KPMG Superannuation Services Pty Limited ABN: Australian Financial Services Licence No

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1 KPMG Superannuation Services Pty Limited ABN: Australian Financial Services Licence No Telephone: Shelley Street Facsimile: Sydney NSW 2000 DX: 1056 Sydney P O Box H67 Australia Square 1213 Australia To ASC Superannuation Fund members Date 22 December 2010 From KPMG Superannuation Services Pty Limited Ref Super News December 2010 Super News December 2010 Welcome to the eighth edition of Super News, a quarterly newsletter for members of the ASC Superannuation Fund ( the Fund ). The purpose of this newsletter is to provide information to members on new products and services offered by the Fund, an update of the Fund s investment performance and a general update on industry news. This newsletter contains information in relation to the following: KPMG office closure over the Christmas period; Insurance benefits offered within the Fund; The Government s response to the Cooper Review: Stronger Super Reforms; Binding Beneficiary Nominations; Monthly and year-to-date performance returns to 31 October 2010; and Comparison of the Fund s performance with similar superannuation funds. Office closure over the Christmas period The office of the Fund Administrator, KPMG Superannuation Services Pty Limited, will be closed from 24 December 2010 until 10 January Please note that we will be unable to issue PINs, process benefit payments and other transactions, or answer any member enquiries made via the Fund's address or by telephone during this period. We will respond to any enquiries or requests as soon as our office reopens on 10 January On behalf of KPMG Superannuation Services, we would like to take this opportunity to wish all members and their families a Merry Christmas and a safe and happy New Year in 2011.

2 Insurance benefits offered within the Fund Effective 1 July 2010, some of the insurance benefits offered within the Fund were enhanced through a new insurance policy held with the Fund Insurer, Hannover Life Re. Enhancements to the insurance policies are outlined below. General Terms and Conditions Insurance cover can now be provided to members on employer approved leave regardless of their geographical location, subject to the following terms: - Cover will continue for up to 2 years (previously this was 1 year) which may be extended upon approval from the insurer. - Hannover must be notified prior to the commencement of any period of leave if cover is not to be continued; All employees seconded overseas will be covered for the insurance policy's guarantee period, provided that: - The residence remains temporary in nature; and - The details were provided to the insurer at the quotation stage, at each annual review date or upon request. Death and Total and Permanent Disablement ( TPD) Insurance The Automatic Acceptance Level for Staff Compulsory Cover has increased from $700,000 to $750,000; The maximum limit for Death cover has increased from $5,000,000 to unlimited; The maximum limit for TPD cover has increased from $2,500,000 to $3,000,000; A Terminal Illness benefit has been introduced to a maximum of $3,000,000; The maximum limit for Death and TPD cover available for a Continuation Option has increased from $750,000 to $1,000,000. The interim accident cover for Death and TPD has been set at $1,500,000 (previously interim accident cover for Death was limited to the amount applied for and for TPD this was limited to $500,000); The length of time that cover will continue after a member ceases to be employed (Extended Cover) has been increased from 30 days to 60 days, restricted to meeting certain criteria. The TPD definition has been enhanced to include Cognitive Loss, and the wording has been enhanced from 'unable' to 'unlikely', where previously "..an insured person is gainfully employed a permanent employee and is working 15 or more hours each week within the 6 months prior to the Date of Disablement they suffer TPD if they: (a) are unable to do any work as a result of injury or illness for 6 consecutive months and in our opinion, as at the end of that 6 months they continue to be so disabled that they are in our opinion unable to resume their previous occupation at any time in the future and will be unable at any time in the future to perform any other occupation; or (b) suffer the permanent loss of the use of 2 limbs, or the sight of both eyes, or the permanent loss of the use of 1 limb and the sight of 1 eye. 2

