What you need to know if you lose your job

Ex­pert tips to nav­i­gate sack­ing

Sowetan - - Your Money - By Rei­tumetse Pitso

The low lev­els of eco­nomic growth have put added pres­sure on em­ploy­ers to re­struc­ture their work­force, lead­ing to wide­spread re­trench­ments across sec­tors.

Los­ing your job can be dis­rup­tive and to help you nav­i­gate through the maze of frus­tra­tion, Money has, with the help of ex­perts, com­piled this guide:

UIF: You have a right to

● claim for un­em­ploy­ment ben­e­fits from the Un­em­ploy­ment In­sur­ance Fund (UIF) at your near­est labour depart­ment, pro­vided you had been con­tribut­ing while work­ing. You must ap­ply for it within six months of los­ing your job and if you had been con­tribut­ing for four years or more, you can claim for up to 238 days or un­til you start work­ing again. Claims of one day for ev­ery six days worked ap­ply for shorter con­tri­bu­tion pe­ri­ods.

In­sur­ance: The first thing to ● check is whether you have any cover for re­trench­ment on your poli­cies. Casey Rousseau, mar­ket­ing man­ager for 1st for Women In­sur­ance, says their poli­cies have a re­trench­ment premium waiver and if you have taken this out as an ad­don prod­uct it con­tin­ues to pay for your short-term in­sur­ance pre­mi­ums for up to six months while you are with­out a job.

If you have taken out an in­come pro­tec­tion pol­icy from a rep­utable life in­surer, it may or may not cover re­trench­ment, ad­vises prod­uct devel­op­ment ac­tu­ary at San­lam Per­sonal Fi­nance Karen Bongers. Bongers ad­vises you to know ex­actly what you buy, what the pol­icy will cover and un­til when it will pro­vide you with that cover. In­sur­ance is of­ten one of the first ex­penses to go when bud­gets are tight, and while it may pro­vide tem­po­rary re­lief, not hav­ing cover can have mas­sive fi­nan­cial im­pli­ca­tions in the event of the un­ex­pected, warns Su­san Stew­ard, mar­ket­ing man­ager at Bud­get In­sur­ance.

If you are not able to pay your in­sur­ance premium, let your in­surer know. The Short­Term In­sur­ance Act’s pol­i­cy­holder pro­tec­tion rules say you have up to 30 days to pay your in­sur­ance pre­mi­ums be­fore your pol­icy lapses or claims can be re­jected.

Med­i­cal scheme cover: Try

● to keep your med­i­cal scheme cover at all costs, and if you worry that it may take you longer to find a job in the event of re­trench­ment, con­sider down­grad­ing to cheaper op­tions.

Dis­cov­ery Health’s head of re­search and devel­op­ment Deon Kotze says you should con­sult a fi­nan­cial ad­viser to as­sist with a full fi­nan­cial and med­i­cal needs anal­y­sis and re­struc­ture the over­all in­sur­ance ar­range­ments to re­tain ap­pro­pri­ate cover at a lower cost, rather than do­ing away with med­i­cal in­sur­ance al­to­gether. Julie Reddy, mem­ber­ship spe­cial­ist at ad­min­is­tra­tor Sech­aba Med­i­cal So­lu­tions, says while most med­i­cal schemes only al­low for switch­ing op­tions ei­ther up or down at the be­gin­ning of ev­ery ben­e­fit year, re­trench­ments oc­cur any time. In the un­for­tu­nate event of re­dun­dancy, if your scheme does not al­low a down­grade, you can sub­mit a mo­ti­va­tion for this to the scheme for con­sid­er­a­tion. She sug­gests com­par­ing value for money across schemes and op­tions. A hospi­tal plan may be an op­tion as at least it cov­ers your fam­ily in the event of un­fore­seen emer­gen­cies re­quir­ing hos­pi­tal­i­sa­tion. Kotze adds that net­work­based med­i­cal scheme op­tions of­fer you ex­ten­sive cover at des­ig­nated ser­vice providers at lower con­tri­bu­tions than for plans that cover all hospi­tals and doc­tors.

Credit agree­ments: Be­nay

Sager, chief op­er­a­tions of­fi­cer at Debt Busters, says in many cases when you take out credit agree­ments, such as per­sonal loans and store credit ac­counts, you are obliged to take out credit life in­sur­ance. The in­sur­ance should pay your credit re­pay­ments on your debt for a pe­riod of be­tween six to 12 months. If you have lost the credit agree­ment, ask the credit provider for a copy, he ad­vises.

If you lose your job, tell your credit providers so that any fail­ure on your part to pay your in­stal­ment listed with the credit bu­reaus will re­flect this as the rea­son.

The Na­tional Credit Reg­u­la­tor (NCR) says while the Na­tional Credit Act can­not force credit providers to as­sist you with lower pay­ment op­tions, there are cases where credit providers as­sist con­sumers to rene­go­ti­ate their con­tracts. An al­ter­na­tive, should you have any other form of monthly in­come, is to en­ter into debt re­view, which can of­fer re­lief in the form of lower re­pay­ment on credit agree­ments. If you have re­ceived a re­trench­ment pack­age, you can ar­range a set­tle­ment amount with your credit providers and close those ac­counts, says the NCR.

Pen­sion fund: The Pen­sion

● Funds Act al­lows you to with­draw from your pen­sion fund when you leave the fund. You must, how­ever, fa­mil­iarise your­self with the risks of do­ing this – it may se­verely com­pro­mise your in­come on re­tire­ment and should only be done as a last re­sort. You may also in­cur tax, cau­tions Sager. The South African Rev­enue Ser­vice al­lows you to take R500,000 of a sev­er­ance ben­e­fit tax-free, and the bal­ance is taxed at rates of 18%, 27% and 36% de­pend­ing on the amount. How­ever, if you have used your R500,000 tax-free ben­e­fit on re­trench­ment you will not en­joy it again on re­tire­ment.

/ 123RF

Make plans to deal with your fi­nan­cial obli­ga­tions if you are re­trenched. Ask your credit providers to help you find a way to man­age un­til you get a new job.

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