Super Directions Fund National Mutual Retirement Fund

Transcription

1 Super Directions Fund National Mutual Retirement Fund Trustee s annual report to members For the year 30 September 2013 Contents Message from the Trustee 1 Who s who in the management of your account? 2 Introduction to the Funds 4 Changes announced by the government 6 affecting superannuation and pensions Product news 9 Other information 11 Investments 14 Annual indexation of fees 31 Message from the Trustee I am pleased to present the Trustee s annual report for the year ending September The past year has brought many changes for superannuation. Legislation governing super has been extensively revised with the introduction of Stronger Super. The recent appointment of a new government may bring further changes down the track. In global financial markets there have been significant developments too. Today I m pleased to say the past financial year stands out as the most positive for Australian and global share markets since the global financial crisis began in As we move from a fragile global economy to a more constructive investment environment, challenges may continue. But as market cycles prove, when it comes to investing, it s worth remaining focussed on long-term goals. The investment returns for your super during the year ending September 2013 will depend on how your money has been invested. I encourage you to review your annual statement which provides information about the investment earnings for your super. In the meantime, if you would like to reconsider your super investments or ensure you have adequate insurance cover, I encourage you to speak to your financial adviser, or if you don t currently have an adviser, contact us to find out how to seek quality financial advice. Michael Butler Chairman For further details on the trustee board visit amp.com.au/superboarddirectors This annual report is issued by the Trustee N.M. Superannuation Proprietary Limited ABN , AFS Licence No for the following Funds: Super Directions Fund ABN , National Mutual Retirement Fund ABN

2 Who s who in the management of your account? The Trustee N.M. Superannuation Proprietary Limited (NM Super, the Trustee, we, our or us) is a wholly-owned subsidiary of The National Mutual Life Association of Australasia Limited (NMLA) Australian Business Number (ABN) , Australian Financial Services Licence (AFSL) No , part of the AMP group. The Trustee is an RSE Licensee under the Superannuation Industry (Supervision) Act 1993 (SIS), which means that it has satisfied licensing conditions required by the Australian Prudential Regulation Authority (APRA). The Trustee is responsible for the monitoring and management of the Super Directions Fund and the National Mutual Retirement Fund (together the Funds) for the benefit of all members in accordance with the governing rules of the Funds and relevant legislation. The Trustee also maintains an appropriate level of indemnity insurance for protection against losses that may occur as a result of a claim against it for breach of professional duty. The relationships between the Trustee and other service providers From time to time, the Trustee may engage companies in and outside the AMP group to provide services in relation to the Funds. The Trustee may change these service providers at any time without notifying you. Companies in the AMP group that are related to us and the roles they provide ipac asset management Limited (ipac) In May 2003, ipac became portfolio manager for all of NMLA s multi-manager portfolios. ipac and its related entities are a financial advice and investment group that has been helping clients achieve their financial goals since ipac is one of Australia s largest operators of multi-manager portfolios. As at 30 September 2013, ipac managed in excess of $12.7 billion for more than 20,000 clients, from individuals to Australian superannuation funds. In consultation with NMLA, ipac is responsible for the selection and ongoing monitoring of fund managers used in the multi-manager portfolios, the construction of multimanager diversified and multi-manager sector portfolios, and day-to-day implementation of these portfolios. ipac may change the portfolio sector managers or allocation at any time without notice to members invested in these portfolios. This action may be taken to ensure the most appropriate investment managers are used. AMP Capital Investors (AMP Capital) In 2011, AMP Capital became a fund manager for some of NMLA s portfolios. AMP Capital is committed to delivering outstanding investment opportunities for clients with contemporary solutions in fixed income, equities, real estate, infrastructure and multi-asset portfolios. Sharing a heritage that spans over 160 years, AMP Capital is one of the largest investment managers in the Asia Pacific region. A home strength in Australia and New Zealand has enabled AMP Capital to grow internationally, and operations are now established in Bahrain, China, Hong Kong, India, Japan, Luxembourg, the United Kingdom and the United States. AMP Capital collaborates with a network of global investment partners, leveraging insights to provide greater access to new investment opportunities. A broad investment capability underpins over $135 billion 1 in funds under management across a range of single sector and diversified funds. For more information, please visit ampcapital.com.au. AMP was established in AMP Capital Investors, AMP Capital Funds Management and National Mutual Funds Management Limited are members of the AMP group. The NM Super Board Directors The directors of NM Super are also directors of AMP Superannuation Limited, which is another superannuation trustee and also part of the AMP group. The Boards of each Trustee maintain a framework for the management of conflicts of interest and conflicts of duties, which is documented in the Conflicts Management Policy. The framework provides for the identification, recording, management and monitoring of conflicts in accordance with applicable laws and regulations. Michael Butler, Non-Executive Chairman BSc, MBA, FAICD Michael was appointed as an independent non-executive director of AMP Superannuation Limited in May 2011 and as an independent non-executive director of NM Super in June Experience Michael has extensive experience in investment banking gained as an executive director of Bankers Trust s Corporate Finance group and as executive vice president of its Private Equity group. Michael is a director of Metcash Limited and Candad Pty Limited. Previously he served as a non-executive director of AXA Asia Pacific Holdings Limited, NMLA and various other AXA subsidiaries. He has also served as a director of several other companies including Ayers Rock Resort Corporation, APN Property Group Limited, Ausdoc Group Limited, Freightways Express Limited, Hamilton Island Limited, Members Equity Bank Pty Limited and Industry Super Holdings Pty Ltd September 2013.