3 Insurance benefits offered within the Fund (continued) The TPD definition has been changed to "..an insured person aged less than 65, is gainfully employed as a permanent employee and is working 15 or more hours each week within the 6 months prior to the Date of Disablement, and insured person suffers TPD if they: (a) are unable to do any work as a result of injury or illness for 6 consecutive months and in our opinion at the end of that 6 months they continue to be so disabled that they are in our opinion unlikely to resume their previous occupation at any time in the future and will be unlikely at any time in the future to perform any other occupation; or (b) suffer the permanent loss of the use of 2 limbs, or the sight of both eyes, or the permanent loss of the use of 1 limb and the sight of 1 eye; or (c) suffer a Cognitive Loss The defined terms within the TPD definition have also been broadened, where previously "Loss of sight means the complete loss of functional sight which is permanent and cannot be restored by any currently available treatment or artificial aid" and "Loss of the use of a limb means the permanent loss of the use of a leg from at or above the ankle or an arm from at or above the wrist which is permanent and cannot be restored by any currently available treatment or artificial aid". These defined terms have been changed to "Loss of sight means the complete loss of functional sight which is permanent" and "Loss of the use of a limb means the permanent loss of the use of a leg from at or above the ankle or an arm from at or above the wrist, which is permanent" respectively. Salary Continuance Insurance (SCI) The benefit basis used to calculate the salary continuance benefit was previously 75% x Monthly Income up to $20,000 per month, plus 50% x Remaining Monthly Income up to $25,000 per month. The benefit basis has been updated to 75% of the insured person's Monthly Income up to $30,000 per month; Hannover will not provide SCI cover for overseas members whilst they are not due to receive income from their employer (unpaid leave); The interim accident cover for salary continuance has been updated to $15,000 per month (previously this limit was set at $10,000 per month); Benefit Indexation has been introduced and will apply after a total or partial disability benefit has been paid for 12 continuous months. This will be calculated as the lesser of the annual CPI percentage increase or 7.5%. A death benefit will be paid via the salary continuance policy as a $10,000 lump sum where a member in receipt of Total or Partial Disability benefits dies. The length of time that cover will continue after a member ceases to be employed (Extended Cover) has been increased from 30 days to 60 days, restricted to meeting certain criteria. Total or Partial disability benefits will continue to be paid whilst a member is overseas for a maximum period of 6 months (previously this was 3 months) before the claimant must return to Australia at their own expense for benefits to continue. 3

4 Insurance benefits offered within the Fund (continued) The Insurance Flyer attached to the end of this newsletter outlines the arrangements offered to members of the Fund. This flyer can be accessed from the Fund Information / Information Booklets screen of the Fund website ( Should you have any questions regarding the above enhancements, please contact the Fund Administrator on (02) The Government s response to the Cooper Review: Stronger Super Reforms On 16 December 2010, the Assistant Treasurer and Superannuation Minister Bill Shorten released the Government s second response to the Cooper Review (Super System Review) recommendations entitled Strong Super (the reforms). A summary of the reforms has been prepared by KPMG Superannuation Services Pty Limited, and can be accessed from the Fund Information / Information Booklets screen within the Fund s website. Binding Beneficiary Nominations It is important to keep your beneficiary nominations current within the Fund. You can review your current beneficiary nominations on your 30 June 2010 Annual Member Statement which was recently issued to members, or via the My Personal Details screen on the Fund website ( The Trustee offers both binding and non-binding nominations to members of the Fund. It is important to note that binding beneficiary nominations are only valid for a maximum period of 3 years. After this time, the nomination expires and will need to be updated. Where a binding nomination is no longer valid, it becomes a discretionary nomination, whereby the decision as to whom your death benefit within the Fund is paid lies with the Trustee. Should you wish to make another binding beneficiary nomination, a new form will need to be completed and submitted to the Fund. These forms are available via the Fund website ( Further details regarding these types of nominations are available in the Fund Product Disclosure Statement ( PDS ), which can also be accessed via the Fund website ( Monthly and year-to-date performance returns for 2010/11 The following tables outline the current performance for each of the Fund s three investment options for the Superannuation and Pension divisions: Superannuation Investment option Month Aggressive Growth Cash July % 1.96% 0.30% August % -0.82% 0.31% September % 2.10% 0.30% October % 1.32% 0.34% Financial Year to Date 2.91% 4.60% 1.25% 4

