Dictionary

This dictionary helps explain terms that are related to super, investments, retirement and insurance.
 
A Definition
Absolute return fund A fund which aims to deliver returns that are above zero in a variety of market environments. Movements in share and bond markets have minimal impact on returns. This does not mean that absolute return funds will never have a negative return, as there are still risks involved. They’re also known as hedge funds.
Accident When referring to AustralianSuper insurance, an accident is a bodily injury caused solely and directly by accidental, external and visible means, independent of any other cause.
Allocated pension A type of retirement income arrangement under which an individual invests a lump sum and then draws down a regular pension to a value that takes account of expected cash flow needs and life expectancy. Income ceases when all capital has been used up.

Accumulation fund

Also called a defined contribution fund. It is a fund in which the benefit a member receives is the total of their contributions plus or minus investment returns, less fees and tax.
Active employment
When referring to AustralianSuper insurance, active employment means: you’re employed or self-employed, and capable of doing the normal duties of your job for at least 30 hours a week (even if you’re not working 30 hours a week). The Insurer makes this assessment.
Active style management
An investment management style where the managers use their skills in selecting and trading assets seeking better performance than the index against which they are measured. Managers will vary their strategy depending on current market conditions. The investments are reviewed on a regular basis so that the manager is in a position to benefit from movements in the market or from growth in individual assets. There are two major components of active management: asset allocation and stock selection. 
Activity fees
This is a fee a member will incur directly for a requested service, such as a request to split their super contributions with a spouse. An activity fee will only be charged when an additional service is requested by the member.
Additional cover

If you have basic cover for Death and/or Total & Permanent Disablement, you can apply for additional cover in two ways:

1. Top up your basic cover amount by applying for extra (fixed) cover.  
2.  Apply for a total amount of fixed cover. If you have basic Income Protection and want more cover, you can only apply for a total amount of fixed cover.

Additional cover is also known as voluntary cover.

Adjusted taxable income  Adjusted taxable income is a special term to test an individual’s eligibility, based on income, for certain Government benefits, such as Family Tax Benefit, and Commonwealth Seniors Health Card.
Administration fee The fee charged by a fund to cover administration costs. AustralianSuper charges a low flat fee of $1.50 per week. 
Adviser service fee (Advice fees)  This is the fee you incur directly for receiving advice about your investment in AustralianSuper. This can include advice on your investment options, insurance cover, contributions to super and retirement options. The cost of advice on non-super matters can’t be deducted from your account. The fee can only be deducted from your account for services provided by a financial adviser registered with AustralianSuper, who has been provided with training by the Fund. The adviser service fee can be deducted under two situations: for initial advice: for advice received on the establishment of your account, or for once-off advice: for advice received on your account following establishment. There is no limit on the frequency with which the fee can be deducted. 
After tax money
An amount (usually income) after taxes have been subtracted. 
Age-based cover

This insurance cover design is based on your age. This means the amount of cover you have and the cost of it changes as you get older. It follows a scale where a set amount of cover is provided based on your age.   For Income Protection, the maximum payment you can receive is the lowest of: 

  • your level of cover, or 
  • 85% of your pre-disability income (the salary you earned before you were ill or injured), or
  • $30,000 a month.
  • All Ordinaries Index  An index of companies listed on the Australian Stock Exchange (ASX), which is used as a benchmark to measure the performance of the Australian sharemarket. Other indices commonly used are the S&P/ASX 200 Index and the S&P/ASX 300 Index. See also S&P/ASX 200 Index and S&P/ ASX 300 Index. 
    Alternative assets
    Unlisted investment vehicles that are ‘alternatives’ to the assets that have been included more traditionally in large institutional investment portfolios. AustralianSuper invests in alternative assets because they can play a valuable role in diversifying the investment portfolios to and so reduce overall portfolio risk and boost long-term returns to members. Alternative assets as an asset class is normally understood to include: Private Equity, Infrastructure, Absolute return funds (or hedge funds). 
    Annuity
    An arrangement where payments are made to a person at regular intervals in return for the investment of a lump sum. See also: retirement income account; deferred annuity.
    Alternative assets
    The process of combining different types of assets in selected proportions to build a portfolio. 
    Asset backing
    The value of a company's assets that underpin its issued shares. Some companies may have a strong asset backing even if the dividends they pay on shares are relatively low.
    Asset specific portfolio
    A portfolio that invests in a group of similar types of assets (eg. Australian shares).
    Assets  The financial resources in which a fund invests on behalf of its members. Among other things, these may include shares, property, cash or bonds.
    Assets test  (Also known as Age Pension assets test or Centrelink assets test.) A means test that assesses the value of the assets you own, to determine your eligibility for the Government Age Pension and other social security payments.
    Assets under management  Investment managers and superannuation funds both look after 'assets under management'. It refers to the assets in all classes that are managed.
    Association of Superannuation Funds of Australia (ASFA)
    A non-profit, non-political national organisation whose mission is to protect, promote and advance the interests of Australia's superannuation funds, their trustees and their members. 
    Asset allocation 

