This superannuation glossary helps you break through the super jargon to understand everything in the a-z of superannuation.
The terms that appear as bold italics appear elsewhere in the glossary.
15 per cent pension offset: See pension offset.
15-year exemption: An exemption that allows business owners to ignore a capital gain when they sell active business assets that they’ve held continuously for 15 years or more.
50 per cent assets-test exempt income stream: Applies to complying pensions commenced on or after 20 September 2004 and before 20 September 2007.
50 per cent CGT concession: Only 50 per cent of a capital gain upon the sale of an asset is included in assessable income when the asset is held for more than 12 months before sale.
54/11 rule: Special rule applicable to some long-term members of some public sector funds that are structured as defined benefit funds. If a member retires just before turning 55, they can access more generous retirement benefits.
100 per cent assets-test exempt income stream: Applies to complying pensions commenced before 20 September 2004.
account-based income stream (or account-based pension or annuity): A flexible retirement income stream that gives you unlimited access to your capital but no guarantees on how long the money will last.
accumulation fund: An accumulation fund, or a defined contribution fund, means that a member’s account balance equals any contributions to the fund plus earnings, less taxes and fees.
accumulation phase: The period of time that a member is amassing a superannuation investment portfolio in the anticipation of funding her retirement at some point in the future.
additional contributions: See voluntary contributions.
administration fee: A fee that covers the general running of the fund. A person pays this fee, and often other fees, annually to be a member of a given fund; some funds charge higher fees than others.
adviser service fee: Commission paid to an adviser for recommending a fund.
after-tax contributions (or non-concessional contributions): Super contributions for which an individual or employer hasn’t claimed a tax deduction.
Age Pension: Taxpayer-funded basic retirement income stream for those people who can’t fully support themselves. The single rate Age Pension is set to at least 25 per cent of Male Total Average Weekly Earnings.
Age Pension age: The age at which an Australian can claim the Age Pension, that is, 65 for men and between the ages of 64 and 65 for women.
Age Pension assets test: See Centrelink assets test.
Age Pension Bonus: See Pension Bonus Scheme.
Age Pension income test: See Centrelink income test.
Age Service Pension: A taxpayer-funded income stream payable by the Department of Veterans’ Affairs to a veteran who ‘served in operations against the enemy whilst in danger from hostile forces of the enemy’. Similar to the Age Pension but is payable to veterans five years earlier than the Age Pension.
allocated pension (or annuity): A flexible income stream that gives a person access to his capital but no guarantees on how long the income lasts. New allocated pensions not available after 19 September 2007. See account-based income stream.
annual report: A document that gives super fund members a snapshot of the benefits a member receives, details of the performance of different investment portfolios and other important fund information.
annuity: An income stream that looks the same as a pension but is payable by a life insurance company rather than a super fund.
assessable income: Ordinarily, gross income before any deductions are allowed.
asset: Any item of economic value, such as property, shares, paintings, furniture, cars or cash. In relation to investing, assets are generally known as financial assets.
asset allocation: The process to determine how much you allocate to each asset class; for example, the percentage of your portfolio to be invested in growth assets such as shares and property.
asset classes: The broad categories of particular types of assets, usually categories of financial assets. The main asset classes are cash, fixed interest investments, shares and property.
asset consultant: An organisation (or person) that advises a super fund on asset allocation. It advises trustees on the right investment strategies, how much should be invested in each asset and which investment managers should be chosen to invest the fund’s money.
assets-test exempt income stream: See complying pension.
Australian Financial Services Licence (AFSL): The licence required to provide financial advice legally. Any organisation (or person), including super funds, can’t provide financial advice unless it holds an AFSL.
Australian Prudential Regulation Authority (APRA): The regulator of financial organisations and super funds, which oversees the safeguards put in place to protect the assets of super funds.
Australian Securities and Investments Commission (ASIC): The company and financial services regulator and consumer protection regulator.
