When you are leaving your employer it is important to consider:
- What will you do with your super? Can you remain in the employer fund or should you roll it over to a personal fund?
- Does the life insurance within your superannuation have a continuation option? Many employer superannuation funds offer such an option which avoids you having to go through the cumbersome process of applying for life insurance all over. Make sure you exercise the option before it’s too late and review your overall needs again.
- If you are looking for new employment; are you eligible for a Newstart Allowance from Centrelink?
What happens to your super?
When your employment has ceased, it still takes approximately 1 – 3 months for your final superannuation contribution to come through. If you are part of an employer superannuation fund, your super will then rollover into a holding account with the same account details.
You need to be mindful that the fees may be higher than on your employer super account.
If you are thinking of rolling over your super to a new fund, before you do so, have a look at tips and things to consider in our “Super consolidation checklist“.
Receiving redundancy payment
If you are about to receive a redundancy payment, there are several issues you need to consider:
- You will need to be able to understand the various components of your employer redundancy payment and how it can be used to achieve your overall financial objectives
- You may have to address some financial planning issues such as superannuation and the continuance of any insurance benefits as well as your ongoing investment strategy
- You will need to understand your cash flow. How are you going to fund your living expenses while you transition into new employment or retirement?
- You may need to get in touch with any unused leave entitlement in your redundancy payout could delay the payment of your benefit
Depending on your situation, you may be entitled to all or some of the following lump sum payments:
- Unused annual leave – An employer must pay out the annual leave that you have accrued but have not taken.
- Unused long service leave – If you are entitled to long service leave, but have not yet taken it, your employer must pay your entitlement as a lump sum.
- Tax-free amount – You will only be entitled to a tax-free amount if a genuine or bona fide redundancy is paid and you are over the age of 65.
- Employment termination payment – The remaining amount of your redundancy payment, if any, is called an employment termination payment (ETP).
To read more about redundancy payments, check out our “Receiving a redundancy payment” fact sheet.
Please feel free to contact us if you would like to discuss your options with one of our financial planners.