necessary. 15

16 7 Government benefits 16

17 Check what financial assistance you qualify for. You may be eligible for Centrelink benefits if you remain unemployed but this is dependent on the amount of redundancy benefit you receive. Check with your adviser or with Centrelink for the latest rules and how they may affect you. For more information on the Government benefits available to you visit: 17

18 8 Insurance 18

19 Have your needs changed? Do you still need the same level of cover? Or do you perhaps need more? If your insurance was paid through your work you will need to see if you can retain it personally. While you remain unemployed your income protection may not be valid you need to check what you have and what you are paying for and that you have the best cover for your situation. You have insurance to be there when you need it most, if you ve made the decision to be insured don t let it slide at this or any other time. This may be the time when you need it most. 19

20 9 Super 20

21 Your redundancy payment is likely to not include any payments to super. Do you want to contribute anything additional to your super? Depending on your age and your current super balance you may choose to put some of this money towards your life after work. You should be careful with the amount you choose to contribute don t exceed your contribution limits and make sure you re not putting away too much as you may need it to last you for some time. As everyone s circumstances differ you may need advice before making a decision, as any money you do contribute to super will not be accessible until you reach retirement age. 21

22 10 Think about investing 22

23 From your redundancy, you will have a lump sum to last you until you establish another income stream. Look at where you can put it so that it s giving you the best return. Can you do anything better than a term deposit or bank account? You might find that having your money easily accessible is of primary importance so make sure you are getting the best rate on these? It is probably a good idea to seek good financial advice to look after your long-term goals. 23

24 11 Register for work 24

25 Take some time to think about your next move do you want it to be the same kind of job that you have just left or would you like to try something different? Try not to wait too long to register for work. Even if you don t formally register anywhere, let your friends and colleagues know of your availability and interests. The more people you have on your side the easier it should be to find your next role. Take advantage of outplacement services if they are offered. They will help you with preparing your resume, your interview technique and making the most of networking. Also consider retraining if you think you might be better off in another role or different industry. You may also decide to start your own business. Look at courses that will help with the basics of business including accounting, marketing and technology. 25

26 12 Review your financial plans 26

27 Maybe you should think about putting aggressive investments on hold while still trying to maintain your current plans until you have a good idea of your new future. You should probably steer clear of making rash decisions at this time but make sure that your plans remain in line with your goals. If you have an adviser you should inform them of the change in your situation and let them review your financial position where necessary. 27

28 13 Enjoy a break 28

29 As redundancy is becoming more and more common in these economic times, it is often just a seamless transition between jobs. You were probably working hard before the redundancy and will likely work hard in your new role. So if you can, take some time to have a break between jobs and do something you ve wanted to do for a while, or spend some time with friends and family. 29

30 What to do next For more information: > Speak to your financial adviser This information was prepared by BT Financial Group Pty Limited ABN and is current as at August This publication provides an overview or summary only and it shouldn t be considered a comprehensive statement on any matter or relied upon as such. The information in this publication does not take into account your objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it and obtain financial advice. Any taxation position described in this publication is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and ourinterpretation. Your individual situation may differ and you should seek independent professional tax advice. The rules associated with the super and tax regimes are complex and subject to change and the opportunities and effects will differ depending on your personal circumstances. BT aj