Australian Taxation Office (ATO): The ATO monitors Superannuation Guarantee, regulates self-managed superannuation funds, and collects taxes.
award superannuation: Certain employer super contributions specified in industrial awards representing 3 per cent of an employee’s wage, paid into a super fund. The unions and employers established industry funds to accept these contributions.
balanced option: An investment option that can have more than half of a fund’s assets in shares and the rest in property, fixed interest and cash.
binding nomination (or binding death benefit nomination): A binding nomination means a fund trustee must follow a member’s instructions relating to what happens to the member’s super benefit if he dies. For a nomination to be binding, a member must nominate that his death benefit be paid to one or more dependants or is to be paid to the member’s estate.
bring forward rules: Rules that allow you to bring forward up to two years of non-concessional contributions.
capital: Money, or assets, or amount available to invest.
capital gain: A profit that a fund makes on the sale of an asset.
capital gains tax (CGT): Tax payable on any profit made from selling an investment property or other type of asset.
capital gains tax (CGT) cap: Additional lifetime limit of $1.155 million (for the 2010/2011 year) in non-concessional contributions, from the disposal of qualifying small business assets.
capital gains tax (CGT) discount: A discount that a super fund can take advantage of when it sells an asset previously held for more than 12 months. The CGT discount is one-third of the capital gain, which means that the tax applicable is effectively 10 per cent.
capital gains tax (CGT) exempt component: The capital gain from the sale of active business assets that a small business owner can roll over into a super fund to finance retirement. This component represents when a person disposes of any business assets and claims the capital gains tax retirement exemption.
capital gains tax (CGT) retirement exemption: A special tax exemption for small businesses that sell business assets and put the money towards retirement. Any capital gains on the disposal of business assets up to a lifetime maximum of $500,000 are tax exempt, provided the moneys are used for retirement purposes.
cash: A low-risk asset that delivers a positive return; for example, a term deposit.
Centrelink: The Federal Government agency that administers Australia’s social security system.
Centrelink assets test: A means test that assesses the value of the assets you own against asset thresholds, and determines your eligibility for the Age Pension and other social security payments.
Centrelink income test: A means test that assesses the level of income you receive each year against income thresholds, and determines your eligibility for the Age Pension and other social security payments.
Certified Financial Planner (CFP) or CFP professional: The highest level of FPA (Financial Planning Association of Australia) membership, requiring strong tertiary qualifications and significant experience.
Co-contribution Scheme: The Federal Government puts extra money in a person’s super account if she makes non-concessional contributions. See also Super Co-contribution Scheme.
Commonwealth Seniors Health Card (CSHC): A cardholder pays a concessional price for prescriptions under the Pharmaceutical Benefits Scheme. The card is available to Australians of Age Pension age who don’t receive the Age Pension and earn less than the income threshold for the card.
commutation: The conversion of an income stream into a lump sum amount.
company fund: See employer-sponsored fund.
complying fund: See complying superannuation fund.
complying fund status: The status a super fund attains when the fund follows all the rules under the superannuation and tax laws, including complying with the fund’s trust deed.
complying income stream: See complying pension.
complying life expectancy income stream: A complying income stream that’s payable for a person’s life expectancy.
complying lifetime income stream: A lifetime income stream that satisfies specific rules and, if started before 20 September 2007, receives favourable treatment for Age Pension eligibility.
complying pension (or complying annuity): An income stream that satisfies specific rules, including being payable for a person’s life or for a person’s life expectancy, or falls within the definition of a term-allocated pension.
complying superannuation fund: A super fund that follows the rules contained in the Superannuation Industry (Supervision) Act 1993 and in the fund’s trust deed.
compound interest (or compound earnings): Interest earned on interest or, in the case of a super fund, investment returns on returns.
compulsory superannuation contributions: Employer contributions made under the Superannuation Guarantee Scheme.
concessional component: This term applied to pre-July 2007 benefits. Certain redundancy and invalidity payments that were made before 1 July 1994.
concessional contributions: Before-tax contributions that can include employer contributions, contributions made under a salary sacrifice arrangement and tax-deductible contributions by an individual.
concessional contributions cap: Before-tax contributions receive concessional tax treatment up to this cap.
concessional tax rate: A rate of tax that’s less than what a person ordinarily pays on income received during the year.
concessional tax treatment: A tax assessment that’s subject to a concessional tax rate.
conciliation: A process the Superannuation Complaints Tribunal uses that attempts to get the parties to a complaint (the trustee and member) to resolve it by mutual agreement.
condition of release: A term that means a member can take his super out of the super system after satisfying a condition, such as retiring, or becoming permanently disabled.
conservative option: Ordinarily, a low-risk investment option — a significant portion of the investments in cash and fixed interest investments.
consolidated revenue: Money collected from taxpayers to run the Australian Government.