3 Graeme Thompson, Non-Executive Director FAICD Graeme was appointed as an independent non-executive director of AMP Superannuation Limited in April 2005 and as an independent non-executive director of NM Super in March He was Chairman of the AMP Superannuation Limited Board from August 2009 to March Experience Graeme is a company director and consultant. He has 14 years experience in prudential regulation of financial institutions, including superannuation funds, and was inaugural Chief Executive Officer of the Australian Prudential Regulation Authority (APRA) from 1998 to Before his appointment to APRA, Graeme was with the Reserve Bank of Australia (RBA) for 30 years, including as Deputy Governor and member of the board from 1993 to Graeme has been a director of several organisations, including House With No Steps, where he served as Chairman from 2007 to 2010, and Indue Limited where he was Chairman from 2008 to He has previously been a member of the Council of Financial Regulators and the Payments System Board of the RBA, Chairman of the Australian Payments Clearing Association Limited, Chairman of the Australian Payments System Council and a Director of the Banking Industry Ombudsman Scheme. Graeme Thompson resigned as non-executive director on 23 September Michele Dolin, Non-Executive Director BA, MA, MBA, FAICD, FAIM, FASFA, SF Fin. Michele was appointed as an independent non-executive director of AMP Superannuation Limited and NM Super in April Experience Michele has an extensive executive and financial services background. She is currently a non-executive director of St Andrew s Australia Services Pty Limited and other St Andrew s subsidiaries. Michele served as Chief Executive Officer of Government Employees Superannuation Board, and held executive positions with Bankwest, Westpac Banking Corporation and Challenge Bank Limited. She was previously a Director of the Association of Superannuation Funds Australia Limited, St John of God Health Care Inc., Water Corporation of WA, and a Commissioner of the City of Perth. Michele has also held various subsidiary board roles in Bank of Western Australia Limited (Bankwest) and Challenge Bank Limited. She is a member of the University of Western Australia Senate and a former Pro Chancellor of Curtin University. Michele is a Fellow of each of the Australian Institute of Company Directors, Australian Institute of Management and the Association of Superannuation Funds of Australia, and is a Senior Fellow of the Financial Services Institute of Australasia. Martin Hudson, Non-Executive Director B Juris, LLB, MAICD. Martin was appointed as an independent non-executive director of AMP Superannuation Limited in April 2012 and as an independent non-executive director of NM Super in June Experience Martin has over 40 years of international legal and senior management experience. He was Senior Vice President of Commercial Affairs and Chief Legal Counsel at Foster s Group Limited from 2005 until his retirement in July Previously Martin was Company Secretary and Chief General Counsel at Southcorp Limited, Chief General Counsel to the Pacific Dunlop Group of Companies and for 23 years a Partner (and then Managing Partner/Chairman in the Melbourne Office) of the national law firm Herbert Smith Freehills. He has served as a non-executive director of MLC Building Society, and as a director of numerous companies in the Foster s and Southcorp groups. Martin is currently the Chairman of Transpacific Industries Group Limited and a non-executive director of CNPR Limited. Brian Salter, Executive Director BA, LLB (Hons), LLM (Hons), MAICD, F.ASF Brian joined AMP on 1 July 2008 as General Counsel and Company Secretary. He was appointed as a director of AMP Superannuation Limited in October 2008 and as a director of NM Super in March Brian was Chairman of the AMP Superannuation Limited Board from October 2008 to August Experience Before joining AMP, Brian was a partner with a major Australian law firm for 19 years. He has more than 30 years experience advising many of Australia s leading financial and wealth management companies. Brian is a Director of SCECGS Redlands Limited. He is also a member of the Commonwealth Corporations and Markets Advisory Committee (CAMAC), the Law Committee of the Australian Institute of Company Directors, the Corporations Committee of the Business Law Section of the Law Council of Australia and the Attorney General s Expert Group on Private International Law. 3

4 Darryl Mackay, Non-Executive Director BSc, FIAA Darryl remained on the board of directors as a non-executive director post his retirement from AMP Limited in July Darryl joined AMP in March 2011 from AXA Asia Pacific Holdings Limited, as Head of Secretariat and Company Secretary for AMP Limited. Darryl, a qualified actuary with 35 years experience in the financial services industry, was appointed as a director of AMP Superannuation Limited in April 2012 and as a director of NM Super in March Experience In his 33 years at AXA, Darryl held a range of senior roles, including Company Secretary and General Manager, Group Chief Executive s office, General Manager Group Human Resources and Deputy Chief Executive International. Darryl is currently a director of various AMP subsidiaries. NMLA Board Directors 2013 attendance Meetings held while member Meetings att while member Michael Butler 4 4 Michele Dolin 4 4 Darryl Mackay 4 4 Martin Hudson 4 4 Graeme Thompson 4 4 Brian Salter 4 4 Introduction to the Funds The purpose of this annual report is to provide information about the operation of the Funds as a whole, including: management financial position compliance with relevant statutory requirements, and any changes or developments that may affect member s benefits. Some of the information contained in this report may not be relevant to members of both Funds and all products covered by this report. Where applicable, the information specific to a Fund(s) and product(s) will be identified, otherwise the sections apply to both Funds and all products. Overview of the Funds All benefits under the Funds are provided by means of life insurance policies. The terms and conditions of these policies differ according to the products they support. The products in each Fund are: Super Directions Fund Income Insurance Superannuation Plan Life Protection Superannuation Plan 1 Life Insurance Superannuation Plan 1 Retirement Directions Allocated Pension Plan Simple Super Simple Super Rollover Plan Super Directions for Business Super Directions for Business Rollover Section Super Directions Personal Super Plan Tailored Super Tailored Super Rollover Plan National Mutual Retirement Fund Accelerator Personal Superannuation Plan Conventional Superannuation Flexible Income Plan Flexible Pension Plan Flexipol Personal Superannuation Goldline Personal Superannuation Plan Lifestyle Protection Plan Personal Superannuation Bond Provider Personal Retirement Plan Provider Top Up Retirement Plan Retirement Bond Retirement Security Plan Superannuation Annual Renewable Term 1 Superannuation Life Protection Plan An investment account does not apply for these products.

