What payments may I receive if I am retrenched?
The payments, and size of them, can vary. But if you are a full-time employee and receive a bona fide redundancy payment, there are generally four key elements:
- - Unused annual leave
- - Unused long service leave
- - Tax-free portion of retrenchment payment
- - Taxable portion of retrenchment payment.
What does ‘roll over’ mean?
Roll over simply means moving money within the tax-effective superannuation environment. For example, you may choose to ‘roll over’ your super into another fund when you leave your employer.
Can I ‘cash out’ my super if I’m retrenched?
Generally, you can’t cash out your super until you retire. Even then it is often more tax-effective to maintain money in the superannuation environment by setting up an income stream like an Allocated Pension. There may, however, be a portion of your super that can be cashed out. This is called the ‘unrestricted non-preserved’ portion. In addition, if you are over age 55 but don’t yet plan to retire you may be able to start an income stream known as a non-commutable allocated pension, also known as a transition to retirement allocated pension. Before cashing this out, it is important to consider your age, your need for money now and the tax consequences.
What Centrelink payments may I receive?
Centrelink offers a Newstart allowance that is subject to assets and income tests. Plus there are waiting periods. If you are eligible, your waiting period depends on:
- - The amount of your liquid assets such as cash, term deposits, shares and managed funds
- - The size of your redundancy payment and payments for annual leave and long service leave from your employer.
The rules are complex and it is important to seek professional advice if you are unsure how they apply to you.
How can I manage my cashflow until I find work again?
The key to managing your cashflow is to preserve flexibility because you don’t know exactly what the future will bring. This is not the time to take big risks or make hasty decisions. Some people find it makes sense to ‘pay themselves’ while in transition. This involves putting cash, either from the tax-free part of their retrenchment payment or other sources, into a cash account. They can then draw down a regular income until they get back to work.