Constitution: The document that sets out the system of fundamental principles that the Federal Parliament can make laws on. A matter not listed in Australia’s Constitution is automatically a State issue.
Consumer Price Index (CPI): A measure that tracks quarterly changes in the price of goods and services. CPI increases are also known as inflation.
contribute in specie: A term that means to transfer assets into a superannuation fund rather than contribute money.
contribution fee: Upfront fee payable to an adviser or a financial organisation on contributions an individual makes to a retail superannuation fund.
contributions segment: Ordinarily includes non-concessional contributions made from 1 July 2007.
contributions tax: A tax of 15 per cent on before-tax contributions.
corporate fund: See employer-sponsored fund.
corporate trustee: A trustee incorporated as a company (made up of directors, also known as trustee directors or the trustee board) that performs exactly the same role as a single trustee, but collectively.
CPI: See Consumer Price Index.
crediting rate: The investment return deposited into a member’s account.
crystallised segment: Super funds must calculate a crystallised segment as at 30 June 2007, representing certain pre-July 2007 benefit components. This calculation must be done by 30 June 2008.
death and disability insurance: An insurance policy that provides death cover and disability insurance.
death benefit: On the death of a member, a payment from a super fund in the form of a lump sum payment (a superannuation lump sum death benefit) or income stream (a superannuation income stream death benefit).
death benefit pension: See superannuation income stream death benefit.
death benefit termination payment: A lump sum amount payable by an employer on a member’s death. Contact the Australian Taxation Office for more information.
death benefits dependant: A spouse, or child under the age of 18, and anyone (including adult children) who has an interdependency relationship with the member. Any other person who is financially dependent on a member is also treated as a dependant.
death cover (or life insurance): An insurance product that pays a benefit when the person named in the insurance policy dies.
deemed income: Income that is based on a rate of return that’s assumed for an investment even when that rate isn’t what the investment actually returns.
deeming rates: Rates used to determine deemed income when assessing eligibility for Centrelink entitlements against the Centrelink income test.
deeming thresholds: A set level of income for single person, and for a couple, at which the deeming rate increases to a higher percentage.
default fund: Since 1 July 2005, the super fund where an employer’s super contributions must go, if an employee doesn’t choose a fund.
default investment option: The option a fund chooses for those members who fail to choose an investment option. The default option is usually based on the age and risk profile of the average member of a super fund.
defined benefit fund: A super fund that pays a final super benefit based on a formula that takes into account your final salary and the number of years that you work for your company or government department.
defined benefit pension: A term-certain (such as life expectancy) pension or lifetime pension that’s payable from a super fund .
defined contribution fund: See accumulation fund.
Department of Veterans’ Affairs (DVA) Cards: Concession cards available to recipients of the Age Service Pension. DVA cards entitle recipients to discounted prescriptions and in some cases, free medical care.
dependant: See death benefits dependant and dependant under the superannuation laws.
dependant under the superannuation laws: A spouse, or child of any age, or anyone who has an interdependency relationship with the member. Any other person who is financially dependent on a member is also treated as a dependant. Adult children, however, aren’t considered dependants under the tax laws (see death benefits dependants).
determination: A formal written decision of the Superannuation Complaints Tribunal.
disability insurance (or disability cover): An insurance product that pays the policyholder a lump sum or income stream if he becomes disabled.
diversification: Spreading risk by investing across a broad range of assets.
DIY super fund (or self-managed superannuation fund or small APRA fund): A super fund with four or fewer members.
double dipping: A longstanding but declining practice in Australia, where some retirees spend their super payout as quickly as possible and then claim the Age Pension.
eligible rollover fund: A special super fund that looks after benefits for ‘lost’ members.
eligible service period: Applicable to pre-July 2007 benefits. The period of time that a person is a member of a super fund and, in some cases, the membership period of other super funds.
employer sponsor: An employer who contributes to a super fund via an arrangement between the employer and the trustee board of the fund.
employer-sponsored fund: A super fund with membership only open to employees working for an employer sponsor.
employment termination payment: See ETP.
estate: A term that means any assets that a person owns.
