Terms explained
ABN (Australian Business Number)
This is a unique identification number which a business is required to hold for dealings with the Australian Taxation Office (ATO) and other government agencies.
Account based pension
This enables you to draw your super in the form of regular minimum income payments based on your age, until the account is exhausted. In the event of your death, any remaining balance is usually paid to a beneficiary. For further information read our factsheet.
AFSL (Australian Financial Services Licence)
This is a licence which an organisation is required to hold in order to provide financial services.
Age Pension
An income provided by the government to retirees.
Alternatives
A category of investments which do not fit into the more traditional asset classes such as shares, bonds or cash. Alternatives can include private equity (investments in companies not listed on the stock market); and hedge funds (which can invest in a range of assets and use sophisticated trading techniques).
Annual report
A report which a super fund is required to produce detailing its financial position. To obtain REST’s annual report, go to Forms & Publications then choose ‘Annual Reports’ from the drop down menu.
Asset allocation
The mix of asset classes which an investment option holds. For example, as at 1 January 2010 the asset allocation of our ‘Shares’ option is 50 per cent overseas shares and 50 per cent Australian shares.
Asset class
A category of investment such as shares, bonds and property.
Assets test
This is used by the Australian government to determine the amount of Age Pension to which a retiree is entitled. An assets test is performed in conjunction with an income test.
Award
An award sets out the minimum terms and conditions of employment for a group of employees.
Benchmark (also known as an Index)
Measures the performance of an asset class as a whole, against which the performance of an individual investment option is compared. For example, the S&P/ASX 300 Accumulation Index is the benchmark against which our ‘Australian Shares’ option is compared.
Beneficiary
The person(s) designated by you in a non-binding nomination to receive your superannuation in the event of your death. Your chosen beneficiaries must either be your dependents or your estate.
Bonds (also known as Fixed Interest)
Bonds are one of the major asset classes and can be thought of as a loan. The issuer of the bond (normally government or a corporation) acts as a borrower, while the holder of the bond acts as a lender. The bond is issued for a set period of time and must be repaid along with interest.
Capital gain/loss
The difference between the purchase price and the sale price of an asset. For example, if an asset is bought for $100 and sold for $120, the capital gain is $20.
Cash
In the context of superannuation, cash is one of the major asset classes. Cash investments held by super funds can include (but are not limited to) bank deposits and short-term loans to governments and corporations.
Cashing restrictions
Cashing restrictions are rules preventing a superannuation benefit from being paid to the member. There are some circumstances where, although a person cannot be paid a lump sum, they can access their super benefits as an income stream.
Choice (of superannuation fund)
This is the capacity for employees to select which super fund their compulsory employer contributions are paid to. This choice is available to many but not all employees, and for more information visit the Australian Taxation Office website.
Co-contribution
Personal super contributions you make from your after-tax income could attract a top-up from the government, known as a co-contribution. For more information refer to our factsheet.
Compound returns
A return which is calculated on the original sum invested, plus any subsequent income and capital gains (or losses).
Concessional contributions
Super contributions break down into two main categories: concessional and non-concessional contributions. Concessional contributions entitle the payer to a tax deduction and include compulsory employer contributions and salary sacrifice contributions.
Concessional contributions cap
The maximum amount of concessional contributions that can be made for a member without a tax penalty being imposed.
Conditions of release
The general term used to describe the various ways by which it is possible to access superannuation benefits. The main conditions of release are:
• You have reached preservation age and are genuinely retired;
• You are aged 60 or older and leave or change your employer;
• You have reached age 65;
• You die;
• You are diagnosed with terminal illness with a life expectancy of less than 12 months;
• You become totally and permanently disabled;
• You are temporarily disabled;
• You satisfy severe financial hardship requirements (REST does not release money on this basis);
• You satisfy the Department of Human Services (DHS) that your money should be released for compassionate reasons;
• Your account balance is less than $200 and you've left the employer who paid those contributions; or
• You are an eligible temporary resident permanently departing Australia (excludes New Zealanders).
Note that there are restrictions on the amount you can access with some conditions of release.
Consumer Price Index (CPI)
A measure of inflation that compares the cost of living (i.e. goods and services) over time. CPI is calculated and reported by the Australian Bureau of Statistics.
Contributions tax
Tax of 15 per cent applied to concessional contributions (including compulsory employer contributions and salary sacrifice).
Death benefit
The money payable by a super fund to an eligible beneficiary of a member following his/her death.
Death cover (also known as life insurance)
A type of insurance. Death cover provides a lump sum or pension to your dependant(s) in the event of your death or if you become terminally ill. For more information read our factsheet.
Defensive assets
Lower risk investments which typically produce modest, steadier returns. For example, cash and bonds.
