Glossary
Glossary of Financial Planning Terms
This glossary provides clear definitions of key terms used in financial planning, investment, and wealth management. It is designed to help individuals and businesses understand common terminology, make informed decisions, and navigate professional advice with confidence.
An account-based pension turns superannuation savings into flexible retirement income, providing tax benefits and continued investment growth.
The accumulation phase is when individuals grow retirement savings through contributions and investments during their working years before retirement.
The Age Pension is a government income payment for eligible retirees in Australia, providing means-tested support to fund basic living needs in retirement.
Asset allocation spreads investments across asset classes like stocks, bonds, and cash to balance risk and return while aligning with financial goals.
The assets test assesses the value of property, super, and investments to calculate Age Pension eligibility, with payments reduced above certain limits.
Best Interests Duty is a legal obligation requiring advisers to put client needs first, ensuring advice is transparent, suitable, and free from conflicts.
A binding death benefit nomination is a legal direction that ensures superannuation death benefits are paid to nominated beneficiaries with certainty.
The Carer Payment provides means-tested income support to Australians who give full-time care to someone with disability, illness, or frailty due to age.
The co-contribution scheme helps low and middle-income earners grow super by adding up to $500 when they make personal after-tax contributions.
The Commonwealth Seniors Health Card gives self-funded retirees access to PBS medicine discounts and other concessions, with eligibility based on income.
Concessional contributions are pre-tax super payments, such as SG or salary sacrifice, taxed at 15% to grow retirement savings and reduce taxable income.
A condition of release is the legal requirement for accessing super, triggered by events such as retirement, reaching 65, incapacity, or hardship.
Contribution caps are annual limits on superannuation contributions, designed to maximise tax benefits while preventing excess contributions and penalties.
Deeming rates are fixed returns the government applies to financial assets when assessing Age Pension income, regardless of actual investment earnings.
A defined benefit fund calculates retirement payouts using salary and service formulas, giving predictable income while shifting risk to employers.
Division 293 tax is an extra 15% on concessional super contributions for those earning over $250,000, ensuring fairness in Australia’s super system.
A downsizer contribution allows Australians aged 55+ to contribute up to $300,000 from selling their home into super, boosting retirement savings.
Estate planning arranges how assets and affairs are managed after death or incapacity, using wills, trusts, and legal tools to protect beneficiaries.
An Exchange-Traded Fund (ETF) is a fund traded like a share, giving investors low-cost access to diversified portfolios across markets and asset classes.
Fiduciary Duty is a legal responsibility that requires acting in another party’s best interests, ensuring loyalty, care, and protection from conflicts.
A financial adviser offers tailored guidance on investments, retirement, and money management to help clients reach long-term financial security.
A financial planner creates clear strategies for saving, investing, and retirement planning while helping clients reach financial goals with confidence.
Income protection insurance pays up to 70–75% of income if illness or injury stops you from working, helping cover bills, loans, and living costs.
The income test assesses earnings from work, super, and investments to calculate Age Pension eligibility, reducing payments above set thresholds.
An industry super fund is a not-for-profit superannuation fund that reinvests profits for members, offering low fees and strong long-term retirement returns.
Insurance inside super offers life, TPD, and income protection cover paid from your super balance, making cover affordable but reducing retirement savings.
Life insurance pays a lump sum to beneficiaries when the insured dies or is terminally ill, giving families financial security for debts and living expenses.
A lump sum withdrawal is a one-off super payment taken after meeting a condition of release, offering flexibility but reducing future retirement income.
A managed fund pools investor money into one professionally managed portfolio, offering diversification and access to shares, bonds, and other assets.
A means test assesses income and assets to decide Age Pension eligibility and payment levels, targeting support to retirees who need it most.
Non-concessional contributions are after-tax payments added to super, boosting retirement savings with concessional tax treatment on future investment earnings.
A part pension is a reduced Age Pension paid to retirees whose income or assets are above full pension limits but still below the cut-off thresholds.
The pension phase is the retirement stage where savings provide income through regular withdrawals, helping retirees fund their lifestyle tax-effectively.
The Pensioner Concession Card gives eligible pensioners discounts on medicines, transport, and utilities, helping reduce cost of living in retirement.
Portfolio diversification reduces risk by spreading investments across asset classes, sectors, and regions, helping investors achieve more stable returns.
An Enduring Power of Attorney lets a trusted person manage financial and legal affairs if you lose capacity, protecting assets and ensuring continuity.
Preservation age is the minimum age to access super, between 55 and 60 depending on birth year, provided a retirement condition of release is met.
A retail super fund is a for-profit superannuation option managed by banks or institutions, offering diverse investments but often charging higher fees.
A reversionary pension lets super income continue to a dependant, such as a spouse, after death, providing certainty and ongoing financial security.
A risk profile assesses an investor’s capacity and comfort with financial risk, guiding tailored investment strategies that match goals and time horizons.
A roll-over is the transfer of money between super accounts, preserving tax concessions while reducing fees and simplifying retirement savings management.
Salary sacrifice lets employees direct pre-tax income into superannuation, reducing tax and growing retirement savings with long-term financial benefits.
A Self-Managed Super Fund (SMSF) is a private superannuation fund run by members, offering control and flexibility but with strict compliance duties.
A financial adviser offers tailored guidance on investments, retirement, and money management to help clients reach long-term financial security.
Superannuation is Australia’s retirement savings system where employer and personal contributions are invested to build long-term financial security.
The Superannuation Guarantee (SG) is Australia’s compulsory employer contribution to super funds, helping employees grow savings for retirement security.
A testamentary trust is a will-based trust that manages assets after death, protecting beneficiaries while offering tax flexibility and long-term wealth control.
TPD insurance pays a lump sum if permanent disability stops you from working again, helping cover debts, medical bills, and long-term living expenses.
A Transition to Retirement Income Stream (TRIS) allows limited super withdrawals while still working, supporting a smoother path into retirement.
Trauma insurance pays a lump sum on diagnosis of serious illnesses like cancer or heart attack, easing financial pressure by covering treatment and expenses.
The Work Bonus allows Age Pensioners to earn extra work income without reducing payments as quickly, supporting part-time work while on the pension.
