Superannuation and Retirement Applications (SRA) flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Superannuation Guarantee rate

The percentage of ordinary time earnings employers must contribute to employees' superannuation; legislated to reach 12% from 1 July 2025, applying to eligible employees aged 18-74.

Preservation age

The minimum age at which preserved superannuation benefits can be accessed on retirement; it ranges from 55 to 60 depending on date of birth, with 60 applying to those born from 1 July 1964.

MySuper product

A default superannuation product for APRA-regulated funds that must offer a single diversified investment strategy, simple fee structure, and lifecycle approach for members without investment choice.

SMSF trustee rules

A self-managed superannuation fund may have up to four members; each member must be a trustee or director of the corporate trustee, and an investment strategy must be documented.

APRA and ASIC roles

APRA regulates prudential standards for superannuation fund licensees, while ASIC regulates market conduct, disclosure, and consumer protection in the superannuation industry.

Concessional contribution cap

The annual limit on tax-deductible superannuation contributions, including employer SG, salary sacrifice, and personal deductible contributions; set at $30,000 for 2024-25 and indexed.

Non-concessional contribution cap

The annual limit on after-tax superannuation contributions, set at $120,000 for 2024-25, subject to total superannuation balance tests and the bring-forward rule.

Division 293 tax

An additional 15% tax on concessional contributions for individuals with income above $250,000, making the effective contributions tax rate 30% for those high-income earners.

Carry-forward contributions

A rule allowing unused concessional contribution cap amounts from up to five prior years to be used, provided the member's total superannuation balance is below $500,000.

Bring-forward rule

A rule permitting up to three years of non-concessional contributions ($360,000) in a single year for members under 75, with availability reduced as the total balance approaches the cap.

Downsizer contribution

A contribution of up to $300,000 per person from the sale of a main residence held at least 10 years, available from age 55 and not counted against contribution caps.

Account-based pension minimums

Minimum annual drawdown percentages from an account-based pension based on age: 4% at 55-64, 5% at 65-74, 6% at 75-79, and rising to 14% at 95 and over.

Transition to retirement pension

An income stream available from preservation age that allows limited withdrawals while still working; earnings are taxed at 15% and lump-sum commutation is restricted.

Transfer balance cap

The maximum amount that can be transferred into retirement phase where earnings are tax-exempt; set at $1.9 million for 2024-25 and indexed in $100,000 increments.

Reversionary pension

A pension where a nominated beneficiary automatically receives the income stream on the member's death, avoiding the need for the trustee to pay a death benefit.

Lifetime annuity

A retirement income product that pays a guaranteed income for the purchaser's lifetime, providing longevity protection and often receiving concessional tax treatment within superannuation.

Lump sum tax over 60

Superannuation lump sum benefits paid to a member aged 60 or over are tax-free, regardless of whether they comprise a tax-free or taxable component.

Low-rate cap

The lifetime limit on taxed superannuation lump sums paid between preservation age and 60 that are taxed at 0%; set at $235,000 for 2024-25 and indexed.

Death benefit taxation

Death benefits paid to dependants are tax-free; benefits paid to non-dependants are taxed at 15% on the taxable component, or 30% if from an untaxed source.

Tax-free versus taxable component

Superannuation benefits comprise a tax-free component (not taxed on payment) and a taxable component (taxed according to age and benefit type), determined by contributions and earnings history.

Earnings tax in retirement phase

Investment earnings supporting retirement phase income streams are exempt from tax up to the transfer balance cap; earnings above the cap are taxed at 15% on notional amounts.

Age pension eligibility age

The age at which a person can qualify for the age pension, set at 67 for those born on or after 1 July 1952, subject to residency and means testing.

Age pension income test

A means test that reduces the pension by 50 cents per dollar of income above the free area for singles, and 25 cents per dollar per person for couples.

Age pension assets test

A means test that reduces the pension by $3 per fortnight for every $1,000 of assets above the free area, with different thresholds for homeowners and non-homeowners.

Deeming rules

Rules that treat financial assets as earning a set rate (0.25% up to the threshold and 2.25% above) regardless of actual returns, used to assess income for the age pension.

Work bonus

A concession allowing the first $300 per fortnight of employment income to be disregarded for age pension income testing, with an accruable credit up to $11,800.

Sequence-of-returns risk

The risk that poor investment returns early in retirement permanently reduce portfolio value; managed through cash buffers, bucket strategies, and flexible spending.

Government co-contribution

A government payment of up to $500 to eligible low-income earners who make personal after-tax superannuation contributions, subject to income thresholds and contribution limits.

Spouse contribution offset

A tax offset of up to $540 available to a contributing spouse who makes a contribution of up to $3,000 to a low-income spouse's superannuation fund.

Statement of Advice

A document that must be provided when personal financial advice is given, disclosing the adviser's fees, associations, and the basis for the recommendations made.

Best interests duty

A legal obligation under the Corporations Act requiring advisers to act in the client's best interests, consider alternatives, and prioritise the client's objectives over other interests.

Conflicted remuneration ban

A prohibition on advisers and licensees accepting commissions or benefits from product issuers for personal advice, introduced to remove conflicts of interest in advice.