ETP (employment termination payment): Certain payments from an employer to an employee upon termination of employment
ETP cap: An ETP will receive concessional tax treatment up to the ETP cap amount. The amount in excess of the ETP cap amount will be taxed at the top marginal tax rate.
Excess contributions tax: Penalty tax applicable when an individual exceeds the concessional contributions cap or the non-concessional contributions cap. The penalty tax is imposed on the individual rather than the super fund, although the tax can be deducted from the individual’s super account.
exempt amount: An amount based on the pension’s purchase price and the life expectancy of the person receiving the income stream. This amount isn’t counted when assessing whether a person satisfies the Centrelink income test.
exit fee: A fee charged by a fund upon withdrawal or transfer of a benefit.
FIDO: The investor and consumer Web site of the Australian Securities and Investments Commission.
FIDO Superannuation Calculator: The calculator enables you to forecast the effect on your super of making extra contributions, receiving contributions under the Government’s Co-contribution Scheme, paying lower fees or even stopping contributions for awhile.
financial assets: Assets that people invest in, and that a value can be placed on. They’re divided into broad categories called asset classes.
Financial Information Service (FIS): A not-for-profit financial education and information service that’s available to anyone.
financial services guide (FSG): A document that can assist you in deciding whether to use the services of an adviser. The document explains what services the adviser offers, how she operates, how the adviser gets paid (including any commissions), how she deals with customer complaints, and any interests, associations or relationships that might influence the advice the adviser gives.
Financial Services Reform Act 2001 (FSR Act): An Act of Parliament that created tougher licensing requirements and increased disclosure required by advisers and product providers such as financial organisations.
fixed interest investments (or fixed interest): Relatively low-risk investments that are effectively like term deposits, but not necessarily as secure. A person gives money to a bank, company or Government and, in return, it promises to pay the person a certain amount at set periods and repay the original amount after an agreed period of time. These investments can be traded before they’re due to be repaid.
franked dividends: Dividends that are paid by Australian companies and on which 30 per cent tax has already been paid. Recipients of these dividends are entitled to franking credits.
franking credits: Pre-paid tax on franked dividends from shares. This pre-paid tax can count towards any other tax that a super fund has to pay, reducing any tax payable on concessional contributions or capital gains.
fringe benefits: Items such as cars, low-interest loans and car parking, that individuals may include in salary packages.
fringe benefits tax: One of those johnny-come-lately taxes that the Australian Government introduced to claw back taxes lost due to workers reducing the income tax they paid by packaging fringe benefits.
fund choice: A person having a say over what type of superannuation fund he can join. Fund choice is different from investment choice, which means a person has a say over where a fund invests his super money.
Genuine redundancy payment: A payment that represents the amount that exceeds what that person who has been made redundant would have received had he voluntarily resigned in other circumstances.
Genuine redundancy tax-free amounts: The amount of the genuine redundancy payment that an individual can receiv tax-free.
governing rules: See trust deed.
gross income: Income before any tax is deducted.
growth assets: A type of asset, such as shares or property that usually delivers higher returns over the longer term than income assets, such as cash or fixed interest investments.
growth option: See balanced option.
growth pension or annuity: See term-allocated pension.
guaranteed payment period: A period of time that another person can continue to receive income payments, or a lump sum, after the person originally receiving the income stream dies.
income stream: A series of regular payments over a period of time, just like being paid wages or a salary. Most people have a choice of taking their super as an income stream or as a lump sum.
indexation: A method of adjusting thresholds or prices by linking them to a certain measure such as inflation or a rise in wages. The aim of indexation is to reflect amounts in today’s dollars.
indexed: Any income levels or rates or amounts that are adjusted annually in line with increases in average weekly earnings or inflation or another measure.
indexed income stream: See indexed pension.
indexed pension: An income stream that increases in line with inflation or increases in average weekly earnings.
industry funds: A type of fund that usually caters for workers from a particular industry, although many of these funds are now available to anyone. See public offer funds.
in specie contribution: A non-cash contribution to a super fund; for example, transferring the title of an office into the name of the fund’s trustees or transferring ownership of shares.
interdependency relationship: A close personal relationship between two people who live together, where one or both provides for the financial and domestic support, and care of the other. This definition can include parent–child relationships that don’t fall within the definition of death benefits dependant, and sibling relationships.