5 You can refer to your latest annual statement to confirm what product(s) you hold and which Fund you are a member of. Your annual statement provides information relating to your benefit entitlements including: cash amounts received during the year contributions made by you or your employer earnings credited expenses deducted, and investment portfolio(s) and the performance of the portfolio(s). You will receive your annual statement soon after each anniversary of your policy/plan. It is recomm that you read this report in conjunction with your latest annual statement. Compliance status of the Funds The Funds are regulated funds under SIS. The Trustee has not received any notices of non-compliance during the reporting period and has formally resolved that each Fund will be administered in strict compliance with all applicable acts and regulations. Financial condition of the Funds The assets of each Fund are invested in life insurance policies held by NMLA and therefore under superannuation legislation we are not required to provide the financial reporting in this annual report. If you require a copy of the financial report for a Fund, please contact us and a copy will be provided free of charge. Trust Deed amendment There were no Trust Deed amendments to either Fund during the year. Benefits provided under the Funds As Trustee of the Funds, it is our responsibility to ensure that all benefits arising from the Funds are paid to members, or to members dependants or their legal personal representative (in the event of death) in strict conformity with the Trust Deed of the applicable Fund and the requirements of all applicable laws. The benefit that will ultimately be paid to a member (or to their dependant(s) or legal personal representative) will equal the value of the applicable life insurance policy and any insurance proceeds at the time the benefit is payable, less any government tax, outstanding contributions or charges. The precise value of a member s benefit is dependent upon factors such as the policy and the type of event (eg retirement, death, or transfer to another fund). To determine what amounts are payable to you and under which circumstances these amounts will become payable, we recommend that you refer to your last annual statement, offer document (eg Product Disclosure Statement, Key Features Statement or policy document), speak to your financial adviser or contact our Customer Service Centre. Compensation From time to time there may be circumstances in which the Trustee needs to pay compensation to members of a Fund. There are four key principles that guide the Trustee s payment of compensation to current and former members: the Trustee and AMP should not benefit other members do not bear the cost of compensation compensation is paid to members in a manner that minimises the cost and inconvenience to those members receiving the compensation, and communication should be provided to affected members in all circumstances where the member would reasonably expect to be notified. The Trustee may decide not to pay compensation to current or former members where it considers the individual compensation amounts small. 5

6 6 Changes announced by the government affecting superannuation and pensions Pension payments The government has not ext the pension drawdown relief. The minimum payment amount for account-based pensions has returned to the legislated minimums. No further reduction announcements were made in the 2013 Federal Budget. Age Legislated Pension Factors ( of retirement account balance) 2012/13 financial year ( of retirement account balance) 2013/14 financial year ( of retirement account balance) Under to to to to to or older Deeming rules to apply to account-based pensions Under the current Centrelink means testing rules, account-based pensions are treated as an assessable asset under the assets test. However, income received from an account-based pension is currently treated more favourably than income generated by other financial investments such as money in a bank account. That s because income from an account-based pension attracts a non-assessable portion, which loosely recognises that part of these pension payments represent a return of capital. In comparison, other financial investments are subject to deeming rules which attribute a fixed rate of return to financial investments irrespective of how much income the investment actually produces. The government has announced (but not yet legislated) that deeming rules will also apply to new super accountbased income streams commencing after 1 January All products held by pensioners before 1 January 2015 will be grandfathered indefinitely and continue to be assessed under the existing rules for the life of the product so no current pensioner will be affected, unless they choose to change products. Contributions caps Super contributions are subject to contributions caps with strict penalties in place if these limits are exceeded. It is your responsibility to ensure that you do not exceed these caps. If you exceed the contributions caps, you will be personally liable for the excess contributions tax that applies to amounts above the caps. An annual standard cap of $25,000 per person applies to concessional contributions. This cap will be indexed for the 2014/15 year and annually after that in line with average weekly ordinary time earnings in increments of $5,000 (rounded down). The government has recently passed legislation that will provide an unindexed $35,000 concessional cap for super fund members aged 50 and over, regardless of the size of the individual s super balance. The commencement dates are as follows: for the 2013/14 financial year, the higher concessional contributions