WARNING ON THE USE OF THIS BOOKLET

Transcription

1 WARNING ON THE USE OF THIS BOOKLET The core benefits described in this booklet are generally correct. However, the booklet is not being updated for changes to taxes, superannuation laws, fees, investments or asset allocations, nor for any changes to the Fund s insurance policies. For information about how tax and superannuation law changes affect your benefits, you should seek advice from a licensed financial adviser. The latest information about the Fund is available from the Fund s website, Up-to-date information on Spouse membership in the Fund can be found in the Product Disclosure Statement (PDS) for Spouse members. Information on Retained Benefit membership can be found in the PDS Your IPE Super Guide. The Fund s latest Annual Report includes up-to-date information on the Fund s investment options. All documents are available from the website or by calling the helpline, Superannuation can be complex. So before making any important decisions about your super, we recommend you first discuss your personal situation with a licensed financial adviser. You can find licensed advisers by contacting the Financial Planning Association of Australia on or visiting their website at Information on seeking financial advice and tips on choosing a financial adviser are provided on the Australian Securities & Investments Commission s website at

2 Supplementary Product Disclosure Statement 13 May 2010 Incitec Pivot Employees Superannuation Fund This Supplementary Product Disclosure Statement (SPDS), dated 13 May 2010, updates the Product Disclosure Statement (PDS) of the Incitec Pivot Employees Superannuation Fund (ABN ), which includes: For members of IPE Super s Accumulation section The latest Annual Report (dated 9 September 2009) Your Benefits in IPE Super for Accumulation Members (dated 1 July 2009) IPE Super and your Spouse (dated 17 August 2009) For former members of the WMC Superannuation Plan (with Plum) as at 31 March 2007 who joined IPE Super from 1 April 2007, the SPDS for former members of the WMC Superannuation Plan (dated 1 July 2009) For members of IPE Super s Account-Based Pension section The latest Annual Report (dated 9 September 2009) Your IPE Super Account-Based Pension Guide (dated 1 October 2009) For members of IPE Super s Lifetime Pension section Lifetime Pension and Deferred Pension Benefit Options (dated 27 November 2008) You should read this SPDS with the PDSs. Additional copies of the PDS are available from the Fund Administrator or from IPE Super s website at The purpose of this SPDS is to change the names of the Fund s Trustee, Watson Wyatt Superannuation Pty Ltd and the Fund s service provider, Watson Wyatt Australia Pty Ltd. From 13 May 2010, replace all references in the PDSs to the Fund s Trustee, Watson Wyatt Superannuation Pty Ltd, with Towers Watson Superannuation Pty Ltd (ABN , AFSL ). The change of name follows Watson Wyatt s merger in January 2010 with Towers Perrin. Also replace all references in the PDS to Watson Wyatt Australia Pty Ltd with Towers Watson Australia Pty Ltd (ABN , AFSL ). There are no changes to the Fund s contact details. Issued by Towers Watson Superannuation Pty Ltd (ABN , AFSL ), as Trustee of the Incitec Pivot Employees Superannuation Fund (ABN ).

3 Your Benefits in IPE Super FOR defined benefit members

4 Contents IPE Super snapshot 3 How your super works 4 Your benefits in IPE Super 8 How your super is invested 12 Taxes, fees and your super 15 Linking you with your super 21 Managing IPE Super 25 Who to contact 27 Key super terms 28 Your Super Choices Form for Defined Benefit Members The Incitec Pivot Employees Superannuation Fund The Incitec Pivot Employees Superannuation Fund ( IPE Super ) is managed by Watson Wyatt Superannuation Pty Ltd for employees of Incitec Pivot Limited and associated companies. IPE Super has two main parts the Accumulation section and the Defined Benefit section. Defined Benefit section (closed to new members) Incitec Pivot Employees Superannuation Fund Spouse section Accumulation section Retained Benefits section Allocated Pension section Product Disclosure Statement This booklet, Your Benefits in IPE Super for Defined Benefit Members, is the Product Disclosure Statement (PDS) for the Defined Benefit section of the Incitec Pivot Employees Superannuation Fund. This PDS describes the main features and benefits provided by the Fund, based on the Trust Deed (the legal document that governs the Fund). If there are any differences between the information provided in this PDS and the Trust Deed, then the Trust Deed is the final authority. The information provided is general information only and does not take into account your particular objectives, financial circumstances or needs. It is not personal or tax advice. You should consider obtaining professional advice about your particular circumstances before making any financial or investment decisions based on the information contained in this document. Information contained in this document that is not materially adverse may be updated if it changes. Updated information can be found on, and/or downloaded from, the Fund s MySuper website at A hard copy will also be provided free of charge on request by contacting the IPE Super Helpline on Issued on 1 April 2008 by Watson Wyatt Superannuation Pty Ltd (ABN , AFSL No , RSE Licence No. L ) as Trustee for the Incitec Pivot Employees Superannuation Fund (ABN , RSE Registration No. R ). Your Benefits in IPE Super for Defined Benefit Members 2

