Jargon buster



A

ABN: Super funds have an ABN (Australian Business Number), which is used to identify the particular fund and facilitate transfers between funds. As GESB looks after multiple funds, you can confirm the ABN for your super by calling your Member Services Centre on 13 43 72.

Accumulation scheme: is a type of super fund where your account balance builds up over time from your employer contributions, your own personal contributions as well as from investment earnings. 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 performance of the underlying assets in which you are invested (e.g. the investment plan you have chosen). GESB Super and West State Super are examples of accumulation schemes.

Asset class: is a broad category of financial securities that you can invest in. Examples include Cash, Fixed Interest, Property, Australian Shares and International Shares.

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

Auto rebalancing: in GESB Super Mix Your plan and West State Super Mix Your plan, you can choose to have GESB automatically rebalance your Mix Your plan investment mix, to maintain your desired level of asset allocation. For example, if the Australian Shares component of your super outperforms other asset classes, your asset allocation will increasingly be weighted to Australian Shares over time. Auto rebalancing ensures the weight allocated to each asset class remains the same over time. You can choose to rebalance your investment mix on a quarterly, half-yearly or yearly basis.

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B

Bank bills: 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.

(Investment Grade) Bond: a bond whose credit quality is considered to be among the most secure by any independent bond-rating agency.

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C

Cash investments: Cash investments may take various forms, including a cash deposit held at a bank, term deposits or 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 generally achieve stable, although relatively low, returns.

Commonwealth Government Super Co-contribution: a co-contribution is a Commonwealth Government initiative designed to help eligible individuals increase their retirement savings by boosting their super. Find out more about the Super Co-contribution.

Completed months of service: is the number of months of full-time equivalent service you completed as a contributing Gold State Super member. This figure is used in the calculation of your Final Benefit.

Compound (interest): interest that 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 only as a percentage of the initial capital sum.

Concessional contributions: any contributions made to a super account before tax is deducted, for example employer Superannuation Guarantee contributions or salary sacrifice contributions.

Consolidate: this is when you transfer your super from one super fund to another super fund. This is also known as a rollover or roll in.

Contribution 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.

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D

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. This type of scheme is not market linked, as the benefit is defined and doesn't depend on investment market returns. Gold State Super is a defined benefit scheme.

Dependant: includes your spouse (or former spouse or de facto, including same-sex spouse), a child under 18 (including an adopted, step or ex-nuptial child), any person who is financially dependent on you, or 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 investment approach that involves investing across a range of asset classes, rather than investing in only one type of asset. Diversification suggests that the positive performance of one asset class may help mitigate the negative performance of another. It is consistent with the saying, 'don't put all your eggs in one basket'.

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E

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 service.

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F

Final Remuneration: is your average salary, based on three key dates during your last two years of service while 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 12 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 member's situation may be different.

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G

Growth asset classes: include higher risk asset classes, such as Shares and Property. Growth asset classes typically generate high returns with higher levels of volatility. 

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I

Inflation: increases in the cost of living, usually measured by the Consumer Price Index (CPI).

Investment choice/investment plan: if you are invested in GESB Super or West State Super, you can choose from a range of investment plans, each one with a different objective for target performance; from 'growth' (high risk) through to 'cash' (low risk). Investment plans each have a unique asset allocation, comprising different types of assets such as Shares, Property and Fixed Interest - so you can choose a plan that suits your particular risk profile.

Investment Grade Bond: a bond with a credit quality considered to have a relatively low level of default risk by an 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 those returns. When you invest, there is typically 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 you expect to hold your investment or portfolio. Your investment timeframe is an important factor in determining your risk profile.

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M

Member protection: on 1 July 2015, GESB removed member protection on GESB Super and West State Super accounts. This is in line with APRA regulated funds and Commonwealth provisions. Member protection protected accounts with balances less than $1,000, by preventing administration fees from being applied to what is considered a small account balance. This meant that, subject to the member protection fee of $10 per annum applying, the administration fees for any financial year would not exceed the investment earnings.

Mix Your plan: an investment option which allows you to choose from one or more of the asset classes available. Instead of choosing from one of GESB's Readymade investment plans, Mix Your plan allows you to select your own asset allocation, and manage it yourself. If you choose Mix Your plan, you can also choose to auto-rebalance.

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N

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

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

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).

