Retrenchment is tough, but you can bounce back
“It is with regret that post our announcement and consultations, no counterproposals were feasible and therefore ...” The dreaded retrenchment letter, the one that sends shivers down your spine and makes the hairs on your neck stand up.
SA, and the Eastern Cape in particular, have been affected by a number of these events over the past few years, often leaving employees in a quandary.
How are we going to survive? How am I going to pay my debts? What about my children’s schooling?
These are just some of the many challenges facing a family when the possibility of a breadwinner being retrenched becomes a reality.
The loyalty factor of being employed for a working lifetime is no longer a reality.
We have to appreciate that we are selling our skill set to a company that buys it from us ... when a business goes through tough times it needs to shed expenses or face going bankrupt.
Though it is hard to appreciate, it might be your skill set that is no longer in demand.
Adopting a “sharpening of the saw” attitude towards learning new skills and keeping abreast of changes to your industry should keep you in demand and lessen the chances of being retrenched .
Be aware of these points to navigate your way financially through this difficult time in your life:
- Read the offer that has been presented to you and seek professional assistance if you fail to understand the content. What is a severance package? What is taxable and what is not?
- Age plays an important part in your decision-making process. Can I afford to retire now, as opposed to the normal retirement age?
- With most employers, retirement benefits counselling should be made available to you. This will provide you with factual information regarding your financial situation when faced with either joining or leaving an employer.
- Take advantage of any social uplift programmes that are available. As Albert Einstein once said “... in the middle of every difficulty lies opportunity!” This may be the opportunity you’ve been looking for to create your own destiny.
- If you haven’t done so already, check your budgeted monthly expenses — you may have to sharpen the pencil between those needs and wants. What appears to be a large sum of money (gratuity) might not be that much if you are indebted.
- Seek to fully understand the tax consequences of cashing out your pension.
- Benefits such as severe illness cover, life cover and disability protection will fall away. The next employer may not offer many of these benefits.
- Though the consequences of being retrenched will be felt immediately, you have to appreciate that decisions taken now could positively or negatively affect your retirement planning.
Now more than ever it is important to seek professional advice.
Do not make an emotional or rash decision because you are upset with the situation that has been presented to you.
Brainstorming with an accredited financial planner will provide you with a financial road map to follow and cover most eventualities.
• Rob Rainier is an Eastern Cape provincial executive: individual consulting at Alexander Forbes Financial Planning Consultants