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Absolute Returns are the returns that an investment achieves over a certain period of time. It differs from relative returns because it is concerned with the return of a particular investment and does not compare it to any benchmark.
Administration fee is the fee charged by a fund against a member's account to cover administration costs. Fees are typically charged as a flat fee or a percentage of assets or account balance. AustSafe Super charges $1.50/week.
AFSL is the Australian Financial Services Licence. The licence is granted by ASIC (see below) and authorizes a person who carries on a financial services business to provide financial services.
Asset Class refers to the different types or categories of investments available, such as; Australian Equities, International Equities, Property, Fixed Interest and Cash. Asset Classes can be separated into two basic types, Growth Assets and Defensive Assets.
Australian Prudential Regulation Authority (APRA) is the Federal Government body responsible for the regulation and monitoring of the insurance, superannuation and banking industries.
Australian Securities and Investments Commission (ASIC) is the Federal Government body responsible for administering and enforcing the Corporations Act and laws to protect consumers in the areas of superannuation, investments, insurance and banking.
ATO is the Australian Taxation Office.
AWOTE is Average Weekly Ordinary Time Earnings and is a measure of wage or salary levels of employees in Australia as measured by the Australian Bureau of Statistics and published monthly.
Benchmark is an index against which the performance of an investment can be measured eg S&P/ASX 200.
Beneficiary is a person who receives a benefit.
Capital Growth refers to an increase in the underlying value (or capital) of an investment.
Cash refers to money held in bank accounts, term deposits and bank bills for short periods of time. This is generally a secure way to invest, with low levels of risk. Cash investments tend to earn the lowest rate of return in the longer term.
Concessional contributions are superannuation contributions made from before-tax income for which a tax deduction can be claimed. They are also referred to as deductible contributions. Concessional contributions include employer Superannuation Guarantee (SG) contributions, additional employer contributions (salary sacrifice) and contributions made by the self-employed for which they claim a tax deduction.
Consumer Price Index (CPI) is a measure of inflation that compares the cost of living over time. CPI is measured by the Australian Bureau of Statistics.
Contribution is the money deposited into a superannuation account by either an employer or a member and does not refer to rollover or transfer amounts.
Custodian is an organisation that maintains assets on behalf of other people. Unlike a trustee (eg Austsafe Pty Ltd), which 'owns' the assets, a custodian is solely responsible for holding assets on behalf of others. Super funds use custodians to hold their various assets or investments and provide reporting and administration services.
Death benefit is the amount payable to a member's beneficiary and/or dependant in the event of the member's death.
Death insurance (death cover) is an insurance arrangement where the member's beneficiary and/or dependant receive an insured amount in the event of the member's death.
Default insurance cover is the type and level of cover automatically provided to AustSafe Super members when they first join the Fund.
Default investment choice option is a standard selection for those who do not exercise choice in their Member Investment Choice Option. Members of AustSafe Super can change from the default option at any time. Fees may apply.
Default fund is the superannuation fund into which an employer makes contributions for employees who have not chosen their own fund (exercised a choice).
Defensive Alternatives is an asset class which will invest in products managed via different methodologies to that of traditional asset classes. The alternative methodologies allocated to the investments produce returns consistent with cash investments (in nature) and have a variability of returns lower than bonds. The techniques used to achieve these returns will vary from long/short equity funds to credit enhanced yield products.
Defensive Assets are assets which tend to involve lower levels of risk, as these investments are more secure, however, can generally be expected to produce lower rates of return over the longer term. Defensive Assets include cash and fixed interest.
Dependant in relation to a person is defined under the Superannuation Industry (Supervision) Act 1993 (SIS Act) as: the spouse of a person; any child of the person; and any person who was in an interdependency relationship.
Derivatives are securities whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include equities, bonds, commodities, currencies, interest rates and market indexes.