cap of $35,000 will apply to individuals aged 60 and over. For all others the general cap of $25,000 applies, and for each financial year from 2014/15 onwards, the higher concessional contributions cap of $35,000 will apply to individuals aged 50 and over. For all others the general cap of $25,000 will apply. The higher concessional contributions cap will apply until the general concessional contributions cap reaches $35,000 due to indexation (expected to occur from 1 July 2018). That is, the higher cap will only be temporary. Note, the previously announced government proposal to limit the availability of the higher age-based cap to members with super account balances below $500,000 will not be implemented. The non-concessional contributions cap remains unchanged at $150,000 for all individuals for the 2013/14 financial year. Reduction of tax concession on contributions for incomes above $300,000 The Federal Government previously announced that for concessional contributions made from 1 July 2012, individuals with income greater than $300,000 will have the tax concession on their super contributions reduced from 30 to 15 (excluding Medicare levy). This means that the tax on concessional contributions for these high income earners will be 30 rather than the standard 15. Reduction in co-contributions The government has recently legislated changes to government co-contributions, which are to take effect from the 2012/13 financial year. Under the changes, if your total income is $31,920 or less in a financial year, the government will contribute $0.50 for every $1 of after-tax personal member contributions with a maximum co-contribution of $500. If your total income is more than $31,920 but less than $46,920 in a financial year, the government co-contribution is $500 reduced by cents for each dollar your total income is over $31,920. If your total income is $46,920 or more in a financial year, you are not entitled to a government co-contribution. The co-contribution income thresholds were frozen for the 2012/13 financial year, and indexation of the income thresholds will resume from the 2013/14 financial year. However the changes to the way these thresholds are indexed with result in income thresholds of $33,516 and $48,516 for 2013/14.

7 Low-income superannuation contribution (LISC) A new super contribution payment of up to $500 annually will be provided by the government for low income earners from the 2012/13 income year. This payment effectively ensures that workers earning incomes up to $37,000 will pay no tax on the compulsory superannuation guarantee (SG) contributions paid by their employers on their behalf. This payment is separate from the government superannuation co-contribution which applies to member non-concessional contributions. This scheme is also capped at a maximum of $500. The first monthly LISC payment from the Australian Taxation Office (ATO) will be received in November 2013 and it is expected to contain the majority of the 2012/13 LISC contributions. There will also be Special Holding Account Low Income Superannuation Contributions (SHA LISC) payments. This amount is a LISC payment returned to the ATO when a member cannot be located. The ATO holds the returned LISC amount in a special holding account until the member can be located and contribution can be applied. The government announced proposed changes to the LISC legislation on 24 October If this legislation is passed, we understand that the LISC will not be paid for future financial years (after the 2012/13 financial year). Medicare levy increase The Medicare levy will be increased by half a percentage point from 1.5 to 2 of taxable income from 1 July 2014 to provide funding for DisabilityCare Australia. Increasing the Medicare levy will have impacts to other tax rates that are linked to the Medicare levy including your super and pension accounts. Further information in relation to this levy is available on the ATO website ato.gov.au. Superannuation guarantee The SG percentage was increased to 9.25 on 1 July 2013, and will gradually increase to 12 by 1 July 2019, though this date may be delayed pending new legislation. From 1 July 2013, there will no longer be a maximum SG age limit, which means eligible employees aged 70 and over will also be entitled to receive SG contributions. Reforms announced by government Concessional contributions tax arrangement Under the current arrangements, excess concessional contributions are effectively taxed at the top marginal tax rate (46.5) once excess contributions tax is applied rather than the normal rate applied to these contributions of 15. In addition, individuals are only able to withdraw excess concessional contributions the first time they make an excess concessional contribution after 1 July 2011, and only up to a maximum amount of $10,000. The government has recently passed legislation that changed this process so that, from 1 July 2013, excess concessional contributions will be taxed at the individual s marginal tax rate, plus an interest charge to recognise that the tax on these excess contributions is collected later than normal income tax. Therefore, excess concessional contributions from this date will no longer automatically be subject to the excess contributions tax (31.5). The rate of tax will depend upon the individual s marginal tax rate. In addition, these individuals will have the option of withdrawing up to 85 of their excess concessional contributions made to their super fund from 1 July 2013 from their super fund, if sufficient account balances are there. Future of Financial Advice reforms The Future of Financial Advice (FoFA) drove significant change in the financial advice industry and the manner in which