Good morning fellow Wazuans

It has been ages since I made a post here I hope everyone is ok.

I need your help on this one Someone is considering taking VER. This is the status of the said person;

(1) Turns 50 in March this year thus can drawdown 100% of their PF. Total sum net of tax 13,500,000.

(2) offer given by the company comes to another 4,400,000.

(3) Has one sacco loan of 600,000.

(4) No mortgage, no kids (zero school fees).

(5) Lives in a rental house (30K rent) ... Has a house near Nairobi that is liveable and can be moved into at anytime. The person can also farm vegetables on the parcel of 2.5 acres.

(6) Owns 2 acres of land valued at 6m, and another 1/8th valued at 800k thereabout.

(7) Has fixed income securities that generate 112,000 PA. This is till 2023 when the principal amount will be reimbursed.

(8) In terms of work there is very little room for upward progress in the next 10 years although it is 2 positions away from Director level ( a lot of corporate politics is in play here so this might ever happen).

Should the said person keep working or take the offer.

Asanteni

I can see that you have decided to ditch the sinking KQ ship. Nice move or you sink with it.

How many months current net salo does the 4.4M cover?

Does he want to find another job or pursue other interests?

Is the employer stable enough to keep him employed for another 10 years?

The payout gives him 2 years breathing space to find another job. If employer is not stable, then perhaps its not a bad idea to exit. However, given current conditions, another job may not be so easy to land.

PF should not be considered as that is the real backup post retirement, and I think becomes tax free after the age of 65.

At 50 take your money and go.Look for another job even if its paying less.Meanwhile learn or start something new to push you past retirement.

Take your PF and fix it where it earn you 10% and above.

A company that is going through VER has no room for guys who are 50years.

Asante..

I hadn't even finished with the problems;

(i) The 50% salary was supposed to be deferred till things get better this ended in Dec 2020 which itself is an illegality. So going forward salary will be between 50 - 70% depending on the financial health of the firm and zero deferred pay.

(ii) No payment towards PF.

(iii) Workload is almost the same.

Agreed. This corona thing has wrecked havoc in most industries.

If he is retrenched, he will still get paid.

Since the 4.4 M covers 27.5 months, this translates to a monthly salary of Kes 160,000(gross/net?) Also, how much do you have in savings bank and sacco?

However, I would exit and focus on either of the three approaches

1. Takes @maka's advice by drawing down the PF 13.5M and buy bonds. Assuming a return of 9%. This would yield kes 1,215,000 p.a+112,000=1,327,000 which translates to a monthly income of Kes 110,583. The difference between your current pay and estimated income would come to kes 50K which can be offset off by moving to you own house(saving 30K) and the savings accruing from work related expenses(fuel, lunch etc) and use the remaining 4.4M for first year living expenses(which would be less considering your can grow some of your own food) and utilise teh remaining for any other investment opportunity that might arise. Continue servicing the sacco loan from your income
2. Depending with the location of your livable house, draw down the PF, pay sacco loan(200K-assumption is that you took x3 of your deposits) and consider putting up rentals pole pole.
3. Assuming your land is not strategic for rentals, sell the land(both 1/8 and 2.5 acres) and find a strategic plot for rentals(Kes 4-6M will do) and use the funds from PF, company offer to slowly build rentals. Any savings from the land sale should be used to cover the 1st year living expenses

Please include 10% tithe!!!