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Taking a Voluntary Redundancy from the public service

By Howaboutthat - 17 June 2013 24

Ok folks, here’s the thing. After 26 years in the APS I’ve given it the flick. Or, to put it in more technical terms, I’ve been offered a Voluntary Redundancy from the Australian Public Service and I’m going to take it.

There’s one part of me that says “Hoo-Bluddy-Ray, Hallelujah, Saints Preserve Me and Toorah all you tossers”. Then again, there’s another part of me that says “OMG …I’m going to be Unemployed in a couple of weeks…What now?”.

This is A Big Huge Might-Be-No-Good Or May-Be-Very-Good-But-Who-Knows-Very-Scary-Thing.

Have any other Rioters taken a VR recently? Did it turn out OK, or the other way? Is anybody considering doing it and needs advice on the steps? What’s the vibe out there? I’d really like to hear from anybody who has done it , would like to do it, or wouldn’t dream of doing it in a million years. And why or why not?

What’s Your opinion?

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24 Responses to
Taking a Voluntary Redundancy from the public service
what_the 10:07 pm 19 Jun 13

Leaving the public service was the best thing I ever did. Getting paid to leave is even better.

Alien Fiend 9:01 pm 19 Jun 13

“Ah, the best thing I ever did” they say when you bump into them in town. “Yes, landed on my feet, took the dosh and am now back working where I did before (or similar)”. Hmmm.

As for me, happily took a VR after 24 years service (no debt and no plans or jobs in the wind) and swore that whatever happened, I would NEVER say that to anyone. And I haven’t. But now with a job where I get to do real work, that pays me $40k more than my last APS position, I guess I have been lucky.

But take nothing for granted. Everyone has a VR story and I’m happy to admit that during the few months I had off before I landed my new job, I avoided places where I might have bumped into the “best thing I ever did” people.

dtc 3:59 pm 17 Jun 13

harvyk1 said :

It’s all well and good to go and put money into paying off loans and setting up investments, but if the don’t have a job when the now reduced pot of money runs out you may find it very difficult to get access to money for general day to day living short of going the centrelink route. It is also at this point in time that your risking some very bad things happening (eg going bankrupt)..

Either have a redraw account or put the money in a mortgage offset account. Usually it works out much the same, but it means you will have access to the money if you need it. Caveat – it may make a difference for Centrelink purposes (I imagine the mortgage offset counts as an asset in some way).

You also need to assess your skills. To be blunt, everyone in the private sector (other than ‘manager’ or “HR”) is a specialist. Specialist accountant or lawyer or mechanic or IT. A lot of people in the APS are generalists – policy in particular, or a bit of this or that. A great public sectory policy person may not have much chance of getting a job in the private sector – maybe some temp contracting work back in the APS or maybe an industry body, but thats about it. And if you want to move out of Canberra then those skills arent much use.

But if you are a specialist, then its a much more attractive deal.

wrigbe 3:57 pm 17 Jun 13

I took got a VR about 12 months ago after around 22 years service. For me I it was the perfect timing as I have some chronic health conditions I am trying to get under control at the moment, I am trying to complete a PhD, I have young children and I also have a partner who works full-time. I took a pension and put the rest on the home loan. The pension is not huge but it is not dissimilar to what I would earn if I was working a couple of days a week (which is the most I would manage atm anyway), and I get it indexed for the rest of my life.
And for me I am young enough to still have a second career and a second superannuation once I finish this blasted PhD.

I was in the PSS scheme and the pension option from that was not too bad.

harvyk1 1:41 pm 17 Jun 13

I’ve had a redundancy (private sector, but the principal is the same). It was enough to last nearly 4 months on based on maintaining our current lifestyle. In reality it only took me a week to find a new job.

That said be careful about paying off loans and doing all the wonderful things as suggested here until you have your next job in hand.