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P

Pension: a pension is a type of income stream you might receive in retirement. This may involve putting your super into a product such as an allocated pension, where you would receive a regular income drawn from your super.

Personal contributions: these are contributions that you can make that are over and above the compulsory Superannuation Guarantee contributions that your employer must make on your behalf.   

Preservation: ensures your money is kept in super until your 'Commonwealth preservation age' which is a requirement by legislation. Until this age, you will be unable to access your super benefit (other than in certain defined circumstances - go to the when can you access your super page for more information on these circumstances).

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R

Readymade plan: an investment plan managed by GESB's investment team, which has a pre-determined objective for target performance; from 'growth' (high risk) through to 'cash' (low risk). Each Readymade plan has a different asset allocation.

Recognised unpaid leave: is leave that your employer counts as good service, e.g. parental or sick leave (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.

Retirement Options Service (ROS): a ROS appointment is a face-to-face meeting with one of our knowledgeable consultants to discuss your retirement options and strategies.

Risk profile: your risk profile is a description of you, based on how much risk you are willing to take when you invest your money. Investors willing to take on a lot of risk, or 'growth' investors, typically seek to maximise their longer term investment and are less worried about the possibility of a negative return. On the other hand, conservative investors typically seek more stable returns.

Rollover: see consolidate.

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S

Salary Continuance Insurance (SCI):  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 sickness or injury.

Salary sacrifice: a way to make before-tax (concessional) contributions to your super. The money you 'sacrifice' is paid directly from your salary into your super account before you pay income tax.

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 and salary information.

Simple Advice: this is an over-the-phone service provided by us to help you understand and consider your investment options and provide you with information on the different ways to contribute to your super. Simple Advice is not financial planning advice.

Standard Risk Measure: the Australian Superannuation Funds Association (ASFA) has produced a guide to enable members to compare the potential risk of various investment plans called the 'Standard Risk Measure'.

What is the Standard Risk Measure?

The Standard Risk Measure (SRM) is based on industry guidance developed to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20 year period. The SRM is not a complete assessment of all forms of investment risk. For instance, it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require in order to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the risks and potential losses associated with their chosen investment option(s).

Using the SRM guidelines, GESB estimates the risk of each investment option based on assumptions about how investment markets are forecast to perform, the likely fluctuation in returns and the relationship between asset classes. Being estimates, the outcomes cannot be guaranteed.

Risk band Risk label Estimated number of negative annual returns over any 20 year period
1 Very low Less than 0.5
2 Low 0.5 to less than 1
3 Low to medium 1 to less than 2
4 Medium 2 to less than 3
5 Medium to high 3 to less than 4
6 High 4 to less than 6
7 Very high 6 or greater

Superannuation Guarantee (SG): the compulsory rate (defined by the Commonwealth government) of contributions your employer must make to your super. Currently the rate is set at 9.5%.

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 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.

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T

Transferred Contributions and Interest: if you were previously in the WA Public Sector Pension Scheme, then this component of your benefit consists of the contributions you made plus interest that was 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 the past full-time employment accrued by you when you transferred from the WA Public Sector Pension Scheme (only applicable to Gold State Super).

Transition to Retirement: a strategy that allows you to access your super benefit once you have reached your Commonwealth preservation age, in the form of a non-commutable income stream, while you continue to work full or part time. For more information go to the Transition to Retirement page.  

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U

Unrecognised leave: is leave that your employer does not count as good service, e.g. an extended holiday (only applicable to Gold State Super).

Untaxed scheme: an untaxed scheme means that the government does not tax either concessional contributions that you or your employer make, or your investment earnings. Instead of paying tax upfront, tax is paid when your benefit is paid to you or rolled over to a taxed super fund or retirement income stream.

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 super fund's rules).

USI: A USI (Unique Superannuation Identifier) is used to facilitate transfers in and out of your account. If you need the USI for your super to arrange a transfer to another fund, please contact your Member Services Centre on 13 43 72. Please be aware that we can only accept employer contributions from WA public sector employers or packaging providers. Your employer or approved packager will already have the necessary information to contribute to your super account.

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V

Voluntary contributions: these are additional contributions you can make that are over and above the compulsory Superannuation Guarantee that your employer must make on your behalf. You can make contributions after-tax (non-concessional contributions) or before-tax (concessional contributions), also known as salary sacrificing. They can also be regular or lump-sum payments.

 

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Access your super without having to retire with a Transition to Retirement strategy.

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