Allocated annuity - a type of income stream offered by life insurance companies that converts a lump sum amount to a series of regular payments comprising both capital and earnings.
Allocated pension - a type of income stream offered by providers other than life insurance companies that converts a lump sum amount to a series of regular payments comprising both capital and earnings.
Annuity - a type of income stream that converts a lump sum amount to a series of guaranteed regular payments.
Beneficiary - a person who is receiving or is entitled to receive a benefit from investment products or insurance policies.
Capital Gains Tax - refers to the tax that you pay on any capital gain made when you sell certain assets. It forms part of your income tax therefore is taxed at your marginal tax rate. You are taxed on the net gain which is the gain less any CGT discount available. Information on CGT can be found at www.ato.gov.au.
Commutation - the conversion of the whole or part of an income stream such as a pension or annuity back to a lump sum. The payment is treated as an eligible termination payment if the income stream was originally bought with superannuation money.
Debenture - a type of fixed interest investment available to individuals where a company borrows in return for fixed rate of return.
Deferred annuity - an annuity where the payments are not paid until a specific time frame has passed or event has occurred.
Defined Benefit Superannuation - a superannuation fund where the final benefit is determined by a prescribed formula often taking into account factors such as the member’s salary, amount of contributions made and the number of years of employment the member has served.
Eligible Service Period- refers to the period of time used to calculate the pre July 83 and post June 83 components of an eligible termination payment for tax purposes. The period relates to the time the individual has been employed or was a member of the fund. For employer sponsored funds the commencement date of employment is taken when calculating superannuation components.
Eligible Termination Payment - a payment received upon resignation, retirement or retrenchment involving superannuation entitlements or when money is drawn out of superannuation as a lump sum.
Fixed Interest - an investment that is set for a set period of time at a fixed interest rate for that period.
Fluctuations - refers to the rise and fall in value an investment can experience.
Growth - refers to investments which may have the ability to increase in value.
Inflation - The reduction in the purchasing power of money due to the increase cost of goods and services.
Liability - an amount that is owed or commonly referred to as a debt.
Liquidity - The ability to convert assets into cash.
Lump Sum - an amount or benefit taken as a single payment as opposed to regular payments.
Managed Investments - an investment that pools the funds of individual investors into a single fund and investment decisions are then made by a fund manager on behalf of the individual investors.
Negative Gearing - the process where a person borrows money to invest and incurs costs that are greater than the income received from the investment which can be claimed as a deduction against other income received.
Pension - a series of regular payments producing an income stream. This can be paid from superannuation funds, employers and in the form of government income support.
Retirement Savings Account - an account based, low cost superannuation fund provided by banks, credit unions, building societies and other providers.
Superannuation - an investment that accumulates funds in order to provide for retirement.
Superannuation guarantee - A minimum amount that in certain circumstances employers are required to contribute to the employee’s superannuation. More information can be found at the ATO www.ato.gov.au.
Undeducted contributions - money paid into superannuation by the members where no deductions have been claimed.