Can I Afford To Accept a Redundancy Offer?
Before You Decide
You’ve been offered a redundancy. At first glance, it may feel like a simple question … Should I accept it?
For many Federal Government employees, however, the decision is far more complex than simply comparing today’s payment.
Your redundancy may affect:
- Your PSS or CSS pension
- Your retirement plans
- Your tax position
- Your leave entitlements
- Your Age Pension
- Your long-term financial security
This Decision Brief has been designed to help you understand the questions worth asking before making your decision.
A real story
John had worked in the Australian Public Service for 31 years. When his department announced voluntary redundancies, many of his colleagues immediately began calculating how much money they would receive.
John did the same.
Initially, his focus was entirely on the redundancy package.
But after speaking with a specialist adviser, he realised the redundancy payment was only one part of the picture.
The more important questions were:
- Could he actually afford to retire?
- Should he access his PSS pension now?
- Would waiting improve his long-term retirement income?
- What would happen to his leave?
- How much tax would he pay?
Rather than asking,
“How much do I get?”
John started asking,
“What decision gives me the best long-term outcome?”
That completely changed how he approached the redundancy.
Decision Check
Before accepting a redundancy, ask yourself:
Retirement
☐ Can I afford to retire today?
☐ What income will I need?
☐ Have I projected my cashflow over the next 30 years?
PSS / CSS
☐ Do I understand all of my pension options?
☐ What happens if I leave now?
☐ Would waiting another year improve my benefits?
Tax
☐ How will my redundancy payment be taxed?
☐ How will my leave payout be taxed?
☐ Is there anything I can do before leaving?
Lifestyle
☐ What will I actually do after I leave?
☐ Am I emotionally ready to retire?
☐ What if I want to work again?
Family
☐ Have I discussed the decision with my partner?
☐ Does this align with our retirement goals?
Common Mistakes
❌ Looking only at the redundancy payment.
❌ Not understanding PSS or CSS.
❌ Ignoring tax.
❌ Underestimating retirement income needs.
❌ Making a rushed decision because everyone else is leaving.
Key Takeaway
A redundancy package is a one-off payment.
Your retirement could last thirty years.
Before deciding whether to accept a redundancy, take the time to understand how the decision affects your pension, your income, your tax and your long-term financial security.
Before You Make Your Decision …
There are no prizes for making a quick decision.
The best decisions are made when you understand how today’s choices may affect your financial future.
If you answered “I’m not sure” to two or more questions, it’s likely there are important areas that deserve further consideration before you decide whether to accept your redundancy.
At CTWealth, we specialise in helping PSS and CSS members understand their options so they can make informed decisions with confidence.
Our role isn’t to tell you what decision to make.
Our role is to help you understand the financial consequences of each option, so you can make the decision that’s right for you.