invalidity component: An invalidity payment known as a concessional component or a post-June 1994 invalidity component.
investing: The act of purchasing an asset or an interest in an asset.
investment choice (or member investment choice): A feature of a fund through which a member has a say over where his super fund invests his super money.
investment income tax: Tax payable by a super fund on assessable income, including a fund’s investment income.
investment manager: An investment specialist hired by a trustee to invest super money on the trustee’s behalf.
investment strategy: A formal plan identifying the super fund’s financial goals (investment objectives) and the fund member’s tolerance for risk and the investment time horizon.
licensed adviser: An adviser that has satisfied specified criteria and certain standards under the Financial Services Reform Act 2001. Only licensed advisers can call themselves a ‘financial adviser’ or a ‘financial planner’.
life expectancy (or life expectancy rate): A statistically based average of the number of years a person is expected to live. Statisticians can measure life expectancy at birth or during a person’s life.
life expectancy age: You’re expected to live to this age, on average.
life expectancy pension (or life expectancy annuity or life expectancy income stream): A guaranteed income stream for a fixed period representing a person’s life expectancy.
life insurance: See death cover.
lifetime income stream: See lifetime pension.
lifetime indexed pension (or income stream): An indexed pension payable for life. Many lifetime pensions also pay a reversionary pension.
lifetime pension (or lifetime annuity): A guaranteed income stream for a person’s lifetime and maybe the spouse’s lifetime too.
longevity risk: The chance of a person outliving her retirement savings.
lost member: A member whom a super fund is unable to contact.
Lost Members Register: A central register keeping records of lost members and their super accounts.
Lower transitional ETP cap: An ETP paid under transitional rules receive the maximum concessional tax treatment available up to this cap. Note that an ETP is not a payment from a superannuation fund. Contact the Australian Taxation Office for more information.
Low Income Tax Offset (LITO): A tax offset available to all taxpayers on lower incomes.
low-rate cap: A lifetime limit that applies to superannuation lump sums paid from a taxed benefit after the age of 55 but before the age of 60.
managed fund: A financial product where the money of many investors is pooled into one investment vehicle and the assets are invested according to a single investment strategy.
marginal tax rate: The highest rate of income tax that a person pays on income. The more a person earns, the higher the marginal tax rate.
market-linked income stream: See term-allocated pension.
market-linked pension: See term-allocated pension.
maximum superannuation contribution base: An indexed limit, up to which an employer can contribute 9 per cent of an employee’s salary. If a person’s income for Superannuation Guarantee purposes exceeds this base, the employer makes contributions on the basis of the maximum superannuation contribution base.
means testing (or means test): An assessment of any resources a person may have available to support himself. In relation to the Age Pension, whether a person already has enough money and resources to look after himself.
Medicare levy: A tax that the Federal Government imposes on Australian taxpayers to help fund the country’s public health system.
Medicare levy threshold (Seniors): If the income of an individual of Age Pension age is under this threshold, the individual is not required to pay the Medicare Levy.
member contributions statement (MCS): a special form your super fund must lodge with the Australian Taxation Office and that details all contributions to the fund.
member investment choice: See investment choice.
member protection rule: A requirement that super funds must follow and that means a super fund’s annual administration fee can’t be greater than the investment return credited to a member’s account, if the account balance is less than $1,000.
member statement: An annual summary of a member’s benefits in the super fund, including how much money is in the member’s super account and contributions made during the year.
National Information Centre on Retirement Investments (NICRI): A free confidential service funded by the Federal Government that provides independent information on planning, saving for retirement and post-retirement investing.
Newstart Allowance: The official name for unemployment benefits.
no negative equity guarantee: A mortgage contract guarantee that the debt is never going to exceed the value of your home. <ch 2, .last sidebar Lovely.>
nominated beneficiary (or nominated beneficiaries): A person (or persons) whom a fund member nominates to receive the super if the member dies. Anyone nominated must be a dependant or a person’s legal representative.
non-binding nomination: A type of nomination that helps the trustee to decide who is eligible for a death benefit, especially when a lot of people may claim to be financially dependent.
non-commutable income stream: An income stream that can’t be converted into a lump sum payment.
non-commutable lifetime pension (or annuity): A lifetime pension (or annuity) that can’t be converted to a lump sum amount.