    Asset allocation is the application of an investment strategy that tries to balance risk versus reward by dividing an investment portfolio among the different asset classes.

    For more detailed information on asset allocation please visit our asset allocation page here.

    Asset class  Asset classes are the building blocks of your investment. Some investment options invest in one asset class, while others include a mix. We invest in the following asset classes: Australian shares, international shares, private equity, property, infrastructure, fixed interest, credit and cash.
    ATO 

    The Australian Taxation Office.

    • Visit the ATO website at www.ato.gov.au
    Applied work rating If you’re in AustralianSuper Select, the higher of your individual work rating or your category work rating will be applied, which keeps the cost of your insurance cover as low as possible. You can apply to change your individual work rating anytime. If you leave your employer you’ll be able to keep your insurance with us and your individual work rating too. 
    AUSfund

    A no cost service that helps reunite Australians with unclaimed super.

    • AUSfund website 
    Australian Financial Complaints Authority (AFCA)  An external dispute resolution scheme to deal with complaints from consumers (including superannuation fund members) about financial services and products.  It provides consumers with a fair, free and independent dispute resolution service. It is desirable that complaints have been fully addressed through a fund’s internal dispute resolution procedure before considering making a complaint to AFCA.
    Australian Prudential Regulation Authority (APRA)
    The Federal Government body responsible for the regulation and monitoring of the insurance and superannuation industries. 
    Australian Retirement Fund (ARF)
    In 2006, ARF merged with the Superannuation Trust of Australia and FinSuper to become AustralianSuper – one of the country’s largest superannuation funds. 
    Australian Securities and Investments Commission (ASIC)
    The Federal Government body responsible for administering and enforcing the Corporations Act and laws to protect consumers in the areas of superannuation, investments, insurance and banking.
    AustralianSuper Member Direct investment option
    An AustralianSuper investment option, which enables AustralianSuper members to invest their account in shares in the S&P/ASX 300 Index plus exchange traded funds (ETFs) and term deposits. The AustralianSuper Member Direct option will replace the S&P/ASX 200 option in September 2011. 
    Automatic limit 

    If you’re in AustralianSuper Select and your basic cover design for Death and/or Total & Permanent Disablement is salary-based, your basic cover amount may increase or decrease if your salary changes (as advised by your employer).

    Your basic cover can increase up to an automatic limit and you won’t have to provide detailed health information, as long as you’re in active employment and eligible for cover. Your employer has arranged the automatic limit with the Insurer and us. You can find the automatic limit in the AustralianSuper Select booklet for your employer.

    We’ll write to you if your basic cover has reached the automatic limit. To increase your basic cover above the automatic limit in line with your salary, you’ll need to provide detailed health information and be assessed by the Insurer.

    The automatic limit doesn’t apply if you have fixed cover.

    Average price
    The mean, or average price, obtained in the purchase of a large number of shares or units.
    Award
    An agreement between employers and employees - usually in a particular industry - that has been ratified by Fair Work Australia. The award will set out salary levels and other terms and conditions of employment.
    Award superannuation
    Superannuation entitlements that are determined by a Federal or State industrial award. In some cases these entitlements may provide entitlements to employees, which are above the minimum Superannuation Guarantee requirement of 9% of salary. 
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