An index that tracks the price of share movements
in the major listed companies on the Australian Stock Exchange,
eg if the majority of share prices increased the all ordinaries
index may be positive.
Annual Review
The annual process whereby the Fund's
membership and benefit information is updated to reflect new salaries
and contribution paid by members since the last review, earnings
credited, etc. The annual review date for the Fund is 30 June,
and the updated information is detailed in your Annual Statement.
Member Statements are distributed usually by the first week of September.
Australian Prudential Regulation Authority (APRA)
The government body responsible for the regulation
of superannuation Funds such as the Mercy Super
Fund.
Balanced Fund
A fund that has investments across a range of asset
sectors eg Australian Shares, Overseas Shares, Property, Fixed Interest
and Cash. Due to the diversification of investments this type of
fund should produce returns with lower risk over the medium to long
term. The risk position therefore tends to be in the middle of the
range. Eg Cash funds would be less volatile, whilst the most volatile
type of fund would be those which invest totally in shares.
Beneficiary
A person for whom the Fund holds entitlements in
trust. Eg A superannuation Fund member or their dependants (see
also Dependant).
Benefit Accrual Rate
A rate usually shown as a percentage, used to calculate
your benefit under a Defined Benefit Fund. eg the Defined Benefit
Category of the Mercy Super Fund has
an Accrual Rate of 19%, based on a %5 post-tax member contribution
rate. The higher the rate, the higher your benefit.
Complying Superannuation Fund
A superannuation fund which qualifies for concessional
tax rates by complying with the operating standards set out in the
Superannuation Industry (Supervision) Act. The Mercy Super
Fund is a complying superannuation fund.
Contribution Rebate
A tax rebate available to members who satisfy certain
conditions eg with assessable incomes under a certain level (refer
annual tax pack for further information or contact local tax office
or professional adviser).
Contributions Tax
A government tax imposed on employer and deductible
employee superannuation contributions. The current rate is 15%.
Corporate Trustee
The Trustee of the superannuation Fund
is actually a company (the Mercy Super
Fund is a Corporate Trustee). The individuals who sit on the board
are also known as Directors or Trustee Directors. The company is
known as Mercy Super Pty Ltd, ACN 056047324.
Crediting Interest Rate
The Interest Rate applied to members' accounts at
the Annual Review Date. The value of this rate is determined after
obtaining advice from the Fund's Investment Consultant and taking
into account the financial position of the Fund as a whole. Consideration
will also be given to the Interest Smoothing Policy and the value
and level of Investment Reserves.
Defined Benefit Fund
A Fund where the benefits are calculated using a
formula based on years of membership, salary and Benefit Accrual
Rate (see above). Eg 10 yrs membership * $30,000 (salary) * 19%
(benefit accrual rate ) = $57,000 benefit. Different Funds have
different accrual rates.
Defined Contribution Fund (also
known as Accumulation Fund)
An alternative to the Defined Benefit
Fund and operates somewhat like a bank account. Members who belong
to this type of fund receive the total of all employer and employee
contributions plus the investment earnings (interest) on these contributions
less any taxes and expenses.
Dependant
The definition of dependant under the
Mercy Super Funds Trust Deed is as follows:
the Member's Spouse ( including a person who was the Member's
Spouse at the date of the Member's death);
any child of the Member including any child born after the Member's
death, any stepchild and any adopted child; and
any other person who in the opinion of the Trustee is at the
time of the happening of the event in respect of which the Trustee
must form the opinion (or in the case of a deceased Member was at
the time of death) wholly or partially dependent on the Member for
financial support.
Eligible Termination Payment (ETP)
A Lump sum payment made by a superannuation Fund
to a member upon leaving the Fund. Generally, if you are under
age 65, an ETP can be rolled-over to another superannuation Fund,
approved deposit fund (ADF) or deferred annuity.
Final Average Salary (FAS)
Usually used by defined benefit Funds
when calculating salary within the benefit formula. It is often
defined as the average of a number of years salary prior to retirement.
Final Average Salary within the Defined Benefit category of the
Mercy Super Fund is the average of the
two highest annual award rates salary during membership, whilst
holding a permanent position.
Final Average Salary (FAS)
Usually used by defined benefit Funds
when calculating salary within the benefit formula. It is often
defined as the average of a number of years salary prior to retirement.
Final Average Salary within the Defined Benefit category of the
Mercy Super Fund is the average of the
two highest annual award rates salary during membership, whilst
holding a permanent position.
Grant of Probate
An order of the Court that provides the
executor the authority to administer a deceased person estate under
a will.
Interest Smoothing Policy
The process of protecting members' accounts from large
fluctuations in investment performance over a period of years. Smoothing
allows for a more steady rate of return with less variations from
year to year by building the Reserve Assets for protection during
lean investment periods.
Interim Interest Rate
A rate that the Trustee uses to credit
interest to exiting members accounts between Review Dates. The rate
reflects the investment earnings of the fund between specific dates.
