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Glossary
a fixed sum payable at specified intervals over a period. The standard RSS annuity is a whole-of-life, inflation-adjusted annuity with a 10-year guarantee paid fortnightly or monthly.
arm's length terms
a transaction on arm's length terms is one that is treated as a purely commercial deal, as if there were no personal connection between the parties to the transaction.
certifier
the person responsible for assessing an RSS fund to ensure that it complies with requirements, and certifying the compliance.
collection agency
an entity that collects RSS contributions and forwards them to the RSS fund or funds of the saver's choice.
contributions
amounts paid by a saver to his or her RSS fund.
CPI
Consumer Price Index - a standard measure of inflation prepared by Statistics New Zealand.
deducting agency
a person or entity that pays income to an individual, and deducts tax payments, ACC levies, student loan repayments, child support payments and RSS contributions. These are forwarded on behalf of the individual to the IRD, which distributes it to the appropriate agencies.
diversification
the practice of reducing risk by spreading investments.
DWT
dividend withholding tax.
fiduciary
a person with a legal obligation to act for another person's benefit, for example, as a trustee.
FIRST
The computer system used by the IRD to administer the tax system.
fund
used in this paper to mean a savings and investment scheme. See also RSS fund.
GDP
Gross Domestic Product: the total value added from all economic activity in New Zealand for a given year. 'Value added' is the difference between the purchase price of a good or service and its sale price.
NZS
New Zealand Superannuation: the current scheme for providing retirement income, or the income provided under the current scheme.
PAYE
'Pay as you earn' tax; tax taken from income by the payer of the income, and forwarded to the IRD. PAYE applies to income from employment (excluding self-employment) and from such sources as social welfare benefits, student allowances, ACC payments and NZS.
RSS
Retirement Savings Scheme: used in this paper to mean the proposed compulsory Retirement Savings Scheme as a regime.
RSS annuity
see annuity
RSS contributions
amounts paid by savers into an RSS fund in compliance with the RSS regime.
a savings and investment scheme registered as a fund under the RSS regime, and therefore required to comply with the conditions of the RSS.
RSS savings
the total, including contributions and earnings on those contributions, held in registered RSS funds.
the target amount for the purchase of a standard annuity. This amount will be subject to periodic review to ensure that it continues to provide the guaranteed income at retirement.
RWT
resident withholding tax.
savings manager
the manager of an RSS fund. The savings manager will have certain responsibilities under the RSS legislation. These are outlined in the text.
standard annuity
see annuity
target
10-year guarantee
if a retiree dies before 75, the balance of the payments arising from personal savings that would have been paid between the time of death and the person's 75th birthday will be paid to his or her estate in a lump sum.
WT
withholding tax.
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