Glossary

The entries in this glossary are correct at 31 January 2003. Central estimate An estimate of a variable which is intended to err neither on the side of caution or optimism.  It is often accompanied by the existence of prudential margins.   Contingent interests  Interests in a transaction or asset that will not be crystalised or "vested" until the happening of some event or contingency.  Examples are "remainder interests"  which vest on or are contingent on the death of a life tenant and the interest of an owner or manager which vests on the termination of a retirement village occupancy.    Current pension liabilities  Superannuation funds liabilities for  pensions in the course of payment.    Funds are exempt from taxation on the income earned on assets supporting these liabilities.  The liabilities can be segregated.   For this to occur an  actuarial certificate is necessary.  Note that prudential margins are not included in current pension liabilities ie the liabilities are a central estimate.   Current pension liabilities  Superannuation funds liabilities for  pensions in the course of payment.    Funds are exempt from taxation on the income earned on assets supporting these liabilities.  The liabilities can be segregated.   For this to occur an  actuarial certificate is necessary.  Note that prudential margins are not included in current pension liabilities ie the liabilities are a central estimate.   Life tenant A person entitled to the income from an estate or to occupy a property during their lifetime.   Prudential margins  Margins established so that one has a specified degree of certainty that a an adverse result will not occur.  For example, one might add a prudential margin to the central estimate of a provision for outstanding claims to ensure that say there is a 70% chance that the provision will prove adequate.  The need for these margins flows from the fact that in real life, even if assumptions correctly describe statistical distributions, random fluctuations occur and one needs to guard against the effect of a series of adverse fluctuations.    Remainder interests  An entitlement to ownership of an estate or a property on the death of the life tenant   Retirement village A site containing residences of people of retirmenet age which is recognised by State Authorities as a retirment village under the appropriate State legislation   Segregated assets  Trustees of superannuation funds can set aside particular assets to meet current pension liabilites.    The investment earnings and capital gains on these assets suffer no tax.  The assets can be particular securities or a proportion of  particular securities.