5 Monthly performance returns for 2010/11 (continued) Pension Investment option Month Aggressive Growth Cash July % 2.36% 0.35% August % -1.07% 0.33% September % 2.56% 0.33% October % 1.54% 0.39% Financial Year to Date 3.56% 5.46% 1.41% Past performance is not an indicator of future performance Before making any decisions regarding the investment of your superannuation, we recommend that you consult a professional financial adviser, who will consider your situation and objectives in detail before providing you with advice. Comparison of Fund performance The table below provides a comparison between the three ASC Superannuation Fund superannuation investment options and similar products in the market for the periods: 1 July 2010 to 31 October 2010 Aggressive options Year-to-date crediting rate Growth options Year-to-date crediting rate Cash options Year-to-date crediting rate ASC Aggressive* 2.9% ASC Growth* 4.6% ASC Cash* 1.3% Colonial First State High Growth AustralianSuper High Growth Asset Super High Growth MLC Masterkey Accelerated Growth 7.4% Colonial Balanced 7.1% AustralianSuper Balanced 5.5% Asset Super Medium Growth 9.8% MLC Masterkey Growth Statewide Shares 3.8% Statewide Growth 4.2% Colonial Capital Secure 5.8% AustralianSuper Cash 4.7% Asset Super Cash 6.0% MLC Masterkey Cash 1.2% 1.5% 1.2% 0.7% 3.7% Statewide Cash 1.9% *ASC Fund returns are net of fees and taxes 5

6 Who to contact Should you have any questions relating to the ASC Superannuation Fund, please contact the Fund Administrator on the details below: Fund Administrator Phone: (02) Fax: (02) General advisory disclaimer This newsletter has been prepared by KPMG Superannuation Services Pty Limited (AFSL No ). This newsletter provides you with information only and does not take into account your personal objectives, financial situation or needs. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on the information contained in this newsletter. Before acting or relying on any information, you should consider whether it is appropriate for your circumstances having regard to your personal objectives, financial situation or needs and also whether or not any financial product is appropriate for you. The Trust Company (Superannuation) Limited (ABN: , Registrable Superannuation Entity Licence ( RSEL ) No. L , AFSL No ) as trustee for the ASC Superannuation Fund (ABN: , Registrable Superannuation Entity Registration ( RSER ) No. R ) C/- KPMG Superannuation Services Pty Limited (Fund Administrator) P.O. Box H67 Australia Square NSW 1213 For further enquiries, please contact Chris Mumford on (02)

7 ASC Superannuation Fund Insurance Benefits for ASC Employees This brochure provides you with a summary of the Insurance Benefits provided to eligible employees of ASC Pty Ltd or ASC Shipbuilding Pty Ltd, including: Lump sum benefits payable on Death or Total and Permanent Disablement; and A Salary Continuance Income Benefit payable on Temporary Disablement. Further information (including terms and conditions) is provided in the Product Disclosure Statement ( PDS ) for the ASC Superannuation Fund ( the Fund ), which is available on the Fund s website ( or by contacting the Fund Administrator (contact details on the back page of this brochure). Death and Total and Permanent Disablement Benefits The Death Benefit is designed to provide your beneficiaries with a lump sum benefit in the event of your death. The Total and Permanent Disablement ( TPD ) benefit is designed to provide you with a lump sum benefit in the event of your permanent disablement (where you are assessed as meeting the definition of being Totally and Permanently Disabled ). You would be considered totally and permanently disabled as a result of: Ill health (whether physical or mental), where the Trustee is reasonably satisfied that you are unable, because of the ill health, ever again to engage in any other occupation, including: An occupation you are qualified to perform by your education, training or experience; or A part-time occupation; or An occupation which you perceive to be a lower status than your previous occupation or an occupation where you do not earn as much income as in your previous occupation. Automatic Insurance Cover Eligible members are automatically covered for Death and TPD Insurance when you join the Fund subsequent to your commencement of employment. Your cover in the Fund is calculated depending on your category of membership and is subject to Automatic Acceptance Limits ( AAL ) (see below) Amount of Insurance Cover Your insurance cover is calculated as a percentage of your salary at the date of death/tpd. For the Non-Contributory (NC) Category: 1/12 th x 5% of salary x future completed months of service to age 65 For the Overtime eligible members (PT) category and Non-overtime eligible (NOTE) Category: 1/12 th x 16.67% of salary at the date of death/terminal illness x future completed months of service to retirement from 1 July to age 65 7

