Redundancy

Presented by QSuper

Important information

This information has been prepared for general purposes only, without taking into account your objectives, situation, or needs, and should not be relied on a as legal or taxation advice, nor does it take the place of such advice so it may not be appropriate for your circumstances.

You should read the product disclosure statement (PDS) and consider your circumstances before you make an investment decision. You can download a PDS from our website, or call us and we’ll send you one. Before acting on any of the information, you may wish to consider obtaining personal financial advice.This presentation is issued by the Fund Administrator, QSuper Limited (ABN 50 125 248 286, AFSL 334546), on behalf of the QSuper Board of Trustees (ABN 32 125 059 006). The QSuper Board of Trustees is the issuer of interests in the QSuper Fund (ABN 60 905 115 063). Where the term ‘QSuper’ is used in this document, it represents the QSuper Board of Trustees, the QSuper Fund, and QSuper Limited, unless expressly indicated otherwise.

Today

PaymentsWhat to consider

Hypothetical case study

Payments

1. Accrued leave 2. Severance payment3. Possible incentive payment

Employer Redundancy Package

QSuper Benefit

Can you access this or will you leave it in your QSuper account?

1. Accrued leave• Recreational leave• Long service leave• Both paid as lump sums (Likely to be taxed)Tax on unused leave entitlements

Type of leave Tax treatment

Recreational leave 30%1

Long service leave - accrued before 16 August 1978

5% of total at marginal tax rate1

Long service leave – accrued on or after 16 August 1978 up until 17 August 1993

30%1

Long service leave – accrued after 17 August 1993

< Age 65 = 30%1

> Age 65 = marginal tax rate

1. Plus Medicare levy of 1.5%

2. Severance payment

– A severance payment of two weeks' pay year of service

– The minimum payment is four weeks' pay – The maximum payment is 52 weeks' pay

3. Incentive payment

• In addition to the severance payment, an incentive payment may be offered once only to encourage employees to exit the department on or by a specified date.

• The payment will be $6,500 or 12 weeks' pay at the employee's substantive level, whichever is the greater.

• Incentive payments may apply to early retirements and redundancies, but do not apply to retrenchments

• Conditions apply – see your HR representative for more information

Severance payment & Incentive payment

• Genuine Redundancy PaymentTax-free portion (under age 65)– $8,806 + $4,404 for each completed year of service– Over this amount is an employment termination

payment (ETP)

• Employment termination paymentTax depends on:

- age - the amount of the payment- your taxable income- whether any part of the payment relates to a period before 1 July 1983

Tax Treatment

QSuper benefit

• Membership can continue (leave your funds)• Accumulation account – grows through investment• Defined Benefit account – what happens?

– Official Employment Termination Certificate from employer

• Non-Queensland Government employers can pay into your QSuper Accumulation account

• Insurance – what happens?• Access to your super?

QSuper benefit (obtain a quote)

• ‘Cash’ value

– Can access

– May be subject to tax - rates vary

• Preserved amount

– ‘Condition of release’

– May be subject to tax - rates vary

Total benefit

What are the considerations?

• Opportunity for new challenge

• Financial position

• Job security

• Financial and family commitments

• Work or retire?

• Top up retirement savings

Getting established

Starting outPre-

retirement

Must meet living expenses

Human Services (formerly Centrelink)

Newstart Age Pension

Investments

Partner

SuperannuationWork

Income

Must review retirement and insurance plans

• Super contributions stop (and may be lower in future)

• QSuper insurance ceases – continuation may be possible

• Long term impact of withdrawing super?

Ann and John’s situation

• Situation (both)– Income $70,000

– 40 weeks severance, four weeks annual leave and ten weeks long service leave

– 20 years of service

• Ann (age 48)– Commitments – mortgage and dependent children

• John (age 58) – May work, may retire

Employer estimate for Ann and John

Gross Net

Annual leave1 $ 5,384 $3,688

Long service

leave1$13,461 $9,221

Severance -

40 weeks pay2$53,846 $53,846

Total $72,691 $66,755

Assumptions: Income based on $70,000 and 20 years service.

1. Marginal tax at 31.5%, leave loading not included. 2. Genuine redundancy or ATO approved voluntary early retirement, 2012/2013 tax free amount of $8,806 + $4,404 for each completed year of service. In this example that equals up to $96,886 tax-free

Ann’s issues

• Work/ Career– How soon can she find work?

• Finances– Meet living expenses including mortgage and family

– Impact on family benefits and tax offsets

– Limited access to super and higher tax

– Financial security – insurances and retirement funding

• Benefits– Lump sum for income, debt and family

John’s issues

• Career– Work - part-time / full-time elsewhere?

– Fully retired – all super available

• Finances– Meet living expenses - less commitments

– Income - work, lump sum or super

– Super - may contribute lump sum after tax

• Benefits– Kick-start retirement, greater flexibility

The rest of your life– Lifestyle, career, where to

next?

Financial– Savings, debt, finance

the next phase?

Your decision

The future…….

Help and advice is readily available

General super information

Call our award winning Contact Centre on 1300 360 750

Get information, and use tools and calculators on our websiteqsuper.qld.gov.au

Come to other seminars

Leaving your job doesn’t mean leaving QSuper