Disablement insurance is an insurance arrangement whereby the member may be paid a benefit in the event of becoming disabled. Different funds have different arrangements, which may cover total and permanent disablement (TPD) or temporary disablement, and many give members the option of choosing their levels of cover. In many cases, insurance cover ceases shortly after an employer ceases contributions on behalf of a member. Insurance premiums are usually deducted from the member's account. For further information about insurance, refer to the AustSafe Super Member Guides.
Diversification means spreading your investments across a range of asset classes or types of investments. Diversification is a strategy for managing risk.
Earning rate is the amount applied to a member’s AustSafe Super account balance as a result of the returns earned on investments, less fees and taxes. Earning rates can be negative or positive.
Eligible rollover fund (ERF) is a fund that is eligible to receive benefits automatically rolled over from other funds. Most industry superannuation funds have procedures in place to automatically transfer member accounts with very low account balances (where a member has been inactive for a substantial period of time or when the member cannot be traced) to an ERF. This is designed to protect accounts with low balances from fee erosion.
Eligible termination payment (ETP) is any lump sum payment from a superannuation fund, an employer on termination of employment, or a rollover fund, such as an approved deposit fund (ADF). If the recipient is under age 65, the ETP can be paid into a superannuation fund, an ADF or a deferred annuity, which may defer and/or minimise tax liability.
Employee contributions (Non concessional contributions) is money contributed by the member from their after-tax salary. It is not taxed when deposited into the superannuation account provided the employee has not claimed a tax deduction for the contribution. An annual limit of $150,000 p.a. (or $450,000 in total over 3-years) applies to all voluntary (after-tax) contributions made to super up to age 65. For members aged 65-74 years, an annual contribution limit of $150,000 p.a. will apply, provided they meet the Work Test.
Employer contributions are the amount of money contributed by a member’s employer to a superannuation fund on their behalf. Employer contributions are subject to tax (currently 15% for most employees).
From 1 July 2007, an annual limit of $50,000 p.a. at a concessional tax rate of 15% applies to before tax contributions (SG and salary sacrifice amounts) made to super. Contributions above $50,000 are taxed at 46.5%.
Members aged 50 years or over from 1 July 2007 are entitled to a higher limit of $100,000 p.a. at the concessional tax rate until 1 July 2012, when the limit will revert to $50,000 p.a. regardless of age.
Equities (also known as Shares) allow the investor to own part of a company. Equities can increase or decrease in value and provide returns through dividends paid to the investor. AustSafe Super invests in both Australian and international equities. Over the longer term (investment advisors talk about 25-30 years as the ‘longer term’), Equities are expected to provide a high rate of return, but they also involve a higher level of risk than most other asset classes.
Exit fee is a fee that a fund may charge when you make a full or partial withdrawal.
Financial hardship is a term used to define a member who has been in receipt of a Commonwealth Income Support Payment for a minimum continuous period of 26 weeks (six months) and, as a result, is potentially eligible to request a withdrawal from their super account balance. Conditions apply. For further information contact AustSafe Super on 1300 131 293.
Fixed Interest investments include bonds, which are generally loans to the Government, or debentures or unsecured deposits, which are loans to companies. Bonds and debentures have a fixed rate of interest, which is agreed to at the time of investment. This type of investment has a moderate level of risk and produces a rate of return expected to be slightly greater than cash over the medium term.
Government Co-contribution is an Australian Government initiative to help Australians save for their retirement. If you are eligible and make personal contributions to a complying super fund, the Government will match you personal super contribution with a co-contribution up to certain limits. For information about limits and further information about the Co-contribution, see the fact sheet on this website or refer to the AustSafe Super Member Guide.
Growth Assets are assets which generally produce higher rates of return over the longer term but they are also subject to higher levels of risk. Growth assets include property and equities.
Growth Alternatives is a category of asset class which includes less traditional investments such as infrastructure assets, development capital and private equities. Typically, these investments will aim to be less volatile than listed equities and aim to deliver moderate to high returns over time. This category of asset class enables greater diversification and at times will target investments with higher risk.
