KEY POINTS:
When you're looking to change jobs, there are a lot of financial implications to consider other than just what your new salary will be.
A new benefits package can mean changes to your health plan, gym membership, profit sharing, superannuation, childcare, car or company-sponsored training. You'll need to
make sure any automatic payments or payroll deductions are switched over in time.
Robert Oddy, managing director of International Financial Planners, says you also need to watch out for a pay gap.
"Generally, people don't consider the financial impact in terms of cash flow. And, when changing jobs, people need to remember that there may be a different frequency of payment that they'll receive than the other job," Oddy says.
Financial planners say you should have an emergency cash fund to last you a couple of months.
But the truth is most people tend to operate from one pay period to the next with little in the way of savings.
Particularly when people have credit card debt, it can be easy to get caught out.
Many people will rely on a payout from leftover annual leave, so it is important to know how many days you have owing.
Your health insurance might be one of your biggest concerns. Some insurance schemes have time periods when they have to be notified of a job change. If you have had any change in your health, it could be considered a pre-existing condition and won't be covered under a new policy.
"When you're in group insurance schemes, particularly group medical insurance schemes, you need to be careful that you can still retain the cover with a new employer or if not, as an individual," Oddy says.
The continuity of your health insurance is more important now than ever, he says. "It used to be a luxury but now it's a necessity because the public health system can't cope with the technological and pharmaceutical changes that have been made. The costs have risen enormously."
If you have payroll deductions, you'll need to have them sorted.
People who have bill payments, mortgage payment, insurance payments or utility payments taken directly out of their pay will need to remember to have them switched to the new employer in time to prevent payment delays.
"It can, if you're not careful, trigger off penalties because people don't receive their payments when they're expected," Oddy says.
Changing benefits packages is now less involved since employers are tending to offer more cash instead of perks.
"The difficulty for employers is that with the fringe benefits tax regime, it's very expensive for a company to provide a lot of benefits, particularly for the smaller employer."
But one financial consideration to look at when changing jobs is any training or ongoing education that's on offer.
"If an employer is going to help out by putting you through university or post-graduate degree or some other type of training course and they're going to pay for it, that can be worth a lot of money, particularly if they're going to give you time off during work to study," Oddy says.
Perhaps the most important financial consideration is how well the company you're going to is doing.
"One of the key aspects is looking to see what the stability of the employer is like. In the current environment when the economy is undergoing some significant slowing, there will be some employers that won't be able to stay afloat."
When it comes to job cuts it's often on a "first in - first out" basis so people will want to know if the new employer is positioned to sustain any economic downturn. "They may find themselves after a short period of time losing their job. Of course if you're in a job - which you've been in for a while - you'll have provisions for redundancy payments and all those types of accrued benefits," Oddy says.
Changing jobs during an economic downturn can be risky.
"If all of the New Zealand economy is slowing down then there will be less demand for employees across the board. Some people will obviously have high demand but there will be a reduction of that we have at the moment for employees. A lot of people appear to have their head in the clouds at the moment in terms of the likely impact."
Oddy says to be particularly careful taking up employment in the manufacturing or service sectors because things might not be as stable as they may seem.
"When the New Zealand dollar drops, it's going to put incredible pressure on things like the cost of goods because we'll be importing inflation. For some sectors, it's going to be particularly hard to survive," he says.
Determining the financial viability of a future employer can be difficult.
But Oddy says to try to make some checks. "Ask around to find out what people think of the company. Talking to competitors is usually a good thing because there's usually scuttlebutt that's around there.
"You just have to be able to sort out what is rivalry as opposed to fact."
One new financial consideration employees need to be aware of is KiwiSaver. If you're not already a member of KiwiSaver, you will be when you next change jobs unless you opt out in writing.
If you are going to opt out then that is something to consider when negotiating your next salary, Oddy says.
"If the new employer is providing the KiwiSaver benefit for other employees, then obviously you'd want to make sure you're negotiating an increase in the pay that you're receiving to compensate you for the fact that you're not getting those benefits."
If you go with KiwiSaver, you might want to negotiate a higher employer contribution. Employers put in 1 per cent of your salary which is not taxed. If you agree to a higher percentage then that income is also not taxed but is locked away until retirement. The retirement age is 65 but there is no guarantee that won't change. There are other considerations with KiwiSaver.
"One of the risks I think in the future is that governments will use it as an excuse to not pay the government superannuation to people.
"If you accumulate a large amount in your KiwiSaver account, that may actually work against you in the future."
Jeff Matthews, senior adviser with financial planning firm Spicers, says the good thing about putting money into KiwiSaver is that it will travel with you as you change jobs.
"The whole idea with KiwiSaver is once you're into it you're into it for life," Matthews says.
For people with other superannuation schemes which they may have started before KiwiSaver came out, you can roll that into KiwiSaver when you change jobs.
These schemes might have vesting periods in which case you'll only be entitled to roll over the amount you have vested. When you change jobs with KiwiSaver, you'll need to tell your new employer which funds you are enrolled with and give them the automatic payment details.
You also may have received stock options with your old job. Remember if you cash out stock when you change jobs, it is taxed as income. And don't assume anything in regards to any unpaid bonuses if you're leaving.
"You can take a conservative number on bonuses because they may or may not happen. You might have done really well but some idiot in the company made a bad call and the company lost money," Matthews says.
Certainly don't count on bonus money as if it were a standard payment. "It's nice to get them as a bonus and that's what they should be treated as. You just can't assume it's going to be a constant part of your package."
One part of your employment package which can save you a lot of money is the company car.
"Having a company car is perhaps $30,000 to $35,000 that you don't need to tie up in a vehicle that goes down in value," Matthews says.
And if you're leaving a job which comes with a car for one that doesn't, be prepared. Changing jobs has a lot of financial considerations and Matthews says unless you're going to be substantially better off - don't do it.
"Sometimes the devil you know is perhaps better than the friend that you don't know. If you been in with a place for five years, it may not be perfect but you have some track record and some consistency there."
