Advertisement

Redundancy and You

By 24 October 2012 16

figuring it out

Do you know someone like this?

As a Project Manager of a large construction company, Robert understood stress. He regularly worked long hours, made major financial decisions on the go every day and played his role in the rough and tumble of workplace politics.

So Robert was totally unprepared when his boss called him to an urgent meeting with the HR director where he was told that his role was no longer required. Suddenly, his world was turned upside down. Despite his considerable educational qualifications, he couldn’t make sense of his redundancy payment documents, let alone understand the tax treatment of these payments. He struggled to make important financial decisions such as whether to plough his redundancy payment into his mortgage or invest it in super, or use it to provide an income for his family while he was out of work. If he couldn’t find work and ran out of money could he access Centrelink Newstart Allowance? Would it be enough to keep him and his family? His mind was reeling.

Emotionally, it was tough. From fear about future employment to excitement at new career opportunities; from gratitude for finally having time to play games with his children and get involved in the local community to anxiety over his ability to anchor his family’s financial future.

Thankfully Robert was referred to Wybrow and Associates shortly after he received his notice of redundancy. Robert came to see me as soon as he had his Redundancy paperwork, which firstly enabled us to confirm that this paperwork was correct and then for us to work through his options. We developed a roadmap to get his financial life back on track, allowing Robert to focus on finding his next job and look after his family.

Robert had about $500,000- in super but was only 53 and a half and so had another 18 months before he could access it. He said his super hadn’t been doing too well lately and he was worried about that too. He had been too busy working to do much about it. He thought he would use all his $160,000 Redundancy pay out to pay off his mortgage. Then he intended to use the $25,000 in Rec Leave payments and Long Service Leave for his family to live on. He was fairly sure he would get another job quickly but was still nervous about what might be on offer, certainly at his previous salary level and at his age.

When we discussed all the options I advised Robert about the liquid assets waiting period that Centrelink Newstart Allowance has if you receive a lump sum payment. This means that even if you spend your money on living costs and have nothing left you don’t receive a payment until a set waiting period has passed. He was fairly shocked as, while he didn’t want to access Centrelink benefits, he thought of it as a safety net he could rely on.

So in the end we put the Redundancy funds in his mortgage offset account against his home loan. This would reduce his mortgage repayments down to a very minimal level and allowed him access to funds if cashflow proved difficult in the future.

We set up a Self Managed Super Fund for him with more appropriate, less volatile investments. This also meant that he may be able to access his super as a pension in 18 months time if that became necessary. I explained that we would assist him in the ongoing management of the fund and handle the paperwork for him that needed to be done. I also found out that his employer’s insurance cover had a continuation option so we took this up and had his personal insurances placed inside his new Self Managed Super Fund as well. His own fund would now pay these premiums, which meant that he and his family would be protected if he became ill or died. In addition this would free up his cash flow at the same time.

One by one we dealt with all the issues that worried Robert and after discussing the options available Robert was able to choose a pathway that secured his financial life until he could find other employment. As Robert said to me ’Redundancy is not what I would have chosen but I know I have enough money to keep the family and have access to other sources of income I can call on in the future, which is a big relief”.

Robert’s story has become increasingly familiar part of Australia’s employment landscape over the past decade, particularly in the period since the global financial crisis. While it is common for people to look back on their redundancy as the best thing that ever happened to them, it is almost always a time of great upheaval in their lives. It is certainly a time where you need to get rock solid advice as Robert did to get through what was a very difficult time.

10 Steps on Dealing with Redundancy

Katrina Wybrow Dip FP CFP
Authorised Representative of Fitzpatricks Dealer Group
Wybrow & Associates
Corporate Authorised Representative of Fitzpatricks Dealer Group
Ph 02 61624100
Fax 02 61624101
Unit 5, 8 Phipps Close
Deakin ACT 2600

Fitzpatricks Dealer Group Pty Limited (FDG) ABN 33 093 667 595 holds an Australian Financial Services Licence (AFSL No. 247 429). The content of this email contains general information only and is not intended to provide you with advice or take into account your objectives, financial situation or needs. When we provide you with advice this will be set out and recorded in an eligible advice document. The views expressed in this email and our website are the opinions of the authors at the time of writing and do not constitute a recommendation to act. All information referenced are believed to be accurate at the time of compilation and is provided by FDG in good faith. The information contained in this email is confidential. It is intended solely for the addressee. If you receive this email in error please contact the sender and delete the email. FDG has no liability (including liability in negligence) to any person for any loss or damage consequential or otherwise suffered or incurred by that person resulting directly or indirectly from either the use of, or reliance on, the information contained herein. FDG does not guarantee the performance of any fund, stock or the return of an investor’s capital. Past performance is not a reliable indicator of future performance.

Please login to post your comments
16 Responses to Redundancy and You
#1
yellowsnow12:12 pm, 24 Oct 12

I know someone about to be made reduntant – the Canberra Times

#2
Chop711:24 pm, 24 Oct 12

I would hope you would be a little more sensitive to those who ran in the election…. and as #1 pointed out, those who did the pre poll :)

#3
shirty_bear1:29 pm, 24 Oct 12

Currently between redundancies myself … took one from ACTGov about a decade ago, and currently working for the mob who sacks ‘em like no other.

#4
Paul00751:47 pm, 24 Oct 12

Some handy advice seeing my office is handing out redundancies left right and centre at the moment. I have been assured I am safe, but I really don’t see anything as being guaranteed right now.