advice is provided. AMP made significant investments in the technology solutions and training programs required to implement and become compliant with the regulatory changes. Stronger Super The Stronger Super changes are designed to make super simpler and more transparent and to help members maximise their retirement income. MySuper MySuper is an important part of these changes and came into effect from 1 January It is referred to as a default investment option where your money is automatically invested if you don t select an investment option on joining, or at any time after you join the super fund. With a simple set of product features MySuper is easy to compare so members can see if they are getting what they want, to help meet their retirement goals. This means that for members who have not actively chosen an investment option for their super savings, MySuper has become their new investment option. AMP offers two different investment approaches, determined by which super product members have. Visit amp.com.au/regulatorychange for more information on Future of Financial Advice (FoFA) and Stronger Super. SuperStream SuperStream is a comprehensive range of measures designed to enhance the efficiency of super back office transactions in the super industry. The changes are designed to improve the efficiency of super transactions by improving data, processes and timeliness of super rollovers and employer contributions, and by reducing the number of lost accounts and unclaimed monies. 7

8 The introduction of SuperStream will mean the eventual removal of cheques from the super system. The expected benefits include: fewer data quality issues for funds and members easier data or money reconciliation fewer lost accounts and unclaimed monies less time out of the market for member s benefits, and more straight-through processing. There are a number of initiatives that make up the SuperStream measures. The current legislative status of these initiatives is as follows: SuperStream measure Start date Legislation status Data standards and ecommerce 1 July 2013 Passed Intra-fund consolidation 30 June 2014 Passed Data and e-commerce standards The new Data Standards and ecommerce (DSeC) Standards aim to provide a consistent, reliable electronic method of performing super transactions such as rollovers between APRA regulated funds and the submission of contribution amounts by employers. Change Data and Payment Standards Electronic contributions, member registrations and maintenance Electronic rollover transactions What it is The Standards specify that when an employer makes any superannuation contribution on behalf of employees, those payments and associated data must be sent electronically and in an approved format. Mandatory for all employers, APRA-regulated super funds and certain self managed super funds (SMSFs). The legislative requirements come into effect over a staggered period and are dependent on the size of the employer. At this stage the expectation of when the new requirements take effect are as follows: Progressively from 1 July June 2015: Large and medium-size employers (20 or more employees) are required to use the Standard for sending contributions, member registration and maintenance to funds. Progressively from 1 July June 2016: Small employers (19 or less employees) are required to use the Standard for sending contributions, member registration and maintenance to funds. Electronic rollovers have now commenced. Data will be transmitted between funds electronically and funds transferred via electronic funds transfer (EFT) processes, leading to the eventual removal of cheques from the super system. Key updates: All APRA regulated funds (except self-managed super funds) are now able to receive Electronic Rollover In receiving Rollover Benefit Statement information and the accompanying payment electronically. AMP has been certified by the ATO and is now sending Electronic Rollovers Out across most of our products and platforms. While all APRA regulated funds are progressively transitioning, the total funds certified currently stands at 69. The commencement date varies based on the size of the fund, with larger funds expected to be ready earlier. By being involved during the industry transition, AMP has been able to ensure system stability, ahead of peak volumes to manage this complex change. By 31 December 2014, all APRA regulated super funds (regardless of size) must transact rollovers electronically. Consolidation Consolidation legislation expands the duties of all trustees in the SIS Act, requiring trustees to identify members with multiple accounts within a fund and merge these accounts if it is in the member s best interest to do so. The intent of this change is to reduce the number of accounts members may have and to stop members from paying multiple insurance policies, in cases where these are not necessary. 8 Change Intra-fund consolidation Timing: The first round of intra-fund consolidation is expected to be completed by 30 June What it is Legislation that requires trustees to identify members that have more than one account within a fund and to define rules that will consolidate a customers multiple accounts in the same super trust. AMP will be completing a round of Intra-fund consolidation commencing second quarter 2014, with the identified member being given the opportunity to opt out. What you may need to do: If you have more than one super account with AMP, you may receive notification in April 2014 that your account will be automatically consolidated. You can opt-out of this by advising AMP of your opt-out decision by the notified date in You will receive a letter commencing April 2014 that will offer instructions on how to do this.

