Glossary

See Ten Year Rule.

One of the two factors which define your PSS benefit.  It is generally determined by how many years you contribute and your rate of contribution. 

An active manager has a benchmark to operate against; but the manager sets out to beat the benchmark. This is done by buying shares in different proportions from their benchmark weight. For example, again if Newscorp is 10% of the index by value, an active manager might hold 13% Newscorp in the portfolio if the manager expects Newscorp to outperform. If Newscorp is expected to underperform, then the manager might hold only 7%. So the manager actively moves away from benchmark weight in companies where the manager has conviction that the shares will either outperform or underperform.

An investment management style that aims for returns above a set benchmark, identifying mis-priced securities, which the investor trades to make a profit.

Non-traditional assets, that is, assets outside the traditional asset classes of shares, fixed interest and property. They include infrastructure assets, buy-out funds and venture capital.

The Trustee of the PSS.

We provide superannuation services and products to Australian Government employees and employers through three Schemes—the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS) and the PSS Accumulation Plan (PSSap).

An asset class is a group of financial assets that have similar investment characteristics (such as Australian shares or Australian property).

Scheme managers and investors use various indexes or other market measurements as 'benchmarks 'to judge the performance and risk of a portfolio in comparison with other investments.

An investment option which provides preserved benefit members the opportunity to have more surety of earnings for their taxed accumulation components, in exchange for the likely higher but more volatile earnings delivered by a balanced fund (the current PSS Default Fund).

When you elect to cease PSS membership, one of the following two options will apply to you:

• If you are eligible to be a member of the PSSap you will automatically join the PSSap or
• If you are not eligible to be a member of the PSSap you can elect to join a superannuation fund of your choice provided your employer agrees to make superannuation contributions on your behalf into that superannuation fund.

It is very important that you discuss with your employer your intention to cease PSS membership and the options available to you to join another superannuation scheme. Your PSS membership will not cease until you have become a member of another superannuation scheme. It is not sufficient that you elect to cease PSS membership; you must also become a member of another superannuation scheme for the cessation of your PSS membership to take effect.

The meaning of child within the Family Law Act 1975 includes children:

• born to a woman as the result of an artificial conception procedure while that woman was married to, or was the de facto partner of, another person (whether of the same sex or opposite sex);

and

• who are children of a person because of an order of a state or territory court made under a state or territory law prescribed for the purposes of 60HB of the Family Law Act 1975, giving effect to a surrogacy agreement.

Previously known as deductible contributions. These are contributions made from before-tax income.

If you have joined the PSS with one Commonwealth employer, and then join again with another Commonwealth employer.

You have the flexibility to choose a contribution rate of between 2% and 10% of your salary (as a whole percentage). Or you can choose not to contribute at all. We understand that your financial needs can vary and the PSS allows you to change your contribution rate at any time.

A pension which is indexed half yearly in line with the consumer price index.

Investing in 'debt' includes buying government bonds, fixed interest or cash investments. Debt generally offers less risk but also lower returns than shares or property.

A superannuation fund in which the benefits paid to the member are defined in advance of the member's retirement. The benefit is usually expressed as a proportion of the member's Final Average Salary (FAS). In the PSS, benefits are defined in terms of salary and the rate of contribution paid by the member.

In this style of fund, it is generally the employer rather than the member that carries the investment risk.

Most funds in Australia are accumulation or defined contribution - style funds, whereby a set contribution is paid into the fund and accumulates with investment earnings. Generally, the member carries the risk of investment performance.

This is what the PSS Fund earns on its investments, less fees and taxes. Fund earnings are applied to member’s accounts on a regular basis. Fund earnings may be positive or negative.

An eligible child, is a child of the deceased member or pensioner (including an adopted child, an ex-nuptial child, a step child, a child of the member within the meaning of the Family Law Act 1975 or any other person whom ARIA determines is to be treated as a child of the member) who:

• has not reached age 16

or

• is age 16 or more but less than age 25 and:
  • is receiving full-time education at a school, college or university

  and

  • is not ordinarily employed or self-employed

and

• immediately before the death of the member or pensioner:
  • ordinarily lived with the member (except where the child is a child of a spouse of the deceased person but not of the deceased person)
  • was, in the opinion of ARIA , wholly or substantially dependent upon the member or pensioner

  or

  • where the child is born, after the death of the member or pensioner, and would have, in the opinion of ARIA , been living with the deceased member or pensioner or so dependent on them if the person had been born before the death of the deceased.

A defined amount financed by your employer. This is the balance required to make up your total benefit after your member and productivity components have been included.

The average of your annual superannuation salaries on your three birthdays before leaving the Scheme, used as the base to calculate your retirement benefit. If you work part-time, your equivalent full-time salary is used to calculate your FAS.

Financial planning is the process of meeting your life goals through the proper management of your finances. Your life goals could include buying a home, saving for your children's education, managing debt or planning for retirement.