8 AAL Where you elect to move from the NC to PT category, or the formula for calculating your insurance results in you exceeding the Fund AAL s, you will be capped at these levels of cover and will be required to undergo medical assessment for the higher level of cover. Type of Insurance AAL Death Cover $750, TPD $750, SCI $10, per month Voluntary Cover You may apply for additional voluntary Death and TPD cover above the automatic insurance cover provided to you when you join the Fund, subject to underwriting by the insurer (evidence of health). Members of the NOTE category, PT category or NC category may apply for unlimited additional Death insurance and TPD insurance up to a limit of $3,000,000. Cessation of Cover Any Death and TPD benefits cease on your 65 th birthday or 60 days after cessation of employment, subject to meeting certain criteria. The benefit payable after that date is therefore the same as your withdrawal benefit within the Fund. After leaving ASC Pty Ltd or ASC Shipbuilding Pty Ltd, you are able to continue the insurance you held in the fund by exercising a Continuation Option. A Continuation Option may require the provision of limited health evidence and the insurance premiums payable will be based on your age and your occupation. Contact the Fund Administrator for further information regarding Continuation Options. Premiums Automatic Insurance Cover: The cost of Death and TPD insurance cover is $1.15 per annum for each $1,000 of cover, deducted monthly from your member account. Additional Voluntary Cover If you have elected to take additional Voluntary Cover, any premiums due are deducted from your member account on a monthly basis and are based on an age next birthday calculation. Please refer to the PDS for the voluntary insurance premium rates. Exclusions Some exclusions (including war exclusions) do apply. Please refer to the PDS for further information. 8

9 Salary Continuance Insurance Temporary Disablement Benefit The Salary Continuance Insurance ( SCI ) benefit is designed to provide you with a monthly income if you are assessed as having a continuous and total inability to engage in your usual occupation as a direct result of injury or sickness and is available to members that are working in excess of 15 hours per week. Benefit on Total Disability The SCI benefit payable on total disability is a monthly income up to a maximum of $30,000.00, however further personal information is required if the member s SCI benefit is above the AAL of $10, per month. Approved benefits are payable after 30 days of the date of your illness/injury occurring, and may be paid for a maximum of 2 years. Amount of SCI cover Your SCI benefit is calculated depending on your category of membership and your salary. For the Non-Contributory (NC) and Defined Benefit Category: Salary x 75% For the Overtime eligible members (PT) category and Non-overtime eligible (NOTE) Category: Salary x 75% + 9% SG Contribution Please note that members of the Spouse, Retained and casual categories are not eligible to apply for SCI cover. Benefit on partial disability A partial disability benefit may be payable if you are able to return to work on a part time basis. This is calculated as your SCI benefit less any income you receive from your return to work. SCI benefits are paid monthly and will be indexed on the 12 month anniversary of the commencement of benefits. Additional SCI cover Members of the Fund are unable to take out additional SCI cover. Premiums The following premiums are deducted from your member account to cover the cost of SCI: % of total remuneration for PT and NOTE members % of total remuneration for NC members and members of the defined benefit category Exclusions Some exclusions (including war exclusions) do apply. Please refer to the PDS for further information. Continuation of SCI upon ceasing employment with ASC or retiring SCI cover will cease when you leave employment with ASC. If you wish to continue your SCI cover upon ceasing employment with ASC Pty Ltd or ASC Shipbuilding Pty Ltd, you must take out a Continuation Option. You will be required to provide evidence of your new employment details and salary to effect this cover. You may apply for this policy for up to 60 days after you cease employment. To continue your SCI cover via a Continuation Option, please contact the Fund Administrator. 9

10 KPMG Superannuation Services Pty Limited ABN: Australian Financial Services Licence No Telephone: Shelley Street Facsimile: Sydney NSW 2000 DX: 1056 Sydney P O Box H67 Australia Square 1213 Australia How to Contact Us If you require further information regarding the Insurance Benefits provided to you in the Fund, please contact: Fund Administrator KPMG Superannuation Services Pty Limited PO Box H67 AUSTRALIA SQUARE NSW 1213 Tel: (02) Fax: (02) AU-FMNATASC@kpmg.com.au This document contains general information only which does not take into account your individual objectives, financial situations or needs. Before acting or relying on any information contained in this document, you should consider whether it is appropriate for your circumstances having regard to your objectives, financial situation and needs. You should also obtain and carefully consider the Product Disclosure Statement ( PDS ) prior to making any decision regarding your benefits in the Fund. A copy of the PDS is available on the Fund s website at or by contacting the Fund Administrator. The Trustee of the ASC Superannuation Fund (ABN: ) is The Trust Company (Superannuation) Limited (ABN: , AFSL No: ) Address: PO Box 361 Collins Street West VIC 8007 Ph: (03) Fax: (03) The Administrator of the ASC Superannuation Fund is KPMG Superannuation Services Pty Limited, (ABN: , AFSL: ) Address: PO Box H67, Australia Square NSW 1213 Ph: (02) Fax: (02)