Taking the mystery out of the jargon
When it comes to super, all too often it can seem to be in another language. But when you understand the language, everything starts to make a lot more sense. To help, we explain some commonly used superannuation jargon.
These are super contributions made by your employer, from your pre-tax income (salary sacrifice contribution) or any contribution for which you can claim a tax deduction.
They are generally taxed at only 15 per cent instead of your marginal tax rate.
From 1 July 2017, concessional contributions are capped at $25,000.
Industry super fund
Super funds that were originally established to cater for workers from a specific industry although they are now typically open to workers from any industry. They are not for profit organisations.
MySuper is a government initiative designed to offer simple super funds at lower costs to members. If you do not choose the investment option(s) your super is invested in, or you have not told your employer where you want your super to go, then your employer contributions will go into your employer’s default fund as a MySuper member.
MySuper funds usually have the following features:
- A single diversified investment option or a lifecycle investment option
- A minimum level of insurance cover
- Simple, easily comparable fee structure
These are super contributions made from your after-tax income. Since you’ve already paid income tax on these contributions, they are tax-free going into your super.
Like concessional contributions, there are limits on how much you can contribute. From 1 July 2017 this is $100,000 annually (or
$300,000 over three years).
Generally speaking, this is the age you have to be before you can access your super benefits; exceptions only apply in rare circumstances. For anyone born since 1 July 1964 this age is 60. For those born before 1964 the preservation age changes as shown in the following table:
|Date of birth||Your preservation age|
|Before 1 July 1960||55|
|From 1 July 1960 until 30 June 1961||56|
|From 1 July 1961 until 30 June 1962||57|
|From 1 July 1962 until 30 June 1963||58|
|From 1 July 1963 until 30 June 1964||59|
|On or after 1 July 1964||60|
Also, don’t forget that to access your benefits from your preservation age, until age 65, you must also be retired.
These are your super benefits that, in most circumstances, can’t be accessed until you meet a condition of release such as reaching your preservation age and retiring.
Retail super fund
Retail super funds are run by financial institutions, such as banks and often offer a wide variety of investment and insurance options.
This is just another way of saying that you are moving your super from one fund to another. This can be to consolidate multiple super funds into one or simply deciding to change super providers.
An amount of pre-tax salary that you decide to contribute to super instead of taking as cash salary. This is in addition to the compulsory super contributions that are made by your employer on your behalf.
Note, from 1 July 2017:
- you can only sacrifice up to $25,000 – which includes the amount your employer contributes.
- you can claim a tax deduction for non- concessional personal contributions you make.
This is the term given to the compulsory super contributions your employer makes into your super fund. Currently the Super Guarantee is 9.5% of an employee's salary.