With South Africa’s unstable economy and the scarcity of jobs, retrenchment might be a word looming in the air.
Losing your job and having to start all over again can be really stressful. This can affect you both mentally, as well as financially, if you aren’t prepared.
We have devised a list of steps to take to ensure that if you are retrenched, that you won’t have to suffer too much.
1. Don’t Cancel Your Benefits
According to Financial Advisor, Christopher Da Silva, cancelling your benefits is a really bad long-term idea. Many people receive work benefits such as medical aid and a pension fund. Da Silva advises that keeping these benefits could save you money.
This would assist you in the event of an emergency. If you have however, cancelled your benefits, you might find yourself at a public hospital waiting hours for assistance.
If you cancel some of these benefits and then have to reinstate them, you might find that you will end up paying more than you were before.
2. Don’t Cash In Your Pension
This could land you in hot water when you are wanting to retire. Da Silva advises that you should rather save money every month in a slush fund in order to ensure that you have money at your disposal if you are in a dire situation.
“A slush fund maintains your income for the next three months in the event that a scenario like that[retrenchment]should happen. So that you will have your income for the next three months and it will take the pressures off you.”
The pension benefits that a company offers is there for employees when they retire. The benefits also assist if the employee is unable to work due to illness.
3. Keep Up A Good Score
Having a good credit score could make or break a bond approval or a bank loan. Ensuring that you have a good credit score is important and especially if you are faced with an unexpected retrenchment.
Da Silva explains that getting rid of unwanted debt can decrease your debit orders and ensure that you don’t fall into the negative.
Living a comfortable life is always number one on people’s agenda. However if your finances are running dry, it might be a better idea to cancel unwanted debit orders to ensure that you can save some extra cash.
Even if your job isn’t on the line, knowing your credit score is always important.
Do you want to know yours? Find out here.
4. Don’t Forget About UIF
The UIF or Unemployment Insurance Fund provides financial support for employees who have been retrenched or can’t work due to maternity leave or illness.
If your boss is registered with SARS then they are also required to pay UIF contributions. This means that you can claim UIF benefits within six months of you losing your job. This will however be terminated if you find another job.
Although you will be getting some money back, this might not be enough for you to live on. Your benefits depend on your salary and the time that you have worked at the company.
Calculate your UIF benefits here.
5. Onwards And Upwards
Retrenchments happen when you least expect it. It can be quite an ordeal to go through but it’s best to be prepared. Make sure that you start saving so that you can be financially secure should something happen.
If you are feeling risky, you could request a pension payout and start your own business. This could open up new doors and opportunities, however it is advised to plan properly.
If that isn’t an option, there are always other jobs out there. Why not keep an eye out in your industry just in case you find yourself without a job. Also, don’t forget to ask your old colleagues for job references.
*For more information on UIF and retrenchments, click here.
Written by Melissa Cohen