Retirement basics glossary

Preparing for retirement in Australia means understanding how super and government support work together. This glossary explains some of the main terms you might see when you start planning.

It includes terms on the following topics:

Superannuation basics

Term	Explanation
Accumulation phase	The stage during your working life when money is going into your super and growing through contributions and investment returns. This is where most people's super starts and stays until they move money into a retirement income account. How super works
Superannuation Guarantee (SG)	The minimum percentage of your salary that your employer must pay into your super fund. As of July 2025, this rate is 12%. Super Guarantee explained
Preservation age	The minimum age you need to reach before you can normally access your super, and only if you meet a condition of release like retiring. For most Australians, preservation age is now 60. When can I access my super?
Condition of release	The rules that set out when you can access your super. The most common are reaching age 60 and retiring, or reaching age 65 (you can access your super even if you keep working). Accessing your super
Salary sacrifice	An arrangement where you ask your employer to pay some of your pre-tax salary directly into super instead of your bank account. This can lower your tax and boost your retirement savings. Salary sacrifice into super
Before-tax (concessional) contributions	Contributions made to super before tax is taken out, such as employer SG payments and salary sacrifice contributions. These are usually taxed at 15% inside the fund, which is often lower than most people's marginal tax rate. Before-tax contributions
After-tax (non-concessional) contributions	Contributions made from your after-tax income. No additional contributions tax is taken when they go into super, but there are yearly limits (caps) on how much you can add. After-tax contributions
Government co-contribution	Free money from the government if you add after-tax contributions to super and earn under a certain income. It can be up to $500 a year to help low-to-middle income earners build their retirement savings. Government co-contributions

Income in retirement

Term	Explanation
Income stream	Regular, ongoing payments you receive from your super fund once you start a retirement income account. You might also see this called a super income stream, account‑based pension or allocated pension. Retirement income streams
Account‑based pension (or allocated pension)	An income stream you start using your super after you retire. Your money stays invested and you choose how much to withdraw, as long as you at least meet the government's minimum annual payment for your age. Account-based pensions
Transition to retirement (TTR) pension	A way to use some of your super to top up your income while you are still working, once you've reached your preservation age. Many people use a TTR strategy to reduce their work hours while keeping a similar take‑home pay. Transition to retirement \| TTR calculator
Annuity	A financial product, usually from a life insurance company, that pays you a guaranteed regular income for a set period or for life in exchange for a lump sum payment.
Defined benefit pension	The lifetime limit on how much of your super you can move into retirement‑phase income accounts, where investment earnings are generally tax‑free. If you exceed the transfer balance cap there are tax penalties. Defined benefit super
Transfer balance cap	The lifetime limit on how much of your super you can move into retirement‑phase income accounts, where investment earnings are generally tax‑free. If you exceed the transfer balance cap there are tax penalties. Transfer balance cap rules
Drawdown rate (minimum pension payment)	The minimum amount you must withdraw from your account‑based pension each financial year. The percentage you must take out increases as you get older. Minimum drawdown rules
Downsizer contribution	A one‑off, after‑tax contribution to super of up to $300,000 (per eligible person) from the sale of your family home. You must be 55 or older and meet specific eligibility rules. Downsizer contributions rules
ASFA Retirement Standard	The Association of Superannuation Funds of Australia's (ASFA) guide to how much money you may need in retirement for different lifestyles. It sets two main levels: Modest: Covers the basics. Comfortable: Covers essentials plus extras like some holidays, a reasonable car, private health insurance and household goods. See how much income you might need in retirement
Lump sum	A one-off withdrawal of some or all of your super in a single payment, instead of taking it as a regular income stream. Once you take a lump sum out of super, it stops being super and different tax and Centrelink rules can apply. See how your super can continue to grow in retirement if you stick with your Industry SuperFund

The Age Pension

Term	Explanation
Pension	A regular income payment. This can include the government Age Pension or an income stream from your super, such as an account‑based pension, which may also be called an allocated pension or super income stream. Pensions vs lump sums
Age Pension	A regular payment from the Australian Government for older Australians who meet age, residency and means‑test rules. It is designed to supplement, not replace, your super and other savings. Age Pension and super
Means test	The overall process Centrelink uses to decide if you qualify for the Age Pension. It has two parts: Assets test – looks at the value of what you own (excluding your primary home in most cases). Income test – looks at how much you earn from work and investments. Who qualifies for Age Pension?
Assets test	Part of the means test Centrelink uses to work out if you can get the Age Pension, and how much. It looks at the value of most things you own, but normally excludes your main home. Age Pension asset test
Income test	The other part of the means test. It looks at the income you receive from work, investments and super, including “deemed” income on financial assets, to help calculate your Age Pension payment. Age Pension income test
Deeming	The rules Centrelink uses to assume a set rate of income from your financial assets, such as bank accounts and investments, regardless of what they actually earn. Deeming is used for the income test. Deeming rates calculator

Estate planning and super

Term	Explanation
Beneficiary	The person or people you choose to receive your super if you die. This can include your spouse or partner, children or your legal personal representative (your estate).
Binding death benefit nomination	A formal instruction telling your super fund who to pay your super to if you die. If it is valid, the trustee must follow it. Many binding nominations expire every three years, unless you put in place a non-lapsing nomination.
Reversionary beneficiary	A person you nominate (often your spouse) to automatically keep receiving your income stream if you die. Instead of the pension stopping, it "reverts" to them.

Financial advice terms

Term	Explanation
AFS licence	An Australian Financial Services (AFS) licence given by ASIC allows people or companies to legally carry on a financial services business, including selling, advising or dealing in financial products. You should only deal with licensed businesses as you are better protected.
Product Disclosure Statement (PDS)	The key legal document from your super fund explaining fees, investments, risks and features. Always read it before deciding to join or switch funds.
Statement of Advice (SOA)	A formal document from a licensed financial adviser explaining their personal advice, why it suits you, costs, risks and any conflicts of interest.
Record of Advice (ROA)	A simple document that confirms the advice received from a licensed financial planner or adviser. Similar to a Statement of Advice (SOA) but shorter and less formal. Often given to existing clients to confirm changes to, or implementation of, advice provided in a previous SOA.

Get more information about choosing the right superannuation adviser for you.

Key retirement planning tools

Try these free calculators to see how super and retirement rules may apply to you. These tools use simple questions to give you estimated results based on your age, income and super balance. They're a great starting point before talking to your super fund.

Retirement needs calculator – Estimate how much income you may need in retirement.
Try the retirement needs calculator
Super retirement calculator – Project your super balance and how long it might last.
Try the super projection calculator
Transition to retirement (TTR) calculator – Check how a TTR strategy could work for you if you cut back work hours but still want a similar take‑home income.
Try the TTR calculator
Salary sacrifice calculator – Check how extra contributions could boost your super.
Try the salary sacrifice calculator

If you’re unsure where to start, contact your Industry SuperFund. They can help you plan your retirement.

Retirement basics glossary

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Retirement basics glossary

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