This section contains the general provisions on superannuation and describes its structure.
It also contains information about the types of superannuation schemes, eligible termination payments [2] and roll-over [2] funds.
An ETP is a payment (usually on retirement or termination of employment) which receives concessional tax treatment according to a specified set of rules. It can be transferred to funds which have been granted similar tax concessions by the government.
To roll-over, in relation to an eligible termination payment, means to invest all or part of the payment in an approved superannuation or roll-over fund, according to the requirements of section 27D of the Income Tax Assessment Act, 1936.
The primary purpose of a superannuation scheme is to provide its beneficiaries with financial resources and other benefits during their retirement. Other benefits in some schemes include death benefits for surviving dependants and disability benefits. The Australian superannuation system is intended to fund higher standards of retirement living than continuing reliance on income support pensions [2] as the primary source of retirement income. Most Australians in the workforce are now covered by superannuation schemes with membership and contributions that are either:
To provide eventual retirement benefits, both employer-sponsored and personal superannuation schemes:
The fund's trustee is responsible for implementing an appropriate investment strategy to protect the interests of beneficiaries while increasing the value of the fund's assets.
Depending on the type of fund, benefits paid on retirement or earlier departure from the fund consist of:
Income support pension is:
The superannuation law includes:
An employee is someone who is:
The accumulation phase is the period during a person's working life in which superannuation contributions are paid into a superannuation fund, with the aim of maximising the sum available for retirement through investment and tax concessions.
The draw down phase is the period, after retirement from the workforce, when a person receives regular payments of superannuation benefits from their superannuation fund or an income stream product.
The following table shows the differences in treatment of contributions and benefits between the two main types of superannuation funds [2].
Fund type |
Contributions |
Benefits |
Accumulation or defined contribution |
Defined for employers and employees [2] 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. |
The various types of employer sponsored and personal superannuation schemes include:
Description of Self Managed Superannuation Funds and Small APRA Funds
10.5.5/Description of Self Managed Superannuation Funds and Small APRA Funds [6]
More ? (go back) [7]
A superannuation fund is defined in the VEA as being:
An employee is someone who is:
This is a fund with less than five members that does not meet the criteria for an SMSF. The trustee of an SAF must be a corporate trustee approved by APRA. The trustee may receive remuneration for acting as trustee.
An ATO small superannuation account is an account kept in the name of an individual under the Small Superannuation Accounts Act 1995.
Links
[1] https://clik.dva.gov.au/user/login?destination=node/16484%23comment-form
[2] https://clik.dva.gov.au/%23
[3] https://clik.dva.gov.au/user/login?destination=node/16430%23comment-form
[4] https://clik.dva.gov.au/user/login?destination=node/16554%23comment-form
[5] https://clik.dva.gov.au/book/export/html/16484#tgt-cspol_part10_ftn589
[6] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1055-special-provisions-regarding-self-managed-superannuation-funds-and-small-apra-funds/description-self-managed-superannuation-funds-and-small-apra-funds
[7] https://clik.dva.gov.au/book/export/html/16484#ref-cspol_part10_ftn589
[8] http://clik.dva.gov.au/glossary/foreign-superannuation-fund