Default fund
The super fund your compulsory employer contributions are paid to, in the event that you do not or cannot exercise choice of fund.
Diversification
In investment terms, diversification refers to the spreading of risk. Our Core Strategy option – which many REST members belong to – offers diversification in that it reflects a mix of asset classes, localities and investment managers.
Eligible rollover fund (ERF)
A fund which is eligible to receive benefits automatically transferred in from other funds. Typically, a member’s money might be transferred to an ERF where:
• The account is inactive and has a small balance, and/or
• The account is deemed as lost (in that the member cannot be contacted) and has a small balance
Growth assets
Higher risk investments, prone to greater fluctuation, though offering the potential of higher long-term returns. For example, shares and property.
Inactive account
A superannuation account which is not receiving and has not received, for some time, any contributions.
Income Protection cover
A type of insurance. This pays an income in the event that you’re unable to work for a prolonged period due to injury or illness. For more information read our factsheet.
Income stream
Superannuation taken as regular income payments, rather than a lump sum.
Income test
This is used by the Australian government to determine the amount of Age Pension to which a retiree is entitled. An income test is performed in conjunction with an assets test.
Industry fund
A superannuation fund established to accept and manage super contributions for a particular industry. For example, REST was established as the super fund for retail workers. However, these days most industry funds, including REST, are open to everyone.
Inflation
The rise in the prices of goods and services often measured by the Consumer Price Index.
Interest
The return earned on money lent or invested.
Investment manager
A third party contracted by a super fund to invest members’ contributions.
Investment objective
The goals set for investment option, usually to be achieved over a set time frame.
Investment option
The pool of money your contributions are placed into, and distinguished by its investment mix. For example, many REST members place their contributions in the Core Strategy option, which is made up of a mixture of cash, bonds, property, shares and alternatives.
Investment return
The change in value of an investment over time (positive or negative). This is usually expressed as an percentage.
Investment time horizon
The suggested period of time for which an investment is held.
Lump sum
Superannuation taken as a single payment, rather than an income stream.
Member statement
A statement issued to members at least annually by a super fund. The statement generally includes the member’s account balance, contributions received over the period, investment earnings, fees and charges deducted, and details of any insurance the member holds.
Non-concessional contributions
Super contributions break down into two main categories: concessional and non-concessional contributions. Non-concessional contributions are contributions for which you have not claimed a tax deduction and which are made from your take home pay.
Non-concessional contributions cap
The maximum amount of non-concessional contributions a member can make without a tax penalty being imposed.
Ordinary time earnings
Generally, the earnings on an employee’s ordinary hours of work, upon which compulsory super contributions are calculated.
Portability
The ability which members have to transfer their super monies from one superannuation fund to another.
Preservation
The regulatory requirement that certain super benefits be maintained within the superannuation system. Preserved benefits can only be accessed once a condition of release is satisfied.
Preservation age
The age at which a member can generally access preserved super benefits. For further information read our factsheet.
Product Disclosure Statement (PDS)
A document describing the key features of a financial product, required to be produced and made available to clients. REST has a PDS for each of its four products: REST Industry Super; REST Personal; REST Pension; and Acumen.
Property
One of the major asset classes. It includes commercial, industrial and residential real estate. Property investments provide rental income and can rise and fall in value over time.
Risk
The probability that the actual return on an investment will be different to the expected return. Generally, the higher the potential return of an investment, the higher the risk.
Salary sacrifice contributions
An arrangement with your employer where money is deducted from your salary before tax and paid to your super fund. For more information read our factsheet.
Share
One of the major asset classes. Also known as a stock or equity, a share is part ownership of a company. Profits earned by the company may be distributed to shareholders (a ‘dividend’ payment). The value of shares can rise and fall over time.
Switching
Moving some or all of your superannuation balance from one investment option to another. Please refer to the ‘Application to make an investment choice’ form in the Forms & Publications section of our website.
Superannuation Guarantee (SG) contributions
Also known as ‘compulsory employer contributions’, these are the minimum level of super contributions that an employer must make for eligible employees (currently nine per cent). For more information, visit the ATO website.
Target return
The return that the trustee is aiming to achieve for an investment option. This is not a guaranteed rate of return.
Total and Permanent Disablement cover
This is a type of insurance. Provides a lump sum or, if chosen, a pension, if you’re sick or injured to the extent that you’re not expected to ever work again. For more information read our factsheet.
‘Transition to retirement’ provisions
Enables a person who has reached their preservation age to convert part or all of their superannuation to an account based pension, without the need to retire.
Trustee
In your dealings with us, ‘trustee’ refers to Retail Employees Superannuation Pty Limited.