Financial planners use a six-step process that helps you take a 'big picture' look at where you are and where you want to be financially. Using this process they help you work out what you need to do now and in the future to reach your goals.

The six steps of the financial planning process are:

1. Gathering your financial data - such as details on your income, debt level, commitments, etc.
2. Identifying your goals.
3. Identifying any financial issues - or deficiencies between where you are now financially and where you want to be.
4. Preparing your financial plan - which will identify recommended investments and will address your attitude to risk.
5. Implementing your financial plan.
6. Reviewing and revising your plan - to ensure it stays up-to-date and relevant to the economic climate and your changing lifestyle.

Copyright: FPA 2002

As a 'full benefits' member, you are entitled to the maximum levels of invalidity and death cover available under the PSS, as well as the maximum allowable retirement and pension benefits, depending on your level of contributions, length of service and salary at the time you exit the Scheme. See also Limited benefits membership.

All PSS pensions are automatically adjusted twice each year in accordance with upwards percentage changes in the Consumer Price Index (CPI).

The use of debt to finance assets, usually expressed as the ratio of debt outstanding to gross asset value. For example, the 13% gearing of ARIA 's core unlisted property portfolio implies that $130 of debt is held against every $1,000 of property value.

An invalidity retirement pension is payable if the Trustees agree to your retirement because you suffer a permanent medical condition which is likely to stop you from working again. If you are totally and permanently incapacitated to the extent that you are unlikely to work again in any occupation for which you are reasonably qualified by education, training or experience (or could become so after retraining), you may be retired on invalidity grounds and become entitled to payment of invalidity benefits.

Partial invalidity benefits: A partial invalidity benefit is a form of income maintenance, paid as a pension when your salary is reduced because a permanent medical condition causes you to be downgraded or to work reduced hours. It is also payable if you retired on medical grounds and then returned to work in a position lower than the one you held when you were first retired on medical grounds.

Retrenchment or redundancy, when your employment is compulsorily terminated by your employer, or when you accept an offer of retrenchment or a redundancy package, or when your employment is terminated on inefficiency grounds, as a result of having lost essential qualifications or, in restricted cases, on the termination of contracts.

If a medical assessment suggests you may take excessive sick leave during the first three years of membership, you may be classified as a 'limited benefits' member. This means that benefits payable on invalidity or death in the first three years of membership are reduced.

You will be classified as a Limited Benefits member if you don't complete your CMAPS form within 14 days of joining the Scheme. See also Full Benefits membership.

A marital or couple relationship is a relationship between a member or pensioner and a person of the same sex or opposite sex who lived together as husband and wife or partners in a permanent and bona fide domestic relationship for a continuous period of at least three years at the date of death.

If the relationship had existed for less than three continuous years at the member or pensioner’s death, eligibility can still be determined where ARIA is satisfied that the person ordinarily lived with the member or pensioner as husband and wife or partners.

The maximum potential lump sum benefit allowed under the PSS rules based on the now abolished Reasonable Benefit Limits that applied to all superannuation schemes throughout Australia on 1 July 1990. Once you reach this limit, you must stop contributing to the PSS. Changes to MBLs effective from 1 January 2008 were announced in the 2007 Budget.

An amount equal to all personal contributions made by a member plus Fund earnings.

To help you keep a record of your contributions, as at 30 June each year we calculate your accrued contributions, fund earnings and potential benefits. You can also access your Member Statement from this website.

The minimum retirement age applicable to a person with respect to terms and conditions of employment.

Previously known as undeducted contributions. These are personal contributions made after June 1983 from after-tax salary.

A passive manager is required to track the performance of the relevant index as closely as possible. For example, our passive Australian equities manager, CFS, tracks the performance of the S&P/ASX300 ex Listed Property Trusts (that is the Funds benchmark for Australian equities). CFS does this by buying shares for our portfolio in the same proportion as they occur in the index. For example, if Newscorp is 10% of the index by value then our CFS portfolio will contain 10% Newscorp by value.

Aims to equal the overall annual change in an index e.g. the Dow Jones Index.

A pension payable under the Scheme's rules.

The period starting on a person's first day of membership and ending on his or her last day of membership.

Fortnightly contributions paid by a member’s employer after June 1990. This is payable from a taxed source.

Paid as a result of total and permanent incapacity and in consequence of termination of employment.

Partial income maintenance from the time any sick leave expires until an assessment is made of whether you are, to be retired on invalidity grounds.

The amount of a member’s super which relates to eligible service before 1 July 1983.

Productivity contributions paid by a member’s employer for the period of prior to July 1990. This is payable from an untaxed source.

The minimum age at which you can take a cash lump sum without any restriction.   

An employer-contributed amount, which is dependent on a member's salary, paid fortnightly, to which fund earnings are applied and forms part of any benefit payable from the PSS. The productivity component is paid from a taxed source.

Investors may buy property, such as office buildings, directly or through a property trust. Returns come from rent, property development and market increase in property values. Over the long-term, property investments have a lower risk and return than shares.