Income is another way that investments increase in value. Income can take many forms such as dividends paid on equities or rent paid on property.
Industry superannuation fund (industry fund) is a superannuation fund which will normally cover employees in a particular industry or group of industries, or in a particular geographical area. Many industry funds have large memberships. Their economies of scale, and the fact that they are run only to profit members after the deduction of running costs and do not pay any fees or commissions to agents, make them extremely effective in keeping down costs to members. These funds have trustee boards with equal representation for employers and employees, and have been a very effective vehicle for the implementation of universal superannuation for Australian workers.
Inflation rate is the rate at which the price of goods and services rise or fall. This is usually shown as a percentage and is measured by the Consumer Price Index (CPI).
Infrastructure refers to investments in public or community facilities, such as; toll roads, bridges, airports and power stations.
Interdependent is a person with whom the member has a close personal relationship, the members lives with, the member provides them or they provide the member with financial assistance and the member provides them or they provide the members with domestic support and financial care. A member may also have an interdependent relationship if they have a close personal relationship and are unable to meet the other three requirements because the member or both of the member and the interdependent suffer from a physical, intellectual or psychiatric disability or because the member or the member and the interdependent were temporarily living apart.
Interest rate is the return on money invested, usually expressed as a percentage per annum.
Investment management fee is the fee paid by AustSafe Super to our investment managers.
Investment objectives are the goals that the investment option aims to achieve.
Investment risk is the degree to which returns fluctuate, that is, go up and down in value over time relative to a long-term average.
Investment strategy is the way assets in the various options are invested to achieve the investment objectives.
Limited cover means that a member will not be covered for any pre-existing conditions. The member will only be covered for claims arising from a sickness which first became apparent, or an injury which first occurred, on or after the date that cover last commenced, recommenced or increased for the member in the Fund.
Limited cover will apply if the member:
- is not in ‘active employment’ on the date that cover commences in AustSafe Super;
- joins AustSafe Super more than six months after commencing employment with your AustSafe Super employer; or
- has previously been paid or are entitled to be paid a TPD benefit from AustSafe Super, another superannuation fund or insurance policy.
Liquid or Liquidity refers to an asset’s ability to be converted to cash. If an investment is easily converted to cash, it is considered liquid. However, if an investment is difficult or takes a long time to convert to cash, it is considered illiquid.
Medicare levy is the 1.5% of taxable income paid by most Australian individuals, on top of normal income tax, to help pay for the public health system.
Member contribution is money contributed by the employee from their after-tax salary and is not taxed when deposited into the superannuation account provided the member has not claimed a tax deduction for the contribution. Such amounts contributed from 1 July 1999 are preserved.
Non concessional contributions are contributions made from a member’s after-tax income. The terms ‘non concessional contributions’, ‘post-tax contributions’, and ‘after-tax contributions are often used interchangeably.
Pooled Investment is an investment which has a pre-selected mix of assets which are combined in a single portfolio and are typically available to multiple investors.
Portability is the ability to stay with your super fund even if you change jobs.
Portfolio typically refers to the grouping or aggregation of investments.
Pre-disability income is the total monthly value of remuneration (excluding bonuses) received by you from your own occupation, averaged over the most recent 12 months immediately prior to becoming disabled. If you have been employed for less than 12 months prior to becoming disabled, then the total monthly value of remuneration (excluding bonuses) will be averaged over the period since you last commenced employment but subject to a minimum averaging of 3 months.
Preservation is the legal requirement that certain superannuation benefits must be retained in a superannuation or rollover fund until the member retires after reaching their preservation age. Only in very limited circumstances, including total and permanent disablement and extreme financial hardship, can preserved amounts be released before the member reaches this age. All superannuation contributions made after 30 June 1999 are considered preserved.
Preservation age is the age at which a member can gain access to preserved benefits which have built up in a super fund, approved deposit fund or retirement savings account.
