A TPD payout is the sum of money a worker receives after they are laid off because they can no longer work because of an illness or bodily injuries. The term was first coined in the 1980s. It comes from the Age and Retirement Act, which provides that workers can collect their TPD. Workers receive one-half of their final salary, up to two years before or two years after they retire (whichever is longer). Employees can also use this money to help with expenses during the waiting period between being laid off and receiving their retirement benefits.
Benefits Of TPD Payout
- Reduced Monthly Expenses
A reduced monthly living expense for some time. This can be beneficial to workers who plan on spending their entire working life in one location. For instance, an unionised electrician who has spent most of his life in the same city may choose not to leave his home during retirement and will receive money from his TPD payout amount to help defray the cost of staying there.
Relief from taxes on money paid out as retirement benefits. Since money is taxed at a higher rate when it goes into various retirement funds, people receiving their total permanent disability insurance payout usually avoid paying taxes on it until they draw it down through the government’s PORTA program.
- Improve Saving
A chance to improve their retirement savings. For example, an electrician who has worked in one location his entire life can touch his TPD payout to build a larger nest egg for retirement. Superannuation disability payouts definitely help with what you already have and plan on saving accordingly.
- Financial Stress
A chance to reduce financial stress. The act of receiving the payout relaxes the anxiety level people feel when they are no longer employed and do not know how they will survive financially in retirement.
TPD Payout – How It Works
People with relatively enduring chronic illnesses or injuries are eligible for TPD payouts from the federal government, but state governments also have their own systems for paying out TPD claims. However, if you are receiving Social Security or another pension from the federal government and your state has a TPD payout program for its workers (and vice versa), you may be able to take advantage of both systems. Often people work for large companies. For instance, a person may be eligible for both TPD and Social Security at the same time.
The Amount You Can Receive
The amount of money you can receive under your state’s TPD payout program depends on several factors:
- The age of the receiver
For instance, a 60-year-old person can only receive 80% or $16,000 ($800 per month) of his or her final salary as a TPD payout. A 65-year-old can receive up to 95% or $20,000 of his/ her TPD payout.
- Time Worked
The amount of time the worker was employed by the company. A 15-year employee can receive up to 90% of his final salary, or $20,000.
- Years Worked
The total years the person has worked for a company. There is a minimum age limit in some states as well as minimum and maximum limits on how much you may be eligible to receive based on how long you have worked for your employer and what type of job you had in that organisation during your career with that employer.
What Should You Know About TPD Payouts and TPD Claims?
It is important to consider the dos and don’ts of filing a TPD claim.
- If Employers Are Acquired By Other Company
If you have worked for an employer for a certain number of years prior, you may be eligible for a TPD payout from that company even if the company has already closed its doors. This can happen if the employer went out of business but was bought by another firm, or because another organisation acquired it and inherited its TPD program.
A Good Example Is The Federal Government. In June 2001, the federal government sold off all of its assets except for those needed to run national defence operations.
- Closed Company
If you worked for a company that closed down, and you have already received your TPD payout from that company, the amount of this payout will depend on the length of time you have been out of work. The longer you were unemployed, the more money you can receive.
If your employee benefits are determined to be AD&D and you received your TPD payout from that employer, remember that most state programs do not cover all the types of illnesses covered under federal law. Consequently, if your State program does not cover AD&D, those benefits may have to be paid back to the employer through a settlement agreement with the state.
- State Program
If your benefits were covered under the state program but you did not receive a TPD payout, you may still be able to get that money through a TDP claim.
- Still Working?
If you have been ill and are still working somehow, the amount of your AD&D payment might be reduced or eliminated altogether. For example, if you work three months past getting the illness and then collect your Social Security benefits, you will only receive benefits on 80% of your full amount. So, can you work after a TPD payout? Maybe somewhere else, but certainly not in the same place.
- Military Pension
If you are receiving a military pension and Social Security benefits, make sure to notify your Social Security Office right away if you become disabled during or after your active duty in the military service.
TPD Lawyers can really help you out with your state’s TPD program. As you can see, there are many ways for you to receive or recover funds from your retirement benefits. However, it is important to remember that you cannot file a TPD claim without first filing a claim for retirement benefits from your employer. TPD payout from a superannuation fund will also be something that you’ll need help with. So evaluate your situation well before reaching out for help from a law firm.