9 Product news Introduction of Standard Risk Measure (SRM) The SRM has been introduced to replace the Risk profile label. The Risk profile label was based on an overall risk of a category of investment options relative to other categories of investment options, ie all Balanced options had a Risk profile of Medium compared to all Aggressive options which had a Risk profile of High. In contrast, the SRM is calculated at the investment option level and all investment options are classified into seven Risk Bands, ranging from Very Low to Very High, based on the estimated number of negative annual returns over any 20-year period. The SRM is based on industry guidance to allow investors to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. The table below sets out the SRM bands/labels used for each investment option based on the estimated number of negative annual returns that an investment option may experience over any 20-year period. Negative annual returns may not occur in consecutive years. Risk band Risk label 1/ Very Low Less than 0.5 Estimated number of negative annual returns over any 20-year period. 2/ Low 0.5 to less than 1 3/ Low to Medium 1 to less than 2 4/ Medium 2 to less than 3 5/ Medium to High 3 to less than 4 6/ High 4 to less than 5 7/ Very High 6 or greater Stamp duty on general insurance (Tasmanian and Australian Capital Territory (ACT) residents only) Stamp duty is a State or Territory tax that is payable on insurance premiums such as income protection (salary continuance) and total and permanent disablement insurance. AMP includes the applicable stamp duty in the insurance premiums our members pay and passes the collected money on to the relevant State or Territory Government. Stamp duty varies by state or territory and by type of insurance benefit. In 2012, the ACT Government announced that the rate of Stamp Duty for members that reside in the ACT will reduce gradually, over a 5-year period, from 10 down to 0 by The QLD Government has also recently announced that the rate of Stamp Duty for members that reside in QLD will increase from 7.5 to 9 effective 1 August The changes in Stamp Duty will be reflected in the premium you pay, if applicable. However, other factors such as age and Consumer Price Index (CPI) increases will also impact your premium. Change of Financial End for the Funds The ATO has approved an application from the Trustee to change the financial year end of the Funds from 30 September to 30 June. The purpose of this change is to align with the majority of funds across the industry and the streamline Trustee reporting to government regulatory bodies. This change will take effect from 30 June There is no impact to the benefits of members or beneficiaries as a result of this change. Financial and regulatory reporting timeframes for the overall Funds will be affected for a transition period, as outlined in the table below: As an example, investment options with a risk band/ label of 5/ Medium to High may experience between 3 to less than 4 years of negative annual returns over any 20-year period. The SRM is not a complete assessment of all forms of investment risk. For instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than an investor may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. The SRM is not a comprehensive account of the risks of investing and investors should read these risk band/ labels in conjunction with the different risks of investing that may apply. Investors should still ensure they are comfortable with the risks and potential losses associated with their chosen investment option(s). For each investment option, any significant changes to market conditions may alter the SRM from time to time. For further information on the methodology used to establish the SRM, please go to amp.com.au. Previous reporting period Transitional reporting period New reporting period Income year Period start date October October 2013 Period end date 30 September June July June

10 Trans-Tasman Retirement Savings Portability From 1 July 2013, individuals may transfer retirement savings between Australia and New Zealand after their permanent migration from one country to the other. The transfer of retirement savings is voluntary for members. A member may only transfer their AMP superannuation to a participating complying New Zealand KiwiSaver scheme. Once the superannuation monies are in a KiwiSaver scheme, there are restrictions on when these funds can be accessed, such as: it cannot be used to purchase a first home it cannot be moved to a third country it can be accessed when the member reaches 60 years of age and satisfies the Australian definition of retirement at that age. At this time, AMP does not accept KiwiSaver funds. Investment option switch request A request to switch a member s investment option(s) is deemed to be processed upon receipt. A member cannot cancel a request submitted to us after 4:00pm on the day it is received. Investment option closures Closure of AMP s Wholesale Global Equity Value Fund and AMP s Wholesale Global Equity Growth Fund Super Directions Personal Superannuation Plan, Retirement Directions Allocated Pension Plan, Super Directions for Business and Super Directions for Business Rollover Section Effective 30 June 2013 AMP s Wholesale Global Equity Value Fund and AMP s Wholesale Global Equity Growth Fund investment portfolios were closed to new investors. Termination of Mortgage Biased investment portfolio Super Directions Fund Super Directions Personal Superannuation Plan, Retirement Directions Allocated Pension Plan, Super Directions for Business and Super Directions for Business Rollover Section National Mutual Retirement Fund Flexible Pension Plan and Flexible Income Plan Effective 16 July 2013 the Mortgage Biased investment portfolio was terminated. All impacted members were notified prior to the termination and funds were switched to the product s Cash investment portfolio (unless otherwise notified). Life Protection Superannuation Plan, Life Insurance Superannuation Plan and Income Insurance Superannuation Plan In May 2013 AMP made benefit improvements to: Life Insurance Superannuation Plans issued from 25 July 2005, and Income Insurance Superannuation Plans issued from 14 August 2006 to 16 August For full details of the benefit improvements please refer to the Upgrade booklets found at amp.com.au > insurance > AMP Elevate Life Insurance, TPD, Trauma > Insurance Upgrades. If you would like printed version of these booklets, please contact our Customer Service Centre on A copy will be sent to you free of charge. From 1 January 2014, plan fees will be increasing by the increase in the CPI for the 12 months to 30 September Removal of Establishment fees Super Directions Fund Simple Super only Previously, members were charged Establishment fees (member and contribution) for a period of 13 months after being transferred from the Protection portfolio. Effective 1 July 2013, these fees will no longer be charged. Member fee changes Super Directions Fund Super Directions for Business Rollover Section Prior to 1 July 2013, the member fee of $0.90 per month in Super Directions for Business Rollover Section was charged per component of super benefit (preserved and unrestricted non-preserved components only). Effective 1 July 2013, a single member fee of $0.90 is charged per month, regardless of the components of super benefit held. Member Benefit Protection In late December, you may have received a letter from us outlining that Member Benefit Protection will no longer apply on your 2014 policy anniversary. Unfortunately, within that letter, we have identified the wrong amount has been quoted. We stated that if your account balance is $1,200 or less your plan or policy fees would of been rebated. The correct amount that should have been quoted is $1,000 or less which is in accordance with the legislated requirements and annual statements. 10