The current PSS Fund which we are now referring to as the 'default' Fund to differentiate it from the Cash Option introduced in December 2004. Unless members elect to transfer their funded accumulation components into the Cash Option they will remain in the PSS default Fund.

Under the Better Superannuation legislation, Reasonable Benefit Limits (RBL) were abolished on 1 July 2007. Even though RBLs no longer apply to contributions made after 1 July 2007, the PSS is still required to maintain RBL information.

A person who is a permanent full-time employee, a permanent part-time employee or a temporary full-time employee for at least three months. A temporary part-time employee who is employed for at least three months and has access to sick and recreation leave is also a regular member.

See Involuntary Retirement.

In superannuation terms, this is the transfer of superannuation lump sum payments, into a superannuation fund, approved deposit fund or deferred annuity in order to avoid the requirement to pay lump sum tax (if the rollover is not accessed until the minimum retirement age).

The rules for the administration of the PSS are set out in the Trust Deed.

Shares represent part-ownership of a company. They can deliver a profit through share price increases and dividends. Shares may provide greater long-term returns than other investments, though they do have greater short-term fluctuations.

An investment position that benefits from a decline in market price.

Superannuation Industries (Supervision) Regulations. The governing federal legislation covering superannuation and the superannuation industry. SIS provides the legislative basis of the Superannuation Guarantee.

The Superannuation Industry (Supervision) (SIS) Regulations introduced a number of changes from 1 July 1999. One of these changes relates to the amount of the lump sum that you can access before reaching preservation age.

The SIS upper limit is the amount you could have taken as a lump sum had you received an involuntarily retirement (retrenchment) on 30 June 1999.

Any lump sum benefit we pay you before you reach preservation age cannot exceed your SIS upper limit. If you preserve your benefit in the PSS and claim your benefit before reaching your preservation age, your lump sum cannot exceed your SIS Upper Limit. You will need to pay any balance that exceeds your SIS Upper Limit into a rollover fund.

For the purposes of the PSS Rules, a spouse is a person who had a marital or couple relationship with a member or pensioner at the time of their death.

Where a person previously had a marital or couple relationship but the relationship finished before the date of death, a spouse benefit may still be payable if:

• at the time of the deceased person’s death, the person was legally married to the deceased person

and

• they were wholly or substantially dependent upon the deceased person at the time of the deceased person’s death.

An additional super contribution paid by the Australian Government to low income earners who make after-tax contributions.

A policy introduced in July 1992 which provided that all employers are required to contribute a prescribed level of contributions on behalf of their employees to a complying superannuation fund.

The PSS Scheme exceeds the SG prescribed minimum.

A tax on certain superannuation contributions, specifically regarding higher income earners, which was introduced from 20 August 1996 and abolished from July 2005. Surcharge debts for the period are recorded on member accounts and, if not paid during membership, must be paid when a benefit is claimed.

Previously known as an Eligible Termination Payment. A Superannuation Lump Sum Payment consists of several components each with their own particular tax treatment.

Contributions are based on a percentage rate of your 'superannuation salary', which is your basic salary plus any recognised allowances. Additional payments such as overtime, accommodation or travel are not counted as 'superannuation salary'.

One of the two limits on the amount of PSS benefit you can accrue. Irrespective of your actual contribution rates, your employer's maximum share of your PSS benefit is calculated as if you had contributed at 5% for 10 years and at 10% for the balance of your membership.

If your contribution rates exceed this average, an adjustment is made to the normal Benefit Multiple calculation.

This includes concessional contributions made since 1 July 1983. It can contain taxed and untaxed amounts.

Consists of post-June 1990 productivity member contributions, Super Co-contributions and transfers from other super funds. These component were previously referred to as ‘funded’.

A reduction in tax liability. Often a tax offset is described as a percentage, for example, an offset of 10% to a pension. It is different from a tax deduction, which reduces your taxable income.

A member will be taken to be terminally ill if it is certified by two medical practitioners (at least one of these a specialist) that they are suffering from an illness which in the normal course would result in death within a period of 12 months. The new rules became effective on 12 September 2007.

The highest income tax rate. For 2007/08 the top MTR is 45%

If a member suffers from a physical or mental condition that will result in them being unlikely ever to work permanently again in a job for which he or she is reasonably qualified by education, training or experience or could be so qualified after retraining.

An Superannuation Lump Sum Payment from a superannuation scheme on termination of employment other than on the grounds of invalidity.

The deed established by the Superannuation Act 1990.

A person who holds office as a Trustee of the Board of Trustees and includes the Chairperson.

Previously unallocated earnings related to the notional fund earnings applied to a member’s account from 30 June 2003 to 30 June 2007. From 1 July 2007, ARIA will allocate fund earnings in a way that reflects actual investment performance. Allocated earnings may be positive or negative.

An investment structure whereby a number of investors commit funds to a pooled trust, which purchases and manages direct interests in property assets.

Consists of your employer component and any pre-July 1990 productivity contributions. This component was previously referred to as ‘unfunded’.