A

Administrator: the person or company responsible for the maintaining the operations of a superannuation fund or RSA.  Administration entails keeping records up to date, processing claims, paying out benefits and ensuring annual reports and member statements are distributed to members annually.

Annual Report: a document distributed annually detailing the financial position of the company and other relevant information.   All superannuation funds and ADFs (excluding self-managed superannuation funds) are required to provide an annual report to their members detailing information specified by legislation.  Information which must be disclosed in the annual report includes; a summary of the financial position, the investment objectives and strategies of the fund including; asset allocation, reserves, fees and charges; names of trustees and persons to contact for further information.  

Approved Trustee: a corporate trustee approved by APRA that satisfies certain minimum liquidity and financial conditions imposed by that regulator.  Public offer superannuation funds can only be offered by approved trustees.

Arrears: Superannuation contributions which are overdue.  Superannuation funds are required to inform members of contributions which may be arrears and actions being taken to collect the contributions. 

B

Balanced fund:  this portfolio provides a balanced exposure to and range of assets and aims to produce an appropriate mix of capital growth and income over the medium to long term.  The income from this portfolio should be relatively tax effective due to its exposure to shares and property.

Beneficiary: a person for whose benefit assets are being held. Beneficiaries of a superannuation fund are the members and their dependants.

Benefit: the amount of money in a superannuation fund or RSA, that a fund member or RSA holder is entitled to.

C

Capital growth:  the market value of an asset increases.  The term is also used when referring to investment profiles, in this case the fund would invest primarily in assets such as shares and property, which have the potential to increase in value.

Closed fund:  In regard to superannuation, the fund is no longer accepting new members.  In regards to an investment fund, the fund is no longer accepting new investors, or additional deposits from existing investors.

Conciliation:  the process of bringing two disputing parties together to seek an agreed outcome, with the assistance of a neutral third party.

Contributions:  regular or one off payments to a superannuation fund.

Contributions tax:  the income tax charged on assessable contributions received by superannuation funds or RSA providers.  Contributions tax is currently 15% and is payable on all tax-deductible member contributions and all employer contributions.

Corporate fund:  a superannuation fund established to service and benefit the employees of a specific company or group of companies.

Custodian:  in regards to a superannuation fund, the custodian holds and has title to the fund assets.  A custodian is usually a company.

D

Defacto: describes a relationship in which a couple live together in a bona fide domestic situation but are not legally married. The individuals in the relationship can be called a de facto spouse or a de facto husband/wife.

Dependant: The spouse, child or any other person who, in the opinion of the superannuation provider, financially relies on that member or RSA holder. Superannuation Industry Supervision and RSA legislation defines dependant as the spouse and any child of the member. For benefits tax purposes a dependant must be under 18 years of age or financially dependent. A child includes a stepchild, an adopted child or one born within or outside marriage. Spouse includes legally married or de facto spouse. From 1 July 2004 a dependent also includes a person who was in an interdependency relationship with the deceased. See also de facto, interdependency relationship.

E

Eligible Rollover Fund:  (ERF), a superannuation fund or approved deposit fund which is eligible to receive benefits rolled over from other funds. 

ERF (Eligible rollover fund):  a superannuation fund or approved deposit fund which is eligible to receive benefits rolled over from other funds. 

Exit fee:  a charge levied when assets are withdrawn from the superannuation fund or RSA.

I

Interdependency Relationship: generally two persons can be considered to have an interdependency relationship if:

* they have a close personal relationship, and
* they live together, and
* one or each of them provides the other with financial support; and
* one or each of them provides the other with domestic support and personal care.

A person in an interdependency relationship is considered to be a dependent for superannuation purposes and may be paid a concessionally taxed superannuation benefit on the death of the other party to the relationship.

L

Long term:  generally speaking, long term is approximately five years or more.

M

Management fee:  a fee charged by the superannuation fund's management for services provided.

Medicare Levy: the levy expressed as a percentage of taxable income that is paid by most Australian in addition to normal tax to help pay for the public health system. Currently it is 1.5% of taxable income.

Member benefit statement: applies to a particular member and contains details about the total vested benefit, preserved and non-preserved portions, death and disablement benefits and any insurance amounts.  It also includes totals of contributions during the year and fees, taxes and group life charges which were deducted from the benefit amount.  The member benefit statement is required under legislation, to be sent to all superannuation fund members at least annually.

P

Personal contributions:  contributions made to a superannuation fund or RSA by a member from after-tax income.

Preservation age:  the age at which a permanently retired member can gain access to the preserved superannuation benefit.

Product disclosure statement: abbrev. PDS.  A document required under FSRA that is given to a retail client to describe the key features of a financial product being issued or sold. For superannuation funds, the PDS requirements are prescribed in the Corporations Act regulations, in particular, Schedule 10B. The PDS replaced the KFS and member booklets as the main up-front disclosure document for superannuation funds.

Protected member: a member/RSA holder whose benefits total less than $1000 and contain mandated employer financed benefits. See also mandated employer financed benefits, protection of members?/RSA holders? benefits

R

Reasonable Benefit Limit (RBL): The maximum level of superannuation benefit that an individual can receive over a lifetime on a concessionally taxed basis. The RBL is much more generous if the benefit is taken as a pension than as a lump sum, due to the Government policy to encourage retirees to finance their own retirement through an income stream.

Rollover:  The transfer of a benefit or Eligible Termination Payment (ETP) into a superannuation fund, ADF or deferred annuity.

S

Short term: In general, in investment terms, it means up to one year.

Spouse contributions:  These are made by a fund member on behalf of his/her spouse.  The introduction of this law required changes to many trust deeds as trustees could previously only accept contributions for employees of participating employers.  Consequently, most deeds were changed to allow spouses to join the fund and trustees to accept contributions on behalf of those spouses.  Spouse contributions are fully preserved and fully vested.

Superannuation:  A means of setting aside funds during working life for use in retirement. 

Superannuation Complaints Tribunal:  A tribunal established by the Federal Government to deal with complaints about decisions of superannuation fund trustees. The tribunal requires complaints to be fully addressed through the fund's internal dispute resolution procedure before considering a complaint.

T

Taxable income:  Assessable income minus any allowable deductions, calculated for the purpose of determining gross tax payable. 

Total And Permanent Disablement: (TPD) a condition for which many funds provide insurance cover. The definition of TPD may vary slightly from Fund to Fund, but generally requires that, for payment of the benefit, the trustee must be satisfied that ?the member will never again be able to work in any occupation to which they may be suited by reason of their training, education or experience?. It is a frequent misunderstanding of members that they would be covered if they are unable to return to the position which they held before they became disabled, but the test is normally much stricter than this.

Trust Deed:  A trust deed is a legal document that sets out the Trust's constitution, objectives, purpose and also includes the rights, duties and responsibilities of the Trustee and beneficiaries if any (ie: both members and their dependants). The trust deed is a vital document as action taken by Trustees which is contrary to its terms can be challenged by other parties such as the beneficiaries. 

Trustee:  A trustee is a person or company appointed under Trust Deed to:

1. act as a legal representative of the trust
2. hold legal title to trust assets for the beneficiaries

and

1. make sure that the trust is conducted in

accordance with the provisions of the trust deed and relevant legislation.

Trustee fee:  An annual fee paid for the services of a professional trustee, usually expressed as a percentage of assets under management.