GESB - Jargon Buster

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Accumulation fund: Is a type of super fund where your account builds up over time, in a similar way when you add money to your bank account. How much your account grows, depends on the number and amount of contributions received, the length of time your super is invested, the fees and costs deducted and the overall investment performance of your chosen Investment Plan. GESB Super and West State Super are examples of accumulation style funds.

Asset Class: Is a broad category of financial assets that you can invest in. For example, Cash, Fixed Interest Securities, Property, Australian Shares and / or International Shares.

Average Contribution Rate (ACR): Is the average percentage of your salary you contributed to your Gold State Super account. (Only applicable to Gold State Super).

Auto Rebalancing: In GESB Super MY Plan and West State Super MY Plan, you can elect to automatically rebalance your MY Plan investment mix, to ensure the percentage held in each asset class remains the same over time. You can choose to rebalance your investment mix on a quarterly, half yearly or yearly basis, applied at a set date by GESB.

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Cash investments: Cash is always a short-term investment. It may take various forms ranging from a simple cash deposit held at a bank, to tradable short-term securities such as bank bills that are traded between investors on the money market. GESB invests in bank bills and other short-term to medium-term investments. Cash investments such as bank bills carry a low level of investment risk and returns are generally very stable and relatively low.

Commonwealth Government Super Co-contribution: A Commonwealth Government initiative designed to increase the retirement savings of Australians by matching some (or all) of your personal after-tax contributions - to a maximum amount of $1,000 for the financial year ending June 2010 (subject to assessable income thresholds).

Completed Months of Service: Is the number of months of full-time service you completed as a contributing Gold State Super member. This figure is then used in the calculation of your final benefit. (Only applicable to Gold State Super).

Compound (interest): Interest which is calculated on the initial capital invested AND the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the initial capital sum.

Concessional contributions: Any contributions made to a super account before tax is deducted eg, employer SG contributions or salary sacrifice contributions.

Consolidate: This is when you transfer your super from one complying superannuation fund to another complying superannuation fund. Transferring this superannuation is known as a 'rollover'.

Contributions Splitting: Allows you to split your super contributions with your spouse. A portion of your super can be split into an account held by your spouse.

Contributory Service Benefit: Is your accrued Gold State Super benefit - which includes your member, and employer contributions. (Only applicable to Gold State Super).

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Defensive asset classes: Defensive asset classes tend to be lower risk investments, but typically generate lower returns than growth assets. They are unlikely to fluctuate much in value. Defensive asset classes include Cash and Fixed Interest Securities.

Defined Benefit Scheme: This style of super scheme means that your final super benefit is determined, by applying a fixed or 'defined' formula usually based on your length of service, contributions and final salary. Members of this type of scheme are not able to choose an Investment Plan - as the benefit is defined and doesn't depend on investment returns. An example of a defined benefit scheme is Gold State Super.

Dependant: Includes your spouse (or former spouse or de facto), a child under 18 (including an adopted, step or ex-nuptial child), any person who is financially dependent on you, any person with whom you have an interdependent relationship.

Directed Termination Payment (DTP): Is the concessionally taxed lump sum payment you'll receive on termination of employment from your employer.

Diversification: Is an approach to investing that involves mixing asset classes, rather than investing only in one type of asset. It is much like the saying, 'don't put your all your eggs in one basket'.

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Eligible Persons: Is any person who has the right to obtain information about a member's super - and includes their married spouse, or a person who is intending to enter into a superannuation agreement with a member.

Equivalent Full-Time Contributory Service: Is the equivalent number of months of full-time service you completed for your Gold State Super account, and is used in the calculation of your benefit. For example, if you worked 50% part-time for 12 months, you would only have accrued the equivalent of six-months full-time months service. (Only applicable to Gold State Super).

F

Final Remuneration: Is your average salary - based on three key dates during your last two years service whilst contributing to your Gold State Super account. For part-time employees, your Final Remuneration is based on your equivalent full-time salary. Your salary includes Higher Duties Allowance (HDA) or Temporary Special Allowance (TSA) if one of these is received for at least twelve months continuously within the last two years of employment, and is received on your ceasing date - and/or one or both selection dates. Please note, each account holder's situation may be different.

G

Growth asset classes: Growth asset classes have the potential to deliver good long-term returns but the returns can also be volatile in the short-term. They are generally less stable than defensive asset classes. Growth asset classes include International Shares, Australian Shares and Property.

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Inflation: Increases in the cost of living - usually measured by the Consumer Price Index (CPI) or increase in Average Weekly Earnings (AWE).

Investment choice: This means that you are able to choose which asset class (or Investment Plan) you wish to invest your super. You are free to choose the option that best suits your personal financial situation and goals. Please note: Investment Choice is not available to Gold State Super or WA Public Sector Pension scheme account holders because your benefit is defined.

Investment grade bond: A bond whose credit quality is considered to be among the most secure by any independent bond-rating agency.

