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Practical advice if you lose your job

You need to think logically, calmly, and rationally about what steps to take.

Do not panic if you are or think you are being retrenched, you need to think logically, calmly, and rationally about what steps to take.

First, you should tell your partner as it will make it easier to cope with and you need to share with someone. If your partner is currently unemployed, encourage them to brush up on their skills and send out their CV. They need to work.

If you are on a pension or provident fund, what are your choices?

  • You can transfer the funds tax-free into a pension/provident preservation fund.
  • If you need money the first R25 000 is tax-free. But if you do this you won’t have access to any more funds until you are age 55.
  • If you cash in your pension/provident fund it is taxable according to set tax tables and not your tax rate.
  • If you are over the age of 55, you can have 1/3rd portion tax-free up to R500 000 –  if you have not used the allowance before from a pension/provident fund or a previous package. The balance will need to be invested into a living or fixed annuity from which you can take an income from the annuity. This will be taxable. You can change a living annuity income once a year, a fixed annuity you cannot. A fixed annuity normally dies with you upon your death. A living annuity is passed on to your dependents if you have not drawn too much and eroded your capital.
  • You can claim from the Unemployment Insurance Fund (UIF). You need to approach your company human resource consultant or person that pays your salary for details. This will involve a lot of paperwork, websites and occasionally queues when we can mingle again but you can receive a portion of your income for up to eight months.

Fight the retrenchment – convince your employer that you are invaluable and that they cannot let you go. Tell your employer all those brilliant ideas you have had to bring more business to the company and to make cost-saving actions. Alternatively, swallow your pride and approach your company for a lower position and lower-income, they will thank you for it and in six months you might get your old position back and things will be back to normal.

If you are being retrenched and your company has money, by law they must pay you one-week income separation benefit for every year you have worked and any unclaimed leave days.

A suggestion would be to suggest a reduced income to your employer, they might be surprised and take you up on your offer and when things are normal again they remember your sacrifice and you will be more important in your company.

Remember, if you are on a pension/provident fund you probably have group life cover, disability, dread disease and possibly loss of income cover. If you are retrenched, you normally have the option to convert some covers into whole life policies at no underwriting and a rate consistent with your age. Ask your advisor or the company’s employee benefits advisor about this option.

If you are on medical aid, ask your provider for a possible premium holiday or look at downgrading your plan to a cheaper one. All medical aids at the end of the year allow you to upgrade to a greater and higher plan. Consider purchasing generic medication. It does the same thing but is normally cheaper.

If you have policies, on life policies you can generally not pay your premiums for two months without the policy lapsing. If you have an investment policy through a life company, you can usually take premium holidays. The problem is you will need to catch up on those premiums and there may be penalties. If you have investments directly through unit trusts companies, you can adjust the monthly premiums without incurring any penalties or even stop the premiums at any time without having to pay any last premiums.

Some practical advice at home, switch off your geysers during the day, use your swimming pool pump less. Do the cleaning of your own house – retrench your domestic worker. Learn to mow your lawn – retrench your gardener. Use less water by showering or bathing together, fix leaks, switch off unnecessary lights and cut out luxuries.

If you are renting, ask your landlord for a few months grace period, they will probably have no option but to oblige.

Cut up any unnecessary credit cards and rather pay with cash.

If you have a bond on your property consider approaching the bank to ask for a premium holiday, as most banks right now are allowing up to a three-month grace period, but you will have to catch up with interest.

Same thing on your vehicle repayments, if you have an expensive car consider selling it and purchase a smaller car or just use one vehicle in your household.

If you have armed response, ask for a special rate or even a grace period.

If your children are in private schools, they will understand, and they are looking at the long term, so ask for a holiday on the monthly school fees payments.

If your child is currently in university and you and your partner’s income has dropped below R600 000, you can get free education for your child, ask now.

This is the perfect opportunity to upskill yourself, there are plenty of online courses been offered for free, check out Coursera.

Send invites on Facebook and LinkedIn to everyone in your industry and any influential people you may know.

Speak to your company’s opposition and let them know that you are available.

I hope this practical advice has helped you. Be strong, you were probably in a rut and bored with your job in any case. You will find something better but for now, follow the above advice.

Have hope, be strong, remember everything ends and every cloud has a silver lining.

ADVISOR PROFILE

Michael Haldane

Global & Local Investment Advisors

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