#5
Jazz4:51 pm, 24 Oct 12

I recall a few years ago when a close friend and colleague was made redundant. It totally blindsided her & her shock was palpable, almost as if she’d just been told that a close love one had died.

We wrap up so much of our self worth in what we do for work that it doesn’t surprise me that anyone made redundant would feel an acute sense of loss and anxiety at what to do next.

Unfortunately i think we’ll be seeing more stories like this in Canberra over the next couple of years.

#6
HenryBG6:06 pm, 24 Oct 12

If I were made redundant and received a payout of $160,000, it would be champagne for everybody.

And then find a new job.

Very simple.

The only people who are involuntarily unemployed are those who prioritise their brekky-bongs over having a shave and going to an interview.

#7
bundah6:07 pm, 24 Oct 12

Jazz said :

I recall a few years ago when a close friend and colleague was made redundant. It totally blindsided her & her shock was palpable, almost as if she’d just been told that a close love one had died.

We wrap up so much of our self worth in what we do for work that it doesn’t surprise me that anyone made redundant would feel an acute sense of loss and anxiety at what to do next.

Unfortunately i think we’ll be seeing more stories like this in Canberra over the next couple of years.

Another tragic thing is that there are also self-employed individuals that invest so much of their soul in business ventures,that go belly up and sadly,in a minority of cases,some are so despondent that they commit suicide.

#8
Woody Mann-Caruso7:35 pm, 24 Oct 12

The only people who are involuntarily unemployed are those who prioritise their brekky-bongs over having a shave and going to an interview.M/i>

I’d say I hope you never have to suffer from a mental illness, but you seem to have been dropped on your head as a child and so know first hand what it’s like to have problems upstairs.

#9
Deref8:06 pm, 24 Oct 12

HenryBG said :

If I were made redundant and received a payout of $160,000, it would be champagne for everybody.

And then find a new job.

Married friends of mine have, between them, chalked up 5 redundancies. It’s made them quite wealthy and, of course, they haven’t been without jobs for more than a couple of weeks.

#10
HenryBG9:37 pm, 24 Oct 12

Woody Mann-Caruso said :

…. but you seem to have been dropped on your head as a child and so know first hand what it’s like to have problems upstairs.

That’s right, and I have no problems whatsoever in keeping my job in the public service, where the minimum standard is limited only – so far as I can determine – to those in possession of a pulse.

Of course, I understand that those made redundant from management positions take a little longer in re-gaining employment, due to their lack of perceptible skills, however the public service will always find a home for you, no matter how unskilled.

#11
poetix9:51 pm, 24 Oct 12

Woody Mann-Caruso said :

The only people who are involuntarily unemployed are those who prioritise their brekky-bongs over having a shave and going to an interview.M/i>

I’d say I hope you never have to suffer from a mental illness, but you seem to have been dropped on your head as a child and so know first hand what it’s like to have problems upstairs.

Could you please learn to use the quote function properly? If I don’t immediately remember who you are quoting I have to trawl through all the comments again to find the correct person. In some threads that can be a great many comments.

It’s not hard. Just press the green quotation marks and take out any bits you don’t want to leave in.

I took a redundancy once, and it was the best thing I ever did. However, I certainly didn’t want the job involved, and had other plans. It can work out well, but if you are totally dependent on the wage it must be extremely stressful, as noted.

#12
Conan of Cooma8:27 am, 25 Oct 12

HenryBG said :

The only people who are involuntarily unemployed are those who prioritise their brekky-bongs over having a shave and going to an interview.

Really? I seem to be doing quite well with my employment… I guess your experience is with those of a pathetic and weak disposition.

#13
HenryBG9:16 am, 25 Oct 12

Conan of Cooma said :

HenryBG said :

The only people who are involuntarily unemployed are those who prioritise their brekky-bongs over having a shave and going to an interview.

Really? I seem to be doing quite well with my employment… I guess your experience is with those of a pathetic and weak disposition.

The converse of my statement is not an assertion I made.

Lay off the brekky bongs and you might be able to keep up.

#14
DrKoresh9:18 am, 25 Oct 12

HenryBG said :

The only people who are involuntarily unemployed are those who prioritise their brekky-bongs over having a shave and going to an interview.

Not even true, I’ve got a job.

#15
katrinawybrow10:20 am, 25 Oct 12

There will be a lot more redundancies in the future. I expect next year will be a bit bleak in that respect. However if you get advice and are smart with the way you use your redundancy it can be a great bonus.
The point of my article was to highlight that point as I do see people where things don’t work out so well as they make some fundamental errors in the way they approach it. Few of us are experts in things first time around especially when we are totally blindsided by something totally unexpected happening from left field.
It can be a great thing if you were intending to retire anyway but not so great if you are younger with a mortgage and children to support. Cash flow is king if you have others depending on you.
Katrina Wybrow

#16
thy_dungeonman10:29 am, 25 Oct 12

HenryBG said :

The only people who are involuntarily unemployed are those who prioritise their brekky-bongs over having a shave and going to an interview.

Gee I wish I had known that all I need to get a job is to get up in the morning and shave. I haven’t even touched a brekky bong, where’s my job?

Follow
Follow The RiotACT
Get Premium Membership
Advertisement
The-RiotACT.com Newsletter Sign Up

Images of Canberra

Advertisement
Sponsors
RiotACT Proudly Supports
Advertisement
Copyright © 2014 Riot ACT Holdings Pty Ltd. All rights reserved.