Interim Interest Rate
A rate that the Trustee uses to credit
interest to exiting members accounts between Review Dates. The rate
reflects the investment earnings of the fund between specific dates.
Investment Reserves
An amount of money (reserves) built up in the fund,
mainly accumulation style funds, for the purpose of smoothing the
Crediting Interest Rate from year to year. This is achieved by not
distributing the full investment earning rate when investment rates
are high. Therefore, the amount of investment earning set aside
(reserves) can then be used to increase the investment return credited
to members accounts when investment earning are low.
Leaving Service Benefit
The benefit the member is entitled to receive upon
leaving the Fund.
Letters of Administration
A document the court issues to an Administrator
to look after the arrangements of the deceased in the event where
no will exists.
Non-Preserved Benefits
The part of a benefit which is not required to be
preserved and can be taken in cash when you leave the Mercy Super Fund. There are two types of non-preserved
benefits:
Restricted Non-Preserved: non-preserved amounts that will become
available upon a cashing condition event (such as leaving employment).
Unrestricted Non-Preserved: amounts that are available to the member
now.
Ordinary Time Earnings
Usually defined as an employees award
rate of pay excluding items such as overtime, shift allowances and
penalties. Superannuation Guarantee Contributions (SGC) are usually
calculated on the Ordinary Time Earnings base of an employees salary/wages.
Pooled Superannuation Trust (PST)
An Investment Trust where assets of complying Superannuation
Funds and Approved Deposit Funds are managed by a professional
Investment Manager.
Preservation
A government requirement that certain
member benefits be maintained within the superannuation environment
until permanent retirement from the workforce after reaching preservation
age. The limited occasions in which preserved benefits can be released
include death, disablement and certain other circumstances approved
by APRA.
Pre 1 July 1983 Component
The component of an Eligible Termination
Payment which relates to a members eligible service with their employer
before 1 July 1983. 5% of this component is assessable to the taxpayer
as income in the year of payment.
Pre 1 July 1983 Component
The component of an Eligible Termination
Payment which relates to a members eligible service with their employer
before 1 July 1983. 5% of this component is assessable to the taxpayer
as income in the year of payment.
Post 30 June 1983 Component
The component of an Eligible Termination
Payment which relates to a members eligible service with their employer
after 30 June 1983. For members aged 55 and above, the government
provides a tax free threshold for this component.
Real Rate of Return
The Investment return received by the
member above the rate of inflation (Consumer Price Index (CPI))
eg Investment return 13% and inflation 5%, Real Rate of Return equals
8%.
Reasonable Benefits Limits
The concessionally taxed limit placed on the amount
of superannuation benefits that a member may receive. The portion
of a benefit received above this limit is taxed at the highest marginal
income tax rate.
Salary Sacrifice Contributions
Contributions made from pre-tax salary. These are
treated as employer contributions for tax, surcharge contributions
and preservation purposes.
Superannuation Guarantee Contributions (SGC)
The minimum superannuation support employees are entitled
to receive from their employer. The SGC rate is currently 8% of
the Ordinary Time Earnings base of an employee's salary/wage. The
SGC rate will increase to 9% effective 1 July 2002.
Superannuation Industry (Supervision) Act (SIS)
Legislation that prescribes the prudential and operating
standards for superannuation funds.
Surcharge
A superannuation tax of up to 15% on contributions
for high income earners and members who have not quoted their tax
file number.
Surcharge applies if taxable income plus surchargeable contributions
exceeds $85,242 (2001/2002). The full rate of 15% applies at $103,507
(2001/2002). The amount of surcharge tax is calculated by the Australian
Taxation Office based on individuals' income tax returns and details
of surchargeable contributions provided by superannuation funds.
Surchargeable contributions are tax deducted superannuation contributions
such as employer contributions and salary sacrifice contributions.
Taxed Element
The amount of the Post 30 June 1983 component
which has been paid from a taxed source. eg post 30 June 1983 employer
contributions which have been subject to the government's 15% contributions
tax.
Trust Deed
The legal document that the Trustee must
abide by when operating the Fund. The deed includes the rules
for calculating benefits, eligibility conditions, investment guidelines
and Trustee powers.
Undeducted Contributions
A component of an Eligible Termination Payment comprising
contributions from after-tax salary made after 30 June 1983 for
which no tax deductions were allowable. This component is not taxable
and does not count towards a person's Reasonable Benefit Limit.
Vested Benefits
The amount of benefit that the member
would be entitled to upon leaving the Fund.
Vested Benefits Index (VBI)
Tthe terminology used when calculating
the ratio of assets to liabilities, mainly for a Defined Benefit
Fund. eg VBI = Fund Assets available to meet these benefits
divided by the total value of members leaving service benefits.
Voluntary Contributions
For the Defined Benefit Category and The Contributory
Accumulation Category of the Mercy Super
Fund, voluntary contributions relates to those contributions in
excess of the standard contribution rate of 5%. For the Award/Superannuation
Guarantee Charge Contributions, voluntary contributions relates
to any contributions in addition to the mandatory employer contributions
(currently 8%).