11 Other information Lost Super The account balance thresholds for inactive accounts, and accounts of uncontactable members, that are required to be transferred to the ATO was recently increased to $2,000. The government will further increase the account balance threshold to $2,500 from 31 December 2015, and to $3,000 from 31 December The ATO will pay interest on lost super reclaimed by members from the ATO, at a rate equivalent to CPI inflation. Lost super member accounts and unclaimed super contributions are registered with the ATO. A member can search for their lost super online at ato.gov.au. Taxes All employer contributions paid into a Fund and any personal contributions for which a member claims a tax deduction are currently taxed at a rate of 15. A deduction representing the tax will be made from employer contributions as they are received into a Fund. This deduction is calculated as 15 of the taxable contributions. If a member is self-employed or their employer makes no contributions for them, 15 will be applied, providing they submit a valid notice of intention to claim a tax deduction. If they do not provide a valid notice their contributions will remain non-concessional. Contributions in excess of the concessional or nonconcessional contributions caps are taxed at the top marginal rate, which includes the 15 contributions tax. The ATO will communicate with a member directly if a tax liability arises. If a member does not provide their tax file number (TFN), any concessional contributions they make may be taxed at the top marginal rate and non-concessional contributions will not be accepted. Insurance only members will also need to provide their TFN. Pay as you go (PAYG) tax may be payable by members, or other beneficiaries, when a benefit is paid from a Fund. Surcharge tax While surcharge tax was abolished in July 2005, we may still receive surcharge assessments from the ATO for prior financial years. Any surcharge assessments and liabilities will be deducted from the member s account balance. Fees The fees and charges that are levied against a member s contributions to a Fund and the balance of their account will depend on the type of policy held on their behalf and the particular conditions of that policy. We recommend that you refer to your annual statement, offer document or policy document for specific details on fees and charges. Annual indexation of fees Super Directions Fund Certain fees and thresholds affecting fees are subject to indexation on 1 March of each year in line with movements in Average Weekly Ordinary Time Earnings (AWOTE) (all employees) as published by the Australian Bureau of Statistics, or at any time following one month s notice. The changes for affected products that occurred at 1 March 2013 are included at the end of this report. National Mutual Retirement Fund Certain fees and thresholds affecting fees are subject to indexation in accordance with the increases in CPI for the preceding 12-month period. The changes for affected products that occurred at 1 July 2013 and 1 October 2013 are included at the end of this report. Additional asset charge Simple Super and Tailored Super For members with a membership commencement date prior to 26 April 1994, an additional fee of 1 per annum on the account balance applies when the member elects to remain in the Fund and no longer contributes, ie the status of the account is made paid up. This increased fee will be effective on the date the member is made paid up. Super Directions for Business Rollover Section If you are a member of a Super Directions for Business, Simple Super or Tailored Super employer plan and you leave your employer, the Trustee will automatically transfer your benefit to the Super Directions for Business Rollover Section (Rollover Section). Although you will no longer be a member of your employer s plan, you will be a member of the Rollover Section in your own right. For more information about the Rollover Section, refer to the PDS of the product you hold. The latest PDSs can be found at amp.com.au. 11

12 Conventional Superannuation For benefits backed by a Whole of Life or Endowment policy, the explanation of how earnings are allocated is given below. Allocation of earnings The distribution of profit (in the form of bonuses) is made in accordance with the Life Insurance Act Under the Life Insurance Act, AMP s Appointed Actuary regularly assesses the strength of the NMLA s No. 1 Statutory Fund and advises how much policy owner profit it can prudently pay out, and how to share it fairly among different groups of policies. Bonuses are only paid to members who hold a participating policy. In determining the bonus rates, the Appointed Actuary not only considers the recent investment performance, but also likely future investment return, estimated future rates of mortality, assumed rates of taxes, fees and other expenses. There are two types of bonuses annual bonuses and end bonuses. Annual bonuses Annual bonuses are allocated to plans each year as additions to the sum insured. As the rate of bonus is dependent on AMP s investment experience and our estimates of future experience (including future investment returns), annual bonuses may fluctuate from year to year. However, once allocated they are guaranteed and payable in full when the sum insured becomes payable on death or maturity. End bonuses End bonuses are currently paid in addition to annual bonuses on maturity, death or total and permanent disablement claims (where appropriate) on plans that have been in force for five years or more. These bonuses are not guaranteed and can be decreased, as they are used to pass on the value of more volatile investment returns. Is a policy committee required? Super Directions for Business, Simple Super and Tailored Super A policy committee acts as a channel of communication between members, employers and the Trustee. A policy committee s function is generally of an advisory nature. The ultimate responsibility for the operation of the Fund rests with the Trustee. Policy committees