non-concessional contributions: After-tax contributions including spouse contributions and contributions made under the Super Co-contribution Scheme.
non-concessional contributions cap: The level of non-concessional contributions that can be made each year before penalty tax is payable.
non-dependants: Individuals who aren’t dependants and, ordinarily, can only receive a death benefit when first paid to the deceased member’s estate.
non-preserved benefit: A benefit that is either restricted or unrestricted.
non-resident: Anyone entering Australia on an eligible temporary resident visa.
not-for-profit funds: Super funds such as industry funds, public sector funds and corporate funds.
online calculators: A calculator that’s accessed via the Internet, and that can be used to work out how much a person is likely to need in retirement, or how much life insurance he may need, or how much a fund charges in fees.
pension: An income stream payable from a superannuation fund.
Pension Bonus Scheme (PBS) (or Pension Bonus): A tax-free payment representing 9.4 per cent of the Age Pension if a person defers claiming the Age Pension for at least 12 months.
pension offset (or pension rebate): A 15 per cent pension tax offset is available against assessable pension income where superannuation money is used to purchase an income stream.
pension phase: The period during which a super fund pays an income stream or pension. The alternative to a pension phase is the accumulation phase.
pension valuation factor (PVF): A figure used to calculate allocated pension payments. PVFs are set by legislation and relate to a person’s age.
Pensioner Concession Card (PCC): A card that entitles Age Pensioners and other social security recipients to prescriptions at a lower cost, and discounts on public transport, rates and utility bills.
permanently disabled (or permanent disability): A term that means that the disability or illness must meet the definition of permanent incapacity under the superannuation laws.
personal contributions: A contribution that an individual under the age of 75 contributes to a complying superannuation fund. See also voluntary contributions.
Pharmaceutical Allowance: The amount payable in addition to the Age Pension, to help out pensioners when purchasing medical prescriptions.
Pharmaceutical Benefits Scheme (PBS): A Federal Government plan that subsidises selected pharmaceuticals for all Australians, and also provides concessional prices on medication for those receiving social security payments, and for most senior Australians.
platform: See wrap account.
portability: The right to request the transfer of accumulated super benefits to another super fund.
portfolio: A combination of several assets, such as a conservative, balanced or growth option, rather than a specific investment.
post-30 June 1983 component: A term applicable to pre-July 2007 benefits. This term represents that part of the super benefit generally representing employment before June 1983. A super fund, in accordance with tax laws, separates the benefit into taxed element and untaxed benefit.
post-June 1994 invalidity component: Applied to some pre-July 2007 benefits, and forms part of the tax-free component. The component was part of a benefit payment that consisted of, or was attributable to, an invalidity payment (for permanent disability) made on or after 1 July 1994, and the benefit was transferred into an individual’s current fund.
pre-July 1983 component: Applied to pre-July 2007 benefits. This term represents that part of the super benefit generally representing employment before 1 July 1983.
preservation: A restriction that prevents a member from accessing superannuation benefits until retirement or until satisfying a condition of release.
preservation age: At least 55 years of age and can be up to 60 years of age. Anyone born before 1 July 1960, has a preservation age of 55 years.
preserved (or preserving): A term that means a person’s retirement benefit is locked away until retirement, or until a condition of release is satisfied.
preserved benefit: This type of benefit must remain in a super fund until the member reaches preservation age and, in most instances, retires from the workforce.
Product Disclosure Statement (PDS): A document that explains the features of a super fund, including an explanation of the investment options available (if any), who makes these investments on behalf of the fund, the risks associated with investing in each option, the importance of getting advice and the fund’s past investment performance. A person must receive a fund’s PDS before he joins the super fund, and anyone can ask for a fund’s PDS by contacting the super fund.
property: A broad asset class encompassing office buildings, factories, shopping centres and other developments. Super funds can either invest in these investments directly or indirectly, via listed property trusts.
proportioning rules: The rules that apply to benefit payments — an income stream or lump sum must reflect the proportion of tax-free and taxable components that make up the super benefit.
public offer fund: Anyone can join a public offer fund. Financial organisations, such as banks and insurance companies, usually market these types of funds to the public in the form of retail superannuation funds. Many industry funds are now public offer funds.
