We offer superannuation accounts and pension accounts.
Superannuation accounts are used during a person’s working life to build investments to support them in retirement.
Pension accounts can be used when a person retires (or reaches preservation age) to provide an income from their super investment.
We have two types of superannuation accounts:
- accumulation
-
defined benefit.
Superannuation accounts
In the case of Accumulation accounts, contributions are paid into an individual account for each member. The contributions are invested, for example in the stock market, and the returns on the investment (which may be positive or negative) are allocated to each member’s account after taking into account relevant fees, costs and tax.
On retirement, the member's account is used to provide retirement benefits, often through a lump sum or the purchase of a pension which then provides a regular income.
An Accumulation account will provide a payout at retirement that is dependent upon the amount of money contributed and the performance of the investment vehicles utilised. An individual’s retirement benefit depends on how much superannuation is accumulated over their working life, which is the money paid into their account and any investment earnings, less deductions for expenses and taxes. The payout is also affected by insurance premiums and withdrawals made prior to retirement.
Defined Benefit (DB) account
Please note that accounts in Health Super’s DB scheme are no longer available for new members. Only members with existing DB accounts can access this account type. However, if a member joined Health Super prior to 1 January 1994, they may be able to apply to enter the DB scheme.
A DB account provides a benefit based on a formula which usually depends on a member’s salary, rate of contribution and the number of years' membership in the scheme. These types of accounts are most common in the public and corporate sector but are less common than accumulation accounts.
Funding of the DB scheme
Defined benefit schemes may be either funded or unfunded. Health Super’s DB scheme is fully funded.
In a funded scheme, contributions from the employer, and sometimes also from scheme members, are invested in a pool towards meeting the defined benefits. The future returns on the investments, and the future benefits to be paid, are not known in advance, so there is no guarantee that a given level of contributions will be enough to meet the benefits payable.
Typically, the contributions to be paid by the employer are regularly reviewed in a valuation of the scheme’s assets and liabilities, carried out by an actuary to ensure future benefit payment obligations will be met.
We’ve included more information on the Health Super DB ‘Post Account’ and the Health Super DB ‘Pre Account’. The DB scheme can be complex so if you need further assistance please call us on 1800 133 050.
Pension accounts
A pension is one of the ways members can turn the super they’ve saved into regular income payments. We have two types of pension accounts:
- Account Based Pension
- Transition to Retirement (TTR) Pension.
Account based pension
This pension is designed for those who have permanently retired or satisfied some other condition of release (e.g. reaching age 65), enabling a member to:
- choose the amount of income they receive each year (subject to a prescribed minimum)
- vary their payments (subject to the prescribed minimum) to suit their lifestyle
- make lump sum withdrawals at any time.
It will continue until the money in the member’s account runs out.
The duration of the pension depends on many factors, including the amount of a member’s pension payments, frequency of payments, the investment option they choose (and its investment performance), and any additional withdrawals they make as well as fees and costs.
Transition to Retirement (TTR) Pension
This pension is aimed at those who have reached preservation age (refer to the Fact Sheet: Accessing superannuation), allowing them to access their superannuation before retirement. It’s ideal for member’s who want to reduce their working hours and need to use part, or all of their superannuation to supplement their income. A TTR Pension enables a member to:
- choose the amount of income they receive each year (subject to the prescribed minimum/maximum limits)
- vary their payments (subject to the prescribed minimum/maximum limits) to suit their lifestyle.
What is the difference between a Health Super Pension and the Government aged pension?
The Federal Government provides an Age Pension for those people who have reached retirement age. Eligibility for this pension and the amount somebody will receive is determined by their age, any other income as well as the value of their assets.
Whereas, an account based pension or TTR pension is one of a number of products that individuals can purchase with their own money from a super fund to give them income during retirement. An account based pension or TTR pension is offered by the trustee of the super fund (not the Government). An account based pension or TTR pension is paid until the pension account balance runs out.