It’s all well and good to go and put money into paying off loans and setting up investments, but if the don’t have a job when the now reduced pot of money runs out you may find it very difficult to get access to money for general day to day living short of going the centrelink route. It is also at this point in time that your risking some very bad things happening (eg going bankrupt).

That redundancy money is suppose to keep you going until you have your next job. Once that principal purpose has been fore filled use it as you wish.

Christoph Zierholz 1:17 pm 17 Jun 13

I did some years ago and went into business for myself.

It’d probably take a book to cover the last few years of trials and tribulations but for me it was the right thing to do.

My take on it is that I am the kind of person who had to give it a go and see what happened and as long as I gave it my best shot then even if I failed, at least I wouldn’t be sitting at a desk for the rest of my life contemplating “…what if…?”

As an aside, I didn’t leave my old job because I hated it or anything, it was interesting enough and I worked with great people but it was just that I found something that I wanted to do more.

Anyway, good luck.

Grail 12:18 pm 17 Jun 13

I was given a redundancy some time back, the payout was equivalent to about half a year’s salary. I wasn’t complaining! First thing I did was put the entire lump-sum into my home loan, which got me to the point that I only “needed” half the previous salary to meet my obligations. This alone was a great benefit to me since I could look for a job without the pressure of having to find something immediately with a suitable salary.

In addition, putting the money into the mortgage meant I had no liquid assets counting against me when it came to asking Centrelink for help. Thankfully I found another job before Centrelink would have gotten involved, so I didn’t have to subject myself to the full-time job that is job hunting under the whip.

If your situation is more complex than having a home loan on your primary place of residence, I would highly recommend searching for financial advice from someone who is not flogging superannuation scams. I mean schemes, sorry, I would never want to label Johnny Howard’s pet industry in anything other than the best light possible.

My unqualified, you-found-it-on-the-Internet-written-by-a-guy-wearing-a-tinfoil-hat-it-must-be-true advice is to take as much of the payout as a lump sum as possible, since any ongoing payment or contribution to superannuation is subject to the whims of the new Government that will appear in September. Put that lump sum to use by dismissing the most expensive loans and credit you have. Do not invest in financial-advisor-recommended superannuation: that industry is a scam, you will never see your money again.

Okay. I have taken my medication and I will put the tinfoil hat away just as soon as they stop beaming the mind control rays into my TV.

But seriously: lump sum, pay off debts. You will be much happier in the long run. Accept that you will be “between jobs” for a while and do what is necessary to placate the other half during this interval. Some people might even decide to extend the “between jobs” interval indefinitely due to extra contact with kids/grand kids, savings on travel and child care, and the simple luxury of having time to prepare nice home cooked food instead of Chicken Duets from the freezer every night.

And if you have already paid off your mortgage? Buy an investment property in not-Canberra and retire on the new income 🙂

watto23 11:56 am 17 Jun 13

As someone who has worked in private industry my whole life in Canberra, the one thing many public servant do underestimate is the difference. If you are the sort to complain about public service working conditions, like annual payrises of 3 or 4 % not being enough, or leave conditions, etc then you will find no joy in the private sector. its also a common myth if you are working in the private sector you must be earning a lot, but in Canberra its not the case. Most do it because of the work, or the industry.

So if you are considering leaving to take a redundancy and plan to keep working, I’d be looking at the things you need in a job and look for jobs first for as long as you can.

Ben_Dover 11:31 am 17 Jun 13

Have they offered you a “package”?

Felix the Cat 10:26 am 17 Jun 13

I took a not-so-voluntary redunancy a few years back and finished on Friday and started a new job in private sector on Monday. But the new job was quite different to the old and was a fair bit less money. But it was a job.

The redundancy money paid off the mortgage which was good so I could afford to live on the lower wage.