public sector employees: A term that covers employees working in local government, the Commonwealth and State public services, public healthcare, and in Australia’s public universities.
public sector fund: A superannuation fund for public sector employees.
real return (or real rate of return): Investment return after taking into account the effects of inflation.
reasonable benefit limit (RBL): Abolished from 1 July 2007. The maximum amount of concessionally taxed benefits that a person can receive from the superannuation system over a lifetime.
regulated fund: One of the first things a trustee must do when setting up a super fund is to ‘elect’ for the fund to be treated as a regulated fund, which means the fund is regulated by the Superannuation Industry (Supervision) Act 1993.
residual capital value: A remaining balance of an income stream.
restricted benefit: A person’s benefit may include this type of benefit if she was a super fund member before 1 July 1999. A person can cash this benefit when she resigns from an employer who is contributing to her super fund.
restricted non-preserved benefit: This benefit is restricted until a person leaves his job. A person’s super may include this type of benefit if he was a super fund member before 1 July 1999.
retail superannuation fund: A retail managed fund that’s subject to superannuation laws and entitled to concessional tax rates on investment earnings. These funds are run for profit by financial institutions such as banks, financial planning groups and fund managers.
Retirement Income Policy (RIP): A three-pronged Government strategy intended to save Australia from a funding crisis triggered by Australia’s ageing population.
retirement income stream: An income stream that produces regular income payments during a person’s retirement.
Retirement Savings Account (RSA): A superannuation account that’s similar to a savings account that banks and other financial organisations offer.
reverse mortgage: A loan that allows a person to borrow against the equity in his home. The repayment of accumulated interest and the original loan amount is deferred until the property is sold, which can be after the person dies.
reversionary income stream (or reversionary pension or annuity): An income stream payable to someone else, for example a spouse or children, if a member dies.
risk profile: The level of risk a person is willing to tolerate.
rollover exemption: An exemption that permits a business owner to defer any capital gains tax payable on any capital gain from the sale of a business asset, provided that the business owner purchases another active business asset with the proceeds of the sale.
salary packaging: A more precise term for describing the practice of reducing your taxable income by making superannuation contributions from before-tax salary (salary sacrificing).
salary sacrifice (or salary sacrificing or salary sacrifice arrangement): Including before-tax super contributions as part of a salary package, which then reduces a person’s taxable salary and the amount of income tax payable.
same-sex couple: Two people of the same gender who are in a relationship. For the purposes of superannuation law, a live-in relationship between two women or two men.
secure site: A Web site that a person can only access with a password.
self-managed superannuation fund (or DIY super fund): A small super fund that’s regulated by the Australian Taxation Office.
Senior Australians Tax Offset (SATO): A tax offset that’s available for retirees who are of Age Pension age or older, or of Service Pension age.
Senior Concessions Allowance: A six-monthly tax-free payment to Commonwealth Seniors Health Card holders to help with regular bills such as electricity and gas, rates and motor vehicle registration fees.
Service Pension: See Age Service Pension.
Service Pension age: The age at which the Service Pension is payable to war veterans, which is five years earlier than the Age Pension. Currently, the Service Pension age is 60 for men and between 58½ and 60 for women.
share: A unit of ownership in a company that entitles a person to a share of the profits in the form of dividends and the benefit of any increase in the share price because of the strong performance of the company.
small APRA fund: A DIY super fund that’s regulated by the Australian Prudential Regulation Authority.
small super fund: A fund with four or fewer members, more popularly known as a DIY super fund.
spouse: A spouse can be a married or de facto partner of the opposite sex, or former spouse. A spouse can also be a partner of the same sex.
Statement of Advice (SOA): The written advice your licensed adviser gives you, the reasons for providing you with advice and how much your adviser gets paid, including any adviser commissions.
Super Co-contribution Scheme: The Federal Government makes matching super contributions on behalf of Australian employees who make voluntary contributions and earn less than $61,920 a year (for the 2010/2011 year).
Superannuation Co-contribution Scheme: See Super Co-contribution Scheme.
Superannuation Complaints Tribunal (SCT): An independent body established to investigate complaints about super funds that can’t be resolved by internal complaints processes.
superannuation death benefit: Benefit payable from a superannuation fund upon a member’s death.
superannuation fund: A legal structure, known as a trust run by a trustee or trustee board.
