4.8.1.20 Types of Superannuation Funds

Summary

This topic covers the following matters:

  • what is a superannuation fund for social security purposes?,
  • the 2 main types of superannuation funds, and
  • types of superannuation schemes.

Act reference: SSAct section 9(1)-'superannuation fund'

What is a superannuation fund for social security purposes?

A 'superannuation fund' is a fund regulated under Australian laws. It is defined in the SSAct section 9:

  • a fund that is or has been a complying superannuation fund within the meaning of section 45 of the Superannuation Industry (Supervision) Act 1993 in relation to any tax year, or
  • an Australian superannuation fund (within the meaning of the Income Tax Assessment Act 1997) that is not a complying superannuation fund mentioned in paragraph (a) in relation to any tax year, or
  • a scheme for the payment of benefits upon retirement or death that is constituted by or under a law of the Commonwealth or of a State or Territory, or
  • an RSA within the meaning of the Retirement Savings Accounts Act 1997, or
  • any of the following funds (unless the fund is a foreign superannuation fund within the meaning of the Income Tax Assessment Act 1997):
    • a fund to which paragraph 23(jaa), or section 23FC, 121CC or 121DAB, of the Income Tax Assessment Act 1936 (as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1989) has applied in relation to any tax year,
    • a fund to which paragraph 23(ja), or section 23F or 23FB, of the Income Tax Assessment Act 1936 (as in force at any time before the commencement of paragraph (a) of the definition of superannuation fund in former subsection 27A(1) of the Income Tax Assessment Act 1936) has applied in relation to the tax year that started on 1 July 1985 or an earlier tax year,
    • a fund to which section 79 of the Income Tax Assessment Act 1936 (as in force at any time before 25 June 1984) has applied in relation to the tax year that started on 1 July 1983 or an earlier tax year.

Act reference: SSAct section 9(1)-'superannuation fund'

The 2 main types of superannuation funds

The following table shows the differences in terms of contributions and benefits between the 2 main types of superannuation funds.

Fund type Contributions Benefits
Accumulation or defined contribution.

Defined for employers and employees (1.1.E.87).

Example: A percentage of salary.

Lump sum. Amount depends on performance of fund and amount of contributions.
Defined benefit.

Employee's contributions defined.

Employers contribute whatever additional amounts are needed to meet fund's obligations to its members.

Lump sum, income stream (1.1.I.70) or combination of both. Amount = final salary or average final salary (often the last 3 years) Ă— a MULTIPLE. The multiple ITSELF is usually a combination of length of membership and a percentage of final salary for each year of service.

Act reference: SSAct section 9(1)-'superannuation benefit',

Types of superannuation schemes

The following table shows the various types of employer sponsored and personal superannuation schemes.

Scheme Examples
Public sector funds established for federal and state government employees.
  • Commonwealth Superannuation Scheme (CSS),
  • Public Sector Superannuation Scheme (PSS),
  • Defence Force Retirement & Death Benefit Scheme (DFRDB), and
  • Queensland Government Super (Q-Super).
Corporate funds established by medium to large private sector companies for their employees.
Westpac Superannuation Scheme.
Industry or multi employer funds, for paying employer contributions to superannuation for employees covered by particular awards.
Care Super, Hostplus.
Self managed superannuation funds (SMSF)
Family funds with less than 5 members.
Small APRA funds (SAF)
Funds with less than 5 members that are not SMSFs such as small business funds.
ATO small superannuation accounts, designed for employer contributions that any other superannuation fund will not accept.
Contribution amounts under $1,000 are usually too small for a commercial fund to accept.
Retirement savings accounts.
Retirement savings accounts offered by banks.
Retail funds or public offer funds, covering superannuation funds available to the general public, including employers and the self-employed.

This category includes:

  • personal superannuation products, like superannuation bonds and savings schemes, marketed by life offices and friendly societies (1.1.A.215),
  • master trust funds, comprising a number of sub-schemes operating under a single trust (1.1.T.180) deed, which are available to individuals and employers,
  • roll-over (1.1.R.290) funds, such as ADFs, DAs, eligible roll-over funds and ATO small superannuation accounts, which accept and manage, in a concessionally taxed environment, superannuation lump sums received on leaving employment before age 65.

Act reference: SSAct section 9(1)-'ATO small superannuation account', section 9(1)-'retirement savings account'

Last reviewed: 6 November 2017