The two main types of superannuation funds
The following table shows the differences in treatment of contributions and benefits between the two main types of superannuation funds.
|
Fund type |
Contributions |
Benefits |
|
Accumulation or defined contribution |
Defined for employers and employees such as a percentage of salary |
Lump sum - Amount depends on performance of fund and amount of contributions. |
|
Defined benefit |
Employee's contributions defined. Employers contribute whatever additional amounts are needed to meet fund's obligations to its beneficiaries. |
Either:
Amount is usually based on final salary or average final salary (often the last 3 years) x a multiple. The multiple itself is usually a combination of length of membership and a percentage of final salary for each year of service. |
Examples of superannuation schemes
The various types of employer sponsored and personal superannuation schemes include:
- Public sector funds established for Australian and state government employees,
- Corporate funds established by medium to large private sector companies for their employees,
- Industry, or multi employer, funds for paying employer contributions to superannuation for employees covered by particular awards,
- Self-managed superannuation funds (SMSF) and small APRA funds,
More
Description of Self Managed Superannuation Funds and Small APRA Funds
10.5.5/Description of Self Managed Superannuation Funds and Small APRA Funds
- ATO Small Superannuation Accounts, designed for employer contributions which any other superannuation fund will not accept,
- Retirement savings accounts offered by banks,
- Retail funds or public offer funds, covering superannuation funds available to the general public, including employers and the self employed.