Receive a redundancy payment

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Your decision to leave your job has been made for you. Maybe you have an idea of what you're going to do next but it's more than likely you haven't considered your super. It's not often high on your agenda unless you're close to retirement or if you have a huge sum, but it's something you should think about carefully.

Eligible termination payments (ETPs) are basically lump sum payments from an employer at the termination of employment that are eligible for special tax treatment.

Provided that you are under age 65, the accumulated super and final payout ETP can be rolled over into an alternative superannuation fund or retirement savings account. The idea is to preserve these retirement savings into the superannuation environment where they can enjoy super's concessional rates of tax.

However, a certain portion of your ETP may be taken as cash depending on your own personal circumstances.

When deciding whether to take the cash or rollover the ETP you should consider:

• Superannuation savings are taxed at special rates.
• When you are over 55 you pay less tax on cash payments.
• Delaying the cash out until you have a low income year is better for tax.

For most rollover will be the best option. It has the effect of deferring personal income tax on the payment until it is eventually withdrawn as a benefit.

Before payment is actually made, the payer is required to give you information about the payment. You then advise the payer whether to rollover all or part of the payment for you.

It is important to carefully consider your options as once the payment is made you cannot change your mind.

If the payment is made to you in error, without providing instructions to the payer, you may go back to the payer and ask for the documentation to be reissued, provided you have not received the payment.

Many super funds will allow you to continue paying into them even after leaving your current employment. These funds are transferable and you will need to give the details to your new employer when you start your new job.