The redundancy process can be difficult and usually involves many important financial decisions. There are many important issues regarding redundancy and super that you should consider during this time.
What will happen to my super once I leave my employer?
Your employer-sponsored super
If your super contributions are currently going to your Media Super account, your existing super will be unaffected by your redundancy. Fees and costs, investment performance, contributions and insurance cover will remain the same, as long as you have $1,000 or more in your account.
If your super contributions are currently being directed to a corporate master trust, it is likely that your entire super balance will be transferred into a retail or personal plan run by the same administrator as the corporate plan. If this is the case, consider the features of the new plan and ensure that you are not penalised by higher fees, lower investment performance or reduced insurance cover.
Ensure that you stay in control of your retirement savings. Investing your super in a low-cost, high performing fund can significantly affect your retirement lifestyle.
Employment Termination Payments
A lump sump payment made as a result of termination of employment is known as an employment termination payment. This payment can include:
- amounts for unused rostered days off;
- amounts in lieu of notice;
- a gratuity;
- an employee's invalidity payment (for permanent disability, other than compensation for personal injury), and
- certain payments after the death of an employee.
Employment termination payments do not include:
- a payment for unused annual leave or unused long service leave, or
- the tax-free part of a genuine redundancy payment or an early retirement scheme payment.
Employment termination payments cannot be contributed or rolled over into super and therefore must be taken as cash.