Glossary

Retail Super Fund

A super fund established by a bank, life office, financial planning dealer group, or fund management group. Retail super funds are usually open to the public. Corporate master trusts are a special type of retail super fund.

Risk

Generally used to describe how much, and how often, the returns of a particular type of investment may rise and fall over time. For example, shares have a higher risk profile than bank deposits.

Rolling periods

Continuous periods of a given number of years over which investment returns are measured.

Rollover

The transfer of all or part of an ETP into a complying superannuation fund, RSA or is used to purchase an annuity from a life company or registered organisation.

Salary sacrifice

The portion of salary that is paid to a member's superannuation account before income tax is deducted. This has the effect of reducing the member's taxable income. Salary sacrifice is recognised as an employer contribution.

Share options

A contract that gives the holder the right (but not an obligation) to buy or sell a security during a given timeframe.

Sole Purpose Test

The legal test used to judge a true superannuation fund. It requires that superannuation funds be maintained for the sole purpose of providing benefits on reaching retirement or preservation age, or to member's dependents or estate on the member's death before retirement. Other benefits approved as 'ancillary purposes' under the sole purpose test include the termination of employment and disablement due to ill health. In order for a superannuation fund to qualify as a Regulated Superannuation Fund, it must comply with the sole purpose test.

Superannuation

A system where money is placed in a fund to provide for a person's retirement.

Superannuation Fund (Plan) (Scheme)

In regulatory terms, a superannuation fund is defined as 'a fund which is indefinitely continuing, and is a provident, benefit, superannuation or retirement fund; or is a public sector superannuation scheme'. It is usually governed by a trust deed and administered for the primary purpose of providing benefits for members on retirement, or alternatively, on resignation, death, disablement or other specified event. Funds complying with legislative requirements are eligible for taxation concessions.

Superannuation Guarantee (SG)

A prescribed minimum level of superannuation contributions that an employer must provide for employees. The Superannuation Guarantee (Administration) Act 1992 prescribes the levels. If the employer does not meet their obligations they incur a penalty charge, known as the SGC in addition to having to pay the appropriate contributions.

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