Investment returns and risk: 'Return' can be defined as the gain or loss in the value of your investment. And 'risk' is the variability of these returns. When you invest, there is a trade-off between risk and return. Generally, the higher the potential return, the higher the potential risk. Similarly, investments offering lower returns tend to have a lower level of risk.

Investment timeframe: The period of time your money will be invested. When it comes to your super investment, it is the period of time before you access your super. For example, if you're in your 20's, you'll have a much longer investment time frame than someone who is only 10 years from retirement.

M

Member Protection: All GESB Super and West State Super accounts that have an account balance of less than $1,000 as at 30 June each year are 'protected' from the erosion of their super by fees. This means that the administration fees for that financial year will not exceed the investment earnings applied to your account. However, these accounts will still be impacted by insurance premiums and, where applicable, negative investment returns. An adjustment is made to your GESB Super or West State Super account on 30 June each year where Member Protection applies. This adjustment is only reflected in your 30 June Member Statement.

MY Plan: An investment choice which allows you to choose from one or more of the asset classes available. If you choose this investment plan, you'll be able to select which asset class to invest in, and you'll manage the Investment Plan yourself on an ongoing basis.

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Non-commutable income stream: A non-commutable income stream is one that pays a regular income from your superannuation, but does not allow lump sum withdrawals.

Non-concessional contributions: A contribution that is made from your after-tax income. It includes a 'personal after-tax' contribution (as opposed to your employer's SG contributions which are made before-tax is deducted).

Notional Service: If you die or become permanently disabled, notional service is used to work out the potential number of equivalent months of service you would have worked until you turned 60. (Gold State Super only)

P

Pension: A pension is a type of income you might receive in retirement, and may involve putting your super into a product such as Retirement Income, where you would receive a regular pension payments.

Personal Contributions: These are additional contributions you can make that are over and above the compulsory SG contributions that your employer must make on behalf.

Preservation: Is required by Commonwealth Government legislation, and ensures your money is kept in super until your 'preservation age'. Until this age, you will be unable to access your super benefit (other than in certain defined circumstances).

R

Readymade Plan: An Investment Plan option managed by GESB's Investment Team with its own unique performance objectives and corresponding asset mix. Readymade Investment Plans allow you to match your investment strategy and goals. (Not applicable to Gold State Super or WA Public Sector Pension Scheme)

West State Super and Retirement Income members can choose from four Readymade Investment Plans: Growth, Balanced, Conservative and Cash.

GESB Super members can choose from five Readymade Investment Plans: Growth, Balanced Growth, Balanced Conservative and Cash.

Recognised Leave: Is leave that your employer counts as good service, e.g. parental or sick leave reasons. (Only applicable to Gold State Super).

Restricted Non-preserved: Restricted non-preserved benefits are those benefits which are not preserved, but cannot be cashed until you meet a condition of release - such as termination of employment.

Rollover: See consolidate.

S

Salary Continuance Insurance: Provides a monthly income of up to 75% of your pre-disability income (subject to a maximum amount) for up to two years, if you become disabled due to injury, sickness or disease.

Selection Date: This is the date each year we use to calculate the amount you need to contribute to Gold State Super, taking into account your chosen contribution rate. (Only applicable to Gold State Super).

Superannuation Guarantee (SG): The compulsory rate (imposed by the Commonwealth Government) of contributions your employer must make to your super. Currently the rate is set at 9%.

Superannuation Surcharge: This is an additional tax that applies where a member's 'adjusted taxable income' (normally the member's taxable income plus surchargeable contributions) is over a specified threshold in a financial year. The Commonwealth Government abolished the Superannuation Surcharge from 1 July 2005. It is important to note that the abolition of the superannuation surcharge will not affect any superannuation surcharge tax liabilities owed before 1 July 2005.

T

Transferred Contributions and Interest: If you were previously in the WA Public Sector Pension Scheme, then this component of your benefit is the contributions you made plus interest that were previously transferred from the WA Public Sector Pension Scheme (only applicable to Gold State Super).

Transferred Service Benefit: If you were previously in the WA Public Sector Pension Scheme, then this additional service benefit is based on past full-time employment given to you when you transferred from the WA Public Sector Pension Scheme (only applicable to Gold State Super).

Transition to Retirement (TTR): Allows you to access your superannuation benefits, once you have reached preservation age, in the form of a non-commutable income stream, without having to retire or reduce your hours of work.

U

Unrecognised Leave: Is leave that your employer does not count as good service, e.g. personal reasons (only applicable to Gold State Super).

Untaxed fund: An untaxed fund means that the Commonwealth Government does not tax either the contributions your employer makes on your behalf or your investment earnings. Instead of paying tax up front, tax is charged when your benefit is paid out, rolled over to a taxed super fund.

Unrestricted Non-preserved: These are benefits for which a condition of release has previously been met, and may be accessed at any time (subject to your superannuation fund's rules.)

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