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Important Notice

This booklet gives information of a general nature and is not intended to be relied on by readers as advice in any particular matter.

You should consider consulting a financial adviser regarding how this information may apply to your own circumstances.

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(sometimes called defined contribution) is a fund where the benefit a member receives is the total of defined contributions to the fund plus earnings on those contributions, minus tax, fees and other charges. Most new superannuation funds are accumulation funds. Members carry the investment risk.


an Australian Financial Services Licence is issued by the Australian Securities and Investments Commission (ASIC) under section 913B of the Corporations Act, which authorises a person who carries out a financial services business to provide financial services, including issuing of a financial product or giving of financial product advice.


can be a physical asset, such as property, or a financial asset, such as a bank balance, a security or a certificate. There are four ‘asset classes’ for investment products – cash, shares, fixed interest and property.

Australian Securities and Investments Commission (ASIC)

is the independent Australian government body, which enforces and regulates company and financial services laws in Australia to protect consumers, investors and creditors. ASIC reports to the Commonwealth Parliament, the Treasurer and the Parliamentary Secretary to the Treasurer.

Automatic acceptance

is insurance cover that provides a basic level of cover within your super fund. This means that members don’t need to provide medical details to obtain this cover.


is the amount of money in a superannuation fund or RSA which the member is entitled upon reaching preservation age and meeting certain conditions of release.


is the monies put into a superannuation fund or RSA by an employer or an individual.

Compound interest

is calculated not only on the initial principal amount, but also on the accumulated interest. Compound interest is different to simple interest which is only calculated as a percentage of the principal amount. Compounding is where the value of an investment increases exponentially over time.

Defined benefit

is a fund where the benefit is calculated based on a formula which takes into account the person's years of employment and salary at retirement. The employer or the sponsor of the fund carries the investment risk, not the member.


is an investment technique that spreads investments over different assets, asset classes or investment managers, in order to reduce the total risk of your investment portfolio. The rationale is that a portfolio of different investments will, on average, provide a higher return and lower risk than any individual investment within your portfolio.

Financial adviser

(also called a financial planner) provides individuals with advice on suitable forms of investments, including superannuation. A licensed financial adviser is obliged under the law to act in the interests of their client when making recommendations to their client.

FSG (Financial Services Guide)

is a document required by the law that is given to a retail client when they are provided a financial service by a holder of an AFSL. The document describes the financial service being given and provides details of who is giving the service.


is the increase in the prices of goods and services in the economy.


is using your money to make it grow, for example, by buying property or shares.

Investment choice

refers to the ability for a member of a super fund to select investment options from within the fund.

Investment manager

can be an individual or a firm responsible for making decisions related to any portfolio of investments in accordance with the stated investment objectives of the fund.

Investment strategy

(sometimes called an investment style) is a method of managing allocation of assets within an investment portfolio reflecting the ‘risk profile’ of the investor. For example, a “balanced” investment technique aims to balance the risk and return of the investment and is suitable for investors with a longer time horizon.

Personal contribution

is the amount that you voluntarily contribute to your superannuation fund from your take home pay. This is in addition to the compulsory contributions your employer makes on your behalf. It is sometimes called private superannuation.

Preservation age

is the age at which a member is able to access preserved benefits, so long as they meet certain conditions of release.

PDS (Product Disclosure Statement)

is a document required by the law that is given to a retail client to describe the main features of a financial product being issued or sold.

RSA (Retirement Savings Account)

is an alternative superannuation product which is offered by banks, building societies, credit unions, life insurance companies and prescribed financial institutions (RSA providers). RSAs are capital guaranteed.


is the amount of money your investment earns.


is the possibility that your investment may fall in value or earn less than expected.

Risk profile

is your tolerance to investment risk. Potential return rises with an increase in risk. Investments with low risk (lower levels of volatility or uncertainty) are usually associated with lower returns, whereas investments with higher risk are associated with potentially higher returns.

Salary sacrifice

is an arrangement between an employer and their employee where the employee sacrifices pre-tax salary or wages into their superannuation fund. Sacrificed contributions are subject to 15% tax in the fund.

SOA (Statement of Advice)

is a document required by the law that is given to a retail client when they are given personal financial advice by a holder of an AFSL or their representative.


is an investment which operates by putting aside money during your working life so you have a payment or income stream upon retirement. Superannuation funds that meet prescribed Government standards are eligible for tax concessions.

Superannuation Complaints Tribunal (SCT)

is an independent tribunal set up by the Commonwealth Government to deal with complaints about superannuation funds, annuities and deferred annuities and RSAs. For more information, visit

Superannuation Guarantee (SG)

is the minimum amount that an employer is required to contribute to superannuation on behalf of its employees. Generally, employees have 9% of their salary or wages contributed to a super fund by their employer.


is a person/company appointed under the terms of the trust deed to make sure that the plan is operated in accordance with the trust deed and in the interest of the beneficiaries, for example, superannuation trustee. Superannuation trustees owe their beneficiaries a fiduciary duty.


is the relative rate at which the price of an investment moves up or down. If the price of an investment moves up and down rapidly, it is said to have high volatility. Conversely, if the price of the investment never or rarely changes, it is said to have low volatility.

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