Preserved benefit is that portion of a superannuation benefit that government legislation requires to be maintained, either in a super fund, approved deposit fund or retirement savings account, until certain conditions are met.
Product Disclosure Statement is an information booklet that you receive when you join a fund, which sets out the key features of that fund.
Property is an investment class which includes office buildings, factories and shopping centres. Property investments can generate rental income as well as increase (or decrease) in capital value over time. Property investments are expected to provide a higher rate of return than cash and fixed interest assets, however, they are also subject to higher levels of risk.
Risk is the likelihood of an investment’s value moving up or down. This is sometimes called ‘volatility’.
Reasonable Benefit Limit (RBL) is the maximum amount of concessionally taxed benefits a member of a super fund can receive during their lifetime.
Reserves is the part of a fund's assets that is not allocated to members' accounts when interest is credited. Among other things, reserves may be used to 'smooth' the fluctuations of returns from year to year and for other purposes allowed in the Fund's trust deed. For example, in a year of good returns, a fund might put some of the earnings into reserve, and declare a lower earning rate than AustSafe Super earned; in a year of poor returns, the reserves might be used to increase the earning rate to members.
Return is the amount the investment value changes. Returns can be positive or negative. Other terms such as ‘interest’ and ‘earnings’, may be used to describe the changing value of an investment.
Salary sacrifice (known as Concessional contributions) is an agreed arrangement between an employer and an employee whereby the employee agrees to sacrifice a part of their gross salary in exchange for a benefit, such as extra employer contributions to superannuation. Salary sacrifice contributions to superannuation are preserved. An annual contribution limit applies. See Employer Contributions for more information.
Superannuation Complaints Tribunal (SCT) is a tribunal established by the Federal Government to deal with complaints about decisions of superannuation fund trustees. The SCT requires complaints to be fully addressed through a fund's internal dispute resolution procedure before considering a complaint
Superannuation Guarantee (SG) Employer contributions are usually called Superannuation Guarantee (SG) contributions. Currently the minimum level of SG contributions is the equivalent of 9% of ordinary time earnings. If you are aged 18 years or over but under 70 years and earn more than $450 gross per month, your employer must pay SG contributions into your superannuation fund. This money is not taken out of your wage or salary; it is paid in addition to your wage or salary. An annual contribution limit applies.
Tax File Number (TFN) is a unique number issued to individuals and organisations by the Australian Taxation Office to increase the efficiency in administering tax and other Commonwealth Government systems such as income support payments.
Legally, you do not have to provide your TFN to your super fund, but you will have to pay more tax if you don’t.
Total and Permanent Disablement means you have been absent from your occupation through sickness or injury for six consecutive months and having provided proof to the satisfaction of the insurer that you are incapacitated to such an extent as to render you unlikely ever to engage in any gainful profession, trade or occupation for which you are reasonably qualified by reason of education, training or experience; or You suffer, as a result of illness or injury: the loss of the use of two limbs; or sight of both eyes; or the loss of the use of one limb (whole hand or foot) and the sight of one eye.
Transition to retirement is the period in which a person prepares to leave the workforce (full-time) and move into retirement.
Trustee is a company (or person) that has legal responsibility for the financial aspects (receipts, disbursements and investment) of funds. AustSafe Super’s Trustee is Austsafe Pty Ltd.
Trust Deed is a document that sets out the rules for the establishment and operation of a superannuation fund.
Volatility is the degree of fluctuations in an investment, for example share prices, exchange rates or interest rates. Volatility is one measure of risk.
Voluntary contributions (known as Non concessional contributions ) are Personal contributions made by a member to his or her account. These are additional to any employer contributions. An annual contributions limit applies. See Employee contributions for more details.
Waiting period when referring to AustSafe Super insurance, waiting period means the period of days you are totally disabled and that must elapse before your Income Protection benefit becomes payable. The waiting period commences on the day a medical practitioner examines you. |