How well do you understand superannuation? It can be very confusing, with people throwing around terms like beneficiary and non-concessional contributions? Here are some standard superannuation terms that you should know about.
You can nominate a beneficiary – a person that you nominate to receive your super benefits if you pass away. They must be dependents, such as your partner, children or any other person that is financially dependent on you.
Binding and non-binding nominations
A binding nomination allows you to advise the trustee on who is to receive your superannuation benefit in the event of your death.
A non-binding nomination gives the trust of the superannuation fund the discretion to protect the interests of your beneficiaries if circumstances change. This means they can pay the benefit to one or more dependents, or to your estate, and decide what proportion they receive.
Concessional and non-concessional super contributions
Concessional contributions are made into your account from money that has not been taxed yet, so therefore receives a concessional (lower) tax rate. In contrast, non-concessional contributions are made into your super fund from after-tax income and are not taxed in your super fund.
ESG in superannuation stands for environmental, social and corporate governance funds. They are seen as sustainable funds before they focus on long-term, long-lasting investments. Often, they will choose not to invest in areas such as tobacco, gambling, alcohol, and fossil fuels. They might invest in areas of positive social impact, like affordable housing.
Your preservation is the age at which you can access your superannuation. This ranges from 55 to 60 but depends on your date of birth.
Transition to retirement
A transition to retirement strategy can be implemented once you reach your preservation age. You can access some of your super and keep working, letting you reduce your working hours without reducing your income.