April 1999 Volume 80 Number 4 "serving the protectors"
Finance

Police Credit Union
Loan Terminology

In today’s mortgage environment it can feel like you need a translator just to understand all the terminology used by financial institutions when describing mortgage loans. Due to the complexity of the information, we provide this table to explain some of the terms you may encounter if you are looking to acquire a home loan.

Fixed Interest Rate Loan	A loan where the interest rate and repayments are set for a pre-arranged term.
Standard Variable Interest Rate Loan	A loan where your repayments may rise or fall at the discretion of the lender, often in line with official interest rate changes. May include special features such as a redraw facility.
Basic Variable Interest rate	As above but without extra features.
Honeymoon Rate	A loan offering an attractive introductory interest rate for a fixed period, usually twelve months. Be sure to find out what interest rate your loan reverts to when the 'honeymoon is over' and if any restrictions apply during the honeymoon period.
Redraw Facility	A facility that allows you to gain access to money through extra payments you may have made over the term of the loan.
Home Equity/Line of Credit Loans	A type of home loan that lets you access a line of credit using the equity you already have in your home as security.
Principle and Interest Loan	A standard type of loan where your repayments are calculated to include the amount of money borrowed plus interest.
Application/Establishment Fee	Charged by the lending institution upon approval of the loan to cover the legal and administration costs involved with assessing the loan and may or may not involve the cost of a property valuation. This fee can be as high as $750.

Police Superannuation Scheme Benefits
Payable Upon Death

Serving Members - Spouse, Eligible Children

Upon the death of a serving member of the Police Pension Scheme a surviving spouse is entitled to a lifetime fortnightly pension benefit (2/3 of member's age 60 entitlement), adjusted annually by the Consumer Price Index (for Adelaide). A spouse has the option to commute any amount up to 50 per cent of the pension into a lump sum. Upon the death of a serving member of the Police Lump Sum Scheme a surviving spouse (legal, putative de facto) is entitled to a lump sum benefit (five times annual superannuation salary if member joined at age 25 or under).

A surviving spouse is a spouse who became your lawful or putative de facto spouse before the date of death. Divorce disentitles a spouse from receiving a superannuation benefit, however, separation does not.

An additional fortnightly pension benefit (1/9 of member's age 60 entitlement), is payable to eligible children. An eligible child is a child of the deceased or a child in relation to whom the deceased had assumed parental responsibilities, who is under 16 years of age or over 16 but under 25 years of age and a full-time student.

Serving Members - Estate

Upon the death of a serving member of both the Pension and Lump Sum Schemes a lump sum benefit is payable to the deceased member's estate if the deceased member is not survived by a spouse or an eligible child. For members of the Pension Scheme a maximum lump sum of seven times annual superannuation salary is payable after 30 years’ membership. For members of the Lump Sum Scheme a maximum lump sum of seven times annual superannuation salary is payable after 35 years' membership.

In addition where a member of the Pension or Lump Sum Schemes dies in the course of duty and is not survived by a spouse or an eligible child a minimum lump sum benefit of three times annual superannuation salary (maximum seven times annual superannuation salary) would be payable to the deceased member's estate.

To ensure that any lump sum benefit paid to your estate is distributed in accordance with your wishes it is important that you have made a will setting out the beneficiaries. If you have not made out a will the intestate provisions set down how benefits of the estate are to be divided. It is important to ensure that a will is kept up to date and renewed if there has been a change in your circumstances (eg marriage, divorce etc).

Retired Members - Spouse, Eligible Children

Upon the death of a retired member, who retired on or before 31 May 1990, a surviving spouse is entitled to receive a lifetime fortnightly pension (2/3 of the retired member's notional pension at the date of death), adjusted by the Consumer Price Index (for Adelaide) plus one third, plus a lump sum (2/3 of the retired member's lump sum paid at retirement).

Upon the death of a retired member, who retired on or after 1 June 1990, a surviving spouse is entitled to receive a lifetime fortnightly pension, (2/3 of the retired member's notional pension at the date of death), adjusted by the Consumer Price Index (for Adelaide). A spouse has the option to commute (convert) part (up to 50 per cent) of the pension payable into a lump sum.

A surviving spouse is a spouse who became your lawful or putative de facto spouse five years prior to the date of death. Divorce disentitles a spouse from receiving a superannuation benefit, however, separation does not.

An additional fortnightly pension benefit (1/9 of retired member's notional pension at the date of death), is payable to eligible children. An eligible child is a child of the deceased or a child in relation to whom the deceased had assumed parental responsibilities, who is under 16 years of age or over 16 but under 25 years of age and a full-time student.