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You've been retrenched, what now?
A retrenchment benefit will only be paid upon receipt of written certification from your employer stating that you have been retrenched. This written certification must be signed by the Chief Executive Officer, General Manager, HR Manager or equivalent.
The payment of the superannuation retrenchment benefit is separate to any severance payment made by your employer as part of the conditions of your employment.
If you are retrenched after your minimum retirement age, your benefit will be the same as the Age Retirement Benefit.
If you are retrenched before your minimum retirement age, you have two options to choose from:
Benefit options
OPTION 1
LUMP SUM PAYMENT |
A lump sum retrenchment payment will be made in two parts:
- an immediate cash lump sum payment, and
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a preserved lump sum component that must be rolled over to another complying superannuation fund i.e. ESSSuper’s Accumulation Plan.
There are no further benefits payable after a retrenchment benefit has been paid. |
OPTION 2
TOTAL DEFERRED PENSION |
You will be entitled to a total deferred pension after reaching your minimum retirement age (subject to preservation), irrespective of whether you have permanently retired.
If you delay your application until after your minimum retirement age, your pension will commence from the date of acceptance of your application, (i.e. it cannot be backdated to your minimum retirement age). |
Converting your pension to a lump sum
Upon reaching your minimum retirement age, you can elect to convert part or all of your pension into a lump sum. The election must be made within three months either side of the date your pension entitlement commences. You can:
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convert up to 50% of your fortnightly pension to a lump sum, or
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convert 100% of your fortnightly pension to a lump sum.
The lump sum option that you choose will have an effect on your partner in the event of your death (see below.)
Note: If you do not exercise your option to convert part or all of your pension to a lump sum within three months either side of the date of your pension entitlement commences, you will have another opportunity to apply for a lump sum during the three months prior to your 65th birthday. This lump sum conversion becomes effective when you turn 65.
Example of benefit options
Based on a pension of $936 per fortnight @ age 55 and the member elects to convert 50% to a lump sum
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Lump sum option |
Member pension |
Spouse pension |
| Option A |
$141,297 |
$489 per fortnight |
$624 per fortnight* |
| Option B |
$165,659 |
$489 per fortnight |
$326 per fortnight* |
The calculation includes an adjustment for the 'Taxed' status of the benefit.
| * If you elect to convert your entire pension, no further benefits will be payable to either yourself or your eligible partner. |
If you have eligible dependants
In the event of your death, (after retrenchment and prior to your minimum retirement age) a benefit is payable to your eligible dependants. The benefit is based on your deferred pension payable at age 60.
If you have no eligible dependants
A refund of your contributions and earnings (if you did not take them when you ceased employment), and any amount required under the Superannuation Guarantee legislation, is payable to your Estate.
Your level of pension will depend on your:
Your pension will be a lifetime pension, paid fortnightly and indexed in line with CPI for all capital cities.
Your deferred pension may also be payable if you:
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successfully apply to receive it on the grounds of disability, or
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successfully apply for early release of part of the benefit on the basis of financial hardship or on compassionate grounds, or
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terminal illness, or
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attain age 60, or
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die.
Further details of your Retrenchment Benefit are available by calling the Member Contact Centre.
If you are retrenched and choose a total deferred pension prior to your minimum retirement age, you will receive an Annual Benefit Statement which shows your deferred pension payable at your minimum retirement age and the present-day-value of the deferred pension converted to a lump sum.
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