I had thought about buying a business (franchise) with the redunancy money but decided the money earning capacity wasn’t enough to justify the long hours (job might be 9 – 5 but then you have paperwork to do such as re-ordering stock, BAS statements etc etc) and that I would be better off on wages – and theoretically more secure employment.

gungsuperstar 10:16 am 17 Jun 13

I took a VR just over a year ago from the APS. I was probably one of “those people” that conservative public service bashers hate. I got tens of thousands of dollars to leave the job… that I was already planning to leave, cos I had another one lined up.

Because I’d had under 10 years service, I think I only would’ve had to have waited 7 weeks or so to be able to work in the APS, which is a bit of a joke. Had I not had another job lined up, I would’ve had money to survive 6 months, which is plenty of time for a break, to apply for work, and then to apply for another APS job if I had gotten desperate.

A couple of things for people considering it to bare in mind:
– It’s not actually a crazy amount of money. While there is the 2 weeks pay for every year of service, the bulk of the money comes from long service leave and annual leave payout.

– watch your tax. If your department offers reimbursement for financial advice, take it so you know what you’re in for. There’s a very friendly tax rate on redundancy – but when you factor that into your total income for the year, I ended up with a tax bill for nearly $2k last financial year.

– remember that every permanent APS job asks you whether you’ve ever taken redundancy. Having sat on recruitment panels before, I don’t remember ever considering the response to that question – but it must be there for a reason. So the 7 weeks wait before you can work in the public service again for less than 10 years service, or the 7 months you have to wait for more than 10 years could become longer depending on how recruiters respond to that question.

My experience was entirely positive. It cleared my debt, gave me a great holiday, it left me a good little nest egg, and it gave me the confidence that the pay cut I took for the new job was manageable. Given the same circumstances again, I’d do the same thing 100 times out of 100. (The fact that I worked in the APS for 5 years and spent the last 4 years trying to get out of it is a factor).

But everyone’s circumstance is different. If I hadn’t had the other job lined up, I wouldn’t have had the confidence to leave. If I had a family to support, I wouldn’t have given up the security. And if I were doing it now, I certainly wouldn’t be taking the APS for granted as a future employment opportunity if my new job hadn’t have worked out.

It really is one of those “tread your own path” things.

mmillercfp 10:15 am 17 Jun 13

If your plan with the VR is to seek new paid work, it’s worth letting people know that you’ll be available sooner rather than later.

If the VR marks the end of paid work for you – the transition from paid work to retirement is not to be sneezed at. Sometimes a VR brings this on when preparations haven’t been made. Consider a hobby that you’ve always wanted to try and see if there is some sort of regular group. An excuse to get out of bed, out of the pyjamas and talking to someone is a good thing.

Definitely make sure though that you revel in your newfound ability to avoid peak hour traffic, wonderful for quality of life!

neanderthalsis 10:00 am 17 Jun 13

Ask yourself these questions:

Do you have any marketable skills that are in demand in the private sector?

Have you had dealings beyond the APS and built a network of private sector contacts that you can hit up for a job?

Are you sufficiently financially secure to live on no income for a month or two until you find work?

Will there be an opportunity to go back to the APS as a contractor ( and will there be work for contractors in these fiscally challenging times)?

If you answered “no” to more than two of the above, hold on to that APS job as long as you can. I have seen a few people come out of the APS and into private sector jobs and not handle the transition well, including one who simply could not handle the autonomy and the expectation that they would work without constant direction; those institutional shackles can be hard to break.

Zan 9:34 am 17 Jun 13

A lot depends on whether you have interests outside of work, whether youfeel you have enough super to live to the standard you want (or need). Many people take a VR and after a short break go back to work. I call them legal double dippers.

If you do not have interests outside of your work you will find it difficult and maybe get very depressed (a lesson to all those still working).

Rollersk8r 9:25 am 17 Jun 13

I’m no expert but all depends on how old you are, how close to retirement, how close to paying off the mortgage – and most importantly what you have lined up next??

Personally I’ve looked at the figures a couple of times. It seems like a lot of money. Although with a young family my accrued leave entitlements are almost priceless.

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