Any industry comes with its fair share of jargon. Some of them are interesting and others outright weird. Yet, once deciphered, they all come out straight and meaningful. Let us take up a few Superannuation terms within the ambit of this write-up.
Industry funds
These are funds which started as an aid to employees within a specific industry and were lapped up by those who jumped frequently from one job to another (thereby changing their employers) within the same industry. Presently, they work more like retail funds and in being so; they allow individuals from any industry to take part.
Sole Purpose test
It implies that the Self-managed Superannuation Fund is meant entirely for the purpose of providing retiring benefits to the member and any other use, whatsoever, shall be of minimal degree, if at all.
Salary Sacrifice
This one implies a sacrifice of cash bonus made by an employee; an amount which is then directed to the Superannuation kitty, above and beyond the compulsory arrangement.
Super pension
This implies a pension made from the proceeds of a super fund and one that is payable on a monthly basis. These work out as an alternative arrangement as against lump sum payments on offer in the event of retirement.
Rollover
This indicates your right to transfer in part or in full the benefits of a specific Super fund to other Super funds of your choice. This is largely done to combine various Super funds into one.
Default option
This is a name by which the investment option given to you as a default in retail or industry fund goes. Of course, you can choose not to go with the default option and choose your investment strategy (though the degree of flexibility is nowhere near SMSF).
