Taking the mystery out of the jargon

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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.

Concessional contributions

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 are they are now typically open to workers from any industry. They are not for profit organisations.

MySuper

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

Non-concessional contributions

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).

Preservation age

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 birthYour 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.

Preserved benefits

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

Unlike industry super funds, retail super funds are run by financial institutions such as banks and anyone can join.

Rollover

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.

Salary sacrifice

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 guarantee 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.

Super Guarantee

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.