Frequently Asked Questions

Glossary of Retirement Terms

Q. Annuities

A stream of regular payments purchased from a life insurance company using superannuation money, or in some cases, other savings to provide an income. Payment amounts depend on the lump sum, expected future investment return, frequency of payments, expenses and the life expectancy of the individual purchaser or the term, if it is a fixed-term annuity.

Q. Beneficiary

A beneficiary is someone who receives a payment from a superannuation fund, who can either be the member or his/her beneficiaries dependants in the event of death.

Q. Commutation and non-commutable

Commutation is the technical term used to describe withdrawing some or all of your money in a retirement income stream in the form of a lump sum. Some retirement income streams do not allow you to withdraw money, which is known as non-commutable.

Q. 'Complying' income streams

'Complying' income streams were retirement income stream products (that is, pensions or annuities) that met certain requirements relevant before 20 September 2007. Given the changes, it is possible that complying income stream products will disappear from the market after 20 September 2007, as they will no longer have any use. However, existing holders of complying income streams will not be able to commute their benefits and transfer to a new pension.

Q. Eligible termination payment (ETP)

The ETP system was abolished on 1 July 2007. Before 1 July 2007 ETP related to the system for taxing superannuation and other benefits.

Q. Investment choice

Investment choice is when you choose how the money in your retirement income stream product is invested by the fund manager. Fund managers have different investment strategies that carry different levels of risk, and therefore, potentially different levels of return.

Q. Pensions

Pensions are only available from superannuation funds and can only be purchased with superannuation money (that is money paid out from a superannuation fund or retirement savings account. Money from these sources is known as an eligible termination payment or ETP.)

Q. Reversionary beneficiary

A reversionary beneficiary is someone to whom the retirement income stream will continue to be paid following the death of the original purchaser.


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