Superannuation
Definitions of Superfunds
There are many super funds to choose from, so you don't have to pick the first one you see. There's a fund out there that's just right for you.
There are many types of super fund, each is a bit different. Knowing the different types of fund will make it easier for you to choose a fund.
The Difference between Accumulation and Defined Benefit Funds
Accumulation funds
Most Australians have their super in an accumulation fund. They are called 'accumulation' funds because your money grows or 'accumulates' over time. The value of your super depends on:
- How much money your employer contributes
- How much extra you contribute
- How much you receive in bonus contributions
- How much your fund earns from investing your super
- The amount of fees charged
- The investment option you choose
Investment profits are added to your account, and investment losses are taken out.
Defined benefit funds
Defined benefit funds are less common than accumulation funds. Most defined benefit funds are corporate or public sector funds, and many are now closed to new members.
The value of your retirement benefit is defined by the fund rules and depends on:
- How much money your employer contributes
- How much extra you contribute
- How long you have worked for your employer
- Your salary when you retire
For example, after 25 years' membership, your retirement benefit might be worth:
- Five times your final salary (as a lump sum), or
- 75% of your final salary (as a monthly payment), until you die
Extracted from www.moneysmart.gov.au