are required under SIS for certain super funds. If you are self-employed or if your employer s plan has less than 5 members, a policy committee is not required. If your plan has from five to 49 members, a policy committee will only be set up if at least five members ask for one in writing. For plans with 50 or more members, the Trustee must take all reasonable steps to ensure a policy committee is established. For those plans where a policy committee has been established, the details of the employer-appointed and the member-elected representatives for your plan will be included on your annual statement. Generally, the member representatives have been elected by members for a term of three years and may be removed by election or by leaving the plan. Employer representatives have been appointed by your employer and may be removed by your employer at any time. Full details of your plan s appointment and removal procedures can be obtained from your policy committee representatives or your plan s financial adviser. If your plan does not have a policy committee and you feel that one should be established, please send a written request to the Trustee. Steps will be taken to form a policy committee if the Trustee receives requests from, or on behalf of five, or more members or if the plan has 50 or more members. Plan reserves Super Directions for Business, Simple Super and Tailored Super The Plan Reserve account management strategy The Trustee has established within the Fund a reserve account for each principal employer. Each principal employer s reserve account may consist of two subaccounts. They are: Plan Reserve account any balance in this account will be invested in the Multi-manager Secure portfolio (Super Directions for Business) or the Guaranteed Plus portfolio (Simple Super and Tailored Super). Plan Reserve Transfer account any balance in this account may be invested in any of the currently available investment portfolios, except for Multimanager Australian Equities and Multi-manager International Equities (Super Directions for Business) or Australian Equities, International Equities, Property and Diversified Fixed Interest (Simple Super and Tailored Super). The default investment portfolio for this subaccount is the same as the Plan Reserve account. What money can be received into the Plan Reserve accounts? Non-vested portion of benefits on leaving service (if any) will be credited to the Plan Reserve account. Surplus amounts transferred into the Fund from other funds (if any) will be credited to the Plan Reserve Transfer account. How and when is the Plan Reserve account distributed? The Trust Deed provides the Trustee s preferred method for distributing the Plan Reserve account and this will be the default method where an alternative method is not requested by the employer. The preferred method seeks to apportion a member s share of the Plan Reserve account balance according to the proportion of member s assets relative to total plan assets. Other formula(s) may be created, but must be reasonable and require Trustee approval. For further information on your plan s Plan Reserve account please contact our Customer Service Centre on

13 Transfers of money from previous funds We welcome the transfer of money from existing super benefits into the Funds. If you rollover a benefit into a Fund from a previous super fund, your rollover will be invested in: the investment portfolio(s) nominated by you on receipt of the rollover benefit, or the portfolio(s) nominated by you for your accumulated assets, or the Fund s default portfolio (where applicable), if you have not made any investment nominations at all. Transfer to AMP Eligible Rollover Fund If we cannot locate you (deemed to be lost ), or if your account is closed and we need to make a compensation payment to you, or there have been no contributions or rollovers on your behalf in the last five years, we may establish an AMP Eligible Rollover Fund account for you. Having an account created in or being transferred to the AMP Eligible Rollover Fund means that you will cease to be a member of our Fund(s) and: you will become a member of the AMP Eligible Rollover Fund and be subject to its governing rules your benefit will be invested in a capital guaranteed participating life insurance policy issued to AMP Superannuation Limited by AMP Life your returns (by way of a crediting rate) are credited annually to your AMP Eligible Rollover Fund account based on your daily account balance and are guaranteed by AMP Life to never be negative no insurance cover is available in the AMP Eligible Rollover Fund. The PDS for AMP Eligible Rollover Fund is issued by AMP Superannuation Limited. You can obtain a copy of the PDS by visiting amp.com.au/erf. Contact details for the AMP Eligible Rollover Fund are: AMP Eligible Rollover Fund GPO Box 300 PARRAMATTA NSW 2124 Phone: Fax: Enquiries and complaints If you have any enquiries about your super entitlement, please contact our Customer Service Centre on the applicable number: Product Super Directions Personal Super Plan Retirement Directions Allocated Pension Plan Flexible Income Plan Flexible Pension Plan Retirement Bond Personal Superannuation Bond Contact number Life Protection Superannuation Plan Life Insurance Superannuation Plan Income Insurance Superannuation Plan Conventional Superannuation Lifestyle Protection Plan Superannuation Annual Renewable Term Accelerator Personal Superannuation Plan Flexipol Personal Superannuation Goldline Personal Superannuation Plan Provider Personal Retirement Plan Provider Top Up Retirement Plan Retirement Security Plan Superannuation Life Protection Plan Address for correspondence: Customer Service Centre PO Box MELBOURNE VIC If you have a complaint please write to the applicable address above. Please state the exact nature of your complaint, the name and number of your super plan and/or your membership number. The Trustee has 90 days to process your complaint and will respond within this timeframe. If your complaint has not been resolved within 90 days, or if you are not satisfied with the Trustee s response to your complaint, you may contact the Superannuation Complaints Tribunal (SCT). The SCT is an independent body set up by the government to assist members, or their beneficiaries, to resolve superannuation related complaints. You may only approach the SCT if your complaint was dealt with under a Fund s internal complaint procedure. The SCT can be contacted on or by writing to: Superannuation Complaints Tribunal Locked Bag 3060 MELBOURNE VIC 3001 Web: sct.gov.au Time limits apply to certain complaints to the SCT. If you have a complaint, you should contact the SCT immediately to find out if a time limit applies. Product Super Directions for Business Super Directions for Business Rollover Section Simple Super Simple Super Rollover Plan Tailored Super Tailored Super Rollover Plan Address for correspondence: Customer Service Centre PO Box MELBOURNE VIC 8001 Contact number