Our fees are among the lowest in the country
Our Income account won Money magazine's Best Balanced Pension Product for 2020.
If you find yourself in the position of your job being made redundant, you will need information to help you manage your financial future, including your super.
The Australian labour market is changing rapidly as the impacts of the coronavirus pandemic continue to develop.
Before the significant impacts of COVID-19 occurred, Australian Government Labour Market figures showed that in February 2020 unemployment fell to 5.1%.1
This was as a result of both full-time employment and part-time employment rising over the month to be up 1.7% and 2.8% respectively over the past year.
However, youth unemployment also rose in February 2020 to 11.7% above the level recorded 12 months earlier. And the level of underemployment rose to a record high in February 2020 to be 9.5% above the level recorded a year earlier.
COVID-19 has significantly changed labour market conditions, including the introduction of significant emergency control measures for COVID-19.
On 12 and 22 March 2020, the Australian Government announced measures, many to be administered by the Australian Taxation Office, to help the economy withstand and recover from the economic impact of COVID-19.2
On 30 March 2020, the Government announced its intention to provide businesses affected by COVID-19 with a subsidy to continue paying their employees. The $130 billion JobKeeper payment program passed through Parliament and the enrolment process for employers commenced on 20 April.
Significant redundancies, however, have already been announced in some sectors, such as hospitality and travel. With the impacts yet to be fully realised on the number of Australian workers who may have their employment affected by COVID-19, some estimates have put the figure at as many as 900,000 jobs to be under threat as a result of the virus and the response. 3
QSuper’s COVID-19 resources hub is a great source of helpful information on dealing with the impacts of the pandemic.
ASIC’s MoneySmart website4 explains that redundancy occurs when an employer terminates a worker’s employment because the employer decides the job is no longer needed, or the employer becomes insolvent or bankrupt.
Genuine redundancy payments are made when a job is abolished or rendered obsolete, and meet the criteria set out in the Income Tax Assessment Act 1997. Some compliant reasons jobs are abolished may include:
When you receive a redundancy package you may be entitled to two main payments. These include:
Accrued leave and long service leave
Redundancy benefit (this is from your employer).
When you receive your redundancy package, your employer should write to you to explain your entitlements including information about tax.
MoneySmart explains that the employee will usually receive a redundancy payment with tax applied that is lower than the employee’s marginal rate.
Your redundancy payout may be split into two parts:
A tax-free part of the genuine redundancy payment.
The remainder of the genuine redundancy payment, which you may pay tax on.
As well as the redundancy payment, you may be offered a one-off incentive payment.
If you receive a redundancy package and leave your job, you have a number of options with your QSuper accounts:
You can keep your super in an Accumulation account. Your future employer should be able to make contributions into your account when you start a new job.
Open an Income account, if you are eligible, which is a flexible, tax-effective way of receiving regular payments from your super during retirement. If you’ve reached your preservation age and plan to keep working, you can also open an Income account using the transition to retirement option.
Cash in all or some of the unrestricted non-preserved part of your super – this is the part of your super you can access without needing to meet any conditions.
Rolling redundancy payments into super is not an option5, but you may consider contributing some of the after-tax amount you receive to super.
Death and total permanent disability (TPD) cover: If you are an Accumulation account member and have units of death and TPD cover on the day you finish work, your insurance will automatically continue if you keep your super in a QSuper Accumulation account.6 This means you keep the same level of cover you had when you were employed. You can apply to increase or cancel your insurance at any time.
Income protection: Providing you are still eligible for cover, your income protection cover will continue after you leave your job. However if you have salary-based income protection cover it will convert to units of cover, and your waiting period and premium will also change.
Cover for death, TPD and income protection will end if we have not received any money into your account for the last 13 months (unless you have permanently opted in).
Dealing with losing your job and unexpectedly having your income reduced can be challenging. Support organisations including Beyond Blue can help and connect you with relevant support services.
Seeking financial advice about how to best manage your redundancy payment could make a big difference to your future.
Contact us today
1. Labour Market Information Portal, 19 March 2020, Labour Force Summary February 2020, accessed 15 April 2020 at www.lmip.gov.au
2. Australian Taxation Office, 31 March 2020, The Australian Government’s economic response to coronavirus, accessed 15 April 2020 at www.ato.gov.au
3. Borland, J, 26 March 2020, Which jobs are most at risk from the coronavirus shutdown?, The Conversation at www.theconversation.com
4. ASIC, Moneysmart, Losing your Job, accessed 16 February 2019 at https://www.moneysmart.gov.au/life-events-and-you/life-events/losing-your-job
5. Australian Taxation Office, Employment Termination Payments, accessed 16 February 2019 at https://www.ato.gov.au/Individuals/Working/Working-as-an-employee/Leaving-your-job/Employment-termination-payments/
6. Eligibility conditions apply.
Temporary access to superannuation offered.
Take steps after redundancy to put a new job in your sights.
Journalist Robyn Ironside tells the story of her redundancy… and the opportunities the decision created, both personally and professionally.
Being made redundant from your job can be a shock. Follow these tips to find a new job or career.