HOW’S YOUR UNDERSTANDING OF SUPERANNUATION JARGON? OUR TOP 40 TERMS EXPLAINED

Have you ever wondered about the meaning of technical terms (aka ‘jargon’) appearing on your superannuation statement?

For the people who work in the industry it’s all pretty straight forward. But for the vast majority of members of superannuation funds, the jargon is a mystery (much like Defence jargon is to the public).

So much so, that many members have no real understanding of their superannuation arrangements. They just hope for the best and trust that enough will be there when they need it.

That’s a pity because for an increasing number of Australians (especially ADF members, given the 16.4% per annum employer contribution, compared to 12% per annum elsewhere), superannuation may well be their biggest asset when they retire from the workforce.

Therefore, as our contribution to improving the understanding of superannuation jargon, here’s a glossary listing our TOP 40 most common terms you’re likely to encounter when reading your superannuation fund statements, making contributions, choosing investments, or planning for retirement…..

Accumulation Phase
The stage during your working life where your super account is growing through contributions and investment earnings.

After-Tax (Non-Concessional) Contributions
Personal contributions made from money on which you’ve already paid tax. Annual contribution limits apply.

Annual Statement
A summary issued by your super fund showing your balance, contributions, fees, insurance cover and investment performance over the financial year.

Beneficiary
The person (or people) who may receive your super or death benefit if you die.

Binding Death Benefit Nomination (BDBN)
A legally valid instruction directing your super fund about who should receive your death benefit.

Concessional Contributions
Contributions that are generally taxed at 15%. These include employer Super Guarantee contributions, salary sacrifice contributions, and tax-deductible personal contributions. More information at https://moneysmart.gov.au/grow-your-super/super-contributions

Contribution Caps
Annual limits on how much can be contributed to your super while receiving concessional tax treatment. More information at https://moneysmart.gov.au/grow-your-super/super-contributions

Defined Benefit Fund
A type of super fund where retirement benefits are calculated using a formula, often based on salary and years of service, rather than investment returns.

Diversification
Spreading investments across different asset types to reduce overall investment risk.

Downsizer Contribution
A special contribution that eligible older Australians can make to super after selling their home, subject to rules published by the Australian Taxation Office.

Eligible Service Date (ESD)
The date from which your superannuation service is recognised for certain benefits, especially in defined benefit schemes.

Employer Super Guarantee (SG)
The compulsory minimum super contribution employers must make for eligible employees.

Exit Fee
A fee charged when leaving a super fund. Most exit fees have been abolished.

Fees and Costs
Charges deducted by the super fund for administration, investment management, advice, and other services.

Financial Year
The Australian tax year, running from 1 July to 30 June.

Growth Assets
Investments such as shares and property that aim for higher long-term returns but usually involve greater risk.

Income Stream
Regular payments received from your super after retirement, often through an account-based pension.

Insurance Inside Super
Life insurance, Total and Permanent Disability (TPD) insurance, and Income Protection insurance that may be provided through your super fund.

Investment Option
The way your super money is invested, such as Aggressive/High Growth, Balanced, Conservative, or Cash.

Liquidity
How quickly an investment can be converted into cash without significantly affecting its value.

MySuper
A simple, low-cost default super product designed for members who do not choose their own investment option.

Non-Concessional Contributions
Another name for after-tax personal contributions made from money on which income tax has already been paid.

Notice of Intent to Claim
A form submitted to your super fund if you wish to claim a tax deduction for eligible personal super contributions.

Preservation Age
The minimum age at which you can generally access your preserved super benefits, provided you also satisfy a condition of release.

Preserved Benefits
Super money that generally cannot be accessed until a condition of release is met.

Retirement Phase
The stage where you begin drawing an income or lump sum from your super after meeting the eligibility requirements.

Roll Over
Moving your super balance from one super fund to another without withdrawing the money personally.

Salary Sacrifice
An arrangement where you agree for your employer to contribute part of your pre-tax salary into your super account.

Self-Managed Super Fund (SMSF)
A private super fund that members manage themselves. Those members, called the trustees, are responsible for complying with super and tax laws.

Spouse Contributions
Contributions made into your spouse’s super account, which may provide tax benefits if eligibility requirements are met.

Super Balance
The total value of your super account, including contributions, investment earnings, minus fees, taxes, and insurance premiums.

Super Choice
Your right to choose which eligible super fund receives your employer’s compulsory super contributions.

Super Guarantee (SG)
The compulsory employer contribution to your super under Australian law.

Tax-Free Component
The part of your super benefit that is generally not taxed when withdrawn, depending on your circumstances.

Taxable Component
The part of your super benefit that may be taxed depending on your age, the type of benefit, and how it is received.

Transition to Retirement (TTR) Pension
A type of pension that allows eligible people who have reached preservation age to access some of their super while continuing to work.

Transfer Balance Cap
The maximum amount of super that can generally be transferred into the tax-free retirement pension phase.

Trustee
The person/s or organisation legally responsible for managing a super fund in the best interests of its members.

Voluntary Contributions
Additional contributions you choose to make to your super beyond compulsory employer contributions.

Withdrawal (Benefit Payment)
Money taken out of your super after meeting a condition of release, either as a lump sum, regular income, or both.

Like to learn more?

There are many other jargon terms in the industry, but at least we’ve made a dent in the ones our members regularly ask us about. You might also like to review our ADF-specific FAQs and test your knowledge by doing our ADF-specific Super Quiz.

If you’d like to learn more about superannuation in general, read through our Superannuation page. Besides our FAQs and our Super Quiz, you find a wide range of educational material and useful links to trusted sites.

And finally, superannuation and tax are connected. If you want to read more about common tax terminology like ‘pre-tax income’ and ‘taxable income’ our income tax page has explanations, videos, FAQs and even a quiz to help you build your knowledge and understanding.