Superannuation Guarantee (SG): The official term for compulsory superannuation contributions made by employers on behalf of their employees. An employer must contribute the equivalent of 9 per cent of an employee’s salary.
superannuation income stream: A series of regular payments from a superannuation fund.
superannuation income stream death benefit: An income stream payable from a super fund on a member’s death.
Superannuation Industry (Supervision) Act 1993 (SIS Act): The statutory bible for all superannuation funds.
superannuation lump sum: A lump sum payment received from a super fund.
superannuation lump sum death benefit: A lump sum payable from a member’s super account upon the member’s death.
SuperMatch: This product enables a super fund to search the Lost Members Register on a member’s behalf.
SuperSeeker: The online search facility of the Australian Taxation Office (www.ato.gov.au/super) that allows members to locate their lost super.
taxable component: The taxable portion of a superannuation benefit. An individual pays tax on this component if she receives a benefit under the age of 60 or receives an untaxed benefit.
taxed benefit: The benefit is paid from a source where tax has been paid on the concessional contributions and earnings of the fund.
tax-effective: A term that means a person is able to take advantage of much lower rates of tax than he ordinarily pays on income.
taxed element: A person’s taxable component is usually a ‘taxed’ element, unless the person belongs to a public sector fund. See untaxed benefit.
tax file number: A unique number issued by the Australian Taxation Office to identify individuals and organisations for tracking the payment of tax and to improve the efficiency of data collection.
tax-free component: The portion of the benefit that’s tax-free. Ordinarily includes non-concessional contributions and certain pre-July 2007 benefits.
tax offset: An offset that reduces the tax payable on taxable income.
term-allocated pension (TAP) (or annuity): The income stream is market-linked, which means no income guarantee is in place — income depends on how investments perform. A TAP commenced before 20 September 2007 may also allow the recipient to receive more Age Pension.
term-certain pension (or term-certain annuity): A guaranteed income stream for a set period of time, between one year and 25 years. Recipients can choose to receive a residual capital value.
term deposit: An arrangement where a person deposits a certain amount of money with a bank or financial institution for a set period of time and an agreed rate of interest.
testamentary trust: A trust that can control who gets a person’s super and other assets, while protecting the person’s estate from business creditors and wayward children, or as a means to look after children who can’t look after themselves.
today’s dollars: A term to indicate that a benefit amount has been adjusted for inflation to represent what the future benefit can buy today.
total and permanent disability insurance: An insurance product that pays the policyholder a lump sum or income stream if she becomes permanently disabled.
transition-to-retirement income stream (or plan or pension) (TRIP): A non-commutable income stream that’s available before retirement.
trust: The legal basis for the structure of a super fund, and that gives the trustee authority to invest money on behalf of members. A trust is set up via a trust deed.
trust deed: A legal document that sets out the rules for running a super fund, and what the trustee can and can’t do.
trust relationship: The trustee’s responsibility to members of a super fund.
trustee (or trustee board or trustee directors): This individual or organisation runs a super fund.
undeducted contributions: A term previously used to describe non-concessional contributions. See non-concessional contributions.
unfunded: Relates to unfunded public sector arrangements, which means the Government hasn’t coughed up the cash for super contributions.
unrestricted: See unrestricted benefit.
unrestricted benefit: This type of benefit isn’t subject to preservation and can be accessed at any time, subject to the rules of the super fund.
unrestricted non-preserved benefit: See unrestricted benefit.
untaxed benefit (or untaxed element): A benefit that hasn’t been subject to contributions tax or earnings tax. The benefit is subject to a higher rate of tax than a taxed benefit.
untaxed fund: A super fund where the Government hasn’t yet paid in the cash for the additional employer contributions it has agreed to pay on behalf of employees.
Untaxed plan cap: The recipient of the untaxed benefit can receive concessional tax treatment of superannuation lump sum benefits up to this limit.
voluntary contributions (or personal contributions): All contributions other than compulsory superannuation contributions. Individuals under the age of 75 can make voluntary contributions to a complying superannuation fund.
wrap account (or wrap or wrap service or platform): An information collection service that bundles all of a person’s investments — direct shares, bank accounts, term deposits, managed funds. A wrap service records all transactions, prices, brokerage, any GST, dividends paid, tax payable and other similar items.