5 IPE Super snapshot Style of super Contributions Rollovers Your benefits Insurance cover (For permanent employees working at least 15 hours each week) Your link to the Fund Retained Benefits option Accessing your super Defined benefits*. Contribute the percentage of your salary to super that suits your budget and personal situation. Contribute from your before-tax salary (subject to Company consent) or your aftertax salary. Change your contribution rate at any time. Roll over any amounts you may have in other super funds into IPE Super at any time. No additional fees apply to rollovers. Leaving service benefit. Retirement benefit. Death or total and permanent disablement benefit. Incapacity benefit. Life insurance. Total and permanent disablement insurance. IPE Super member kit. Annual Report (after 30 June each year). Annual Benefit Statement (after 30 June each year). IPE Super Helpline MySuper website Regular newsletters. When you leave your employer, you can leave your super invested in IPE Super. When you retire, you have the option of taking your super as a lifetime pension or allocated pension. * Note: The leaving service benefit of some members is the greater of their defined benefit and their accumulation benefit. See page 8 for more information. Your Benefits in IPE Super for Defined Benefit Members 3

6 How your super works What is super? Super is an important financial asset. For many people it will be their main income source during retirement. Whether you are retiring soon or retirement is a long way off, your super can shape your future. So it's important that you understand how your super works. This will help you to build your super savings in the years before you retire, in the way that is best for you. Currently, the Fund provides two main types of super benefits to its members defined benefits and accumulation benefits. The main difference between them is the way in which the super benefits are calculated. As a member of IPE Super s Defined Benefit section, you have defined benefit-style super. This means that your benefits are generally calculated according to a predetermined formula, which is based on the average of your highest three consecutive annual salaries prior to leaving service and how many years you have been a member of the Fund. However, if you are a former member of the Orica Defined Benefit Super Fund who joined the Fund prior to 1 July 1992, your benefits are calculated using both the defined benefit and accumulation methods and you receive the greater of the two benefits. With accumulation-style super, the contributions you and your employer make are paid into one or more super accounts in your name and your benefit is simply the balance of this account, plus (or minus) any investment earnings, less any fees and taxes. See page 8 for more information on your benefits in the Fund. As with all super funds there are certain risks associated with joining IPE Super. For more information refer to page 24. Contributions to your super As a Defined Benefit member, your defined benefits are funded partly by member contributions you make along with contributions made to the Fund by the Company. Your notional employer contribution Your employer meets the cost of providing your defined benefits (other than any compulsory contributions you make). For the purposes of the contribution caps (see pages 15 and 16 for more information), a notional amount reflecting this cost must be determined. This notional employer contribution, along with any before-tax member contributions you make, count towards your $50,000 p.a. concessional contributions cap. However, a higher cap of $100,000 p.a. applies to each tax year until July 2012 for members who reach age 50 during that period see page 15 for more information on the concessional contributions cap. Your notional employer contribution is determined by the Fund s actuary using a formula set by the Government. This notional contribution is only used for the purpose of the contributions cap and is not necessarily the actual amount paid by your employer to IPE Super. You will be advised of your notional employer contribution each year. If your notional employer contribution is less than the concessional contributions cap, you will generally have scope to make additional before-tax contributions up to the cap. For example, if your "notional" employer contribution is $15,000 for the year ahead, and assuming that you are under age 50 years and your contribution cap is $50,000, you will have the scope to pay additional before-tax contributions of $35,000 to take you up to the cap for that year. However, in certain limited circumstances additional amounts may be determined at the end of the year to count towards your "notional" contributions for that year, in accordance with Government rules. You will be advised if this affects you. If your notional employer contribution is greater than the concessional contributions cap the law provides that, in certain circumstances, you may be entitled to have your notional contribution deemed equal to the cap. This is referred to as the grandfathering rule. If the grandfathering applies, you will not pay excess contributions tax in relation to your "notional" contributions, but you will not be able to make any additional before-tax contributions. You will be advised if this affects you. Your Benefits in IPE Super for Defined Benefit Members 4

7 Your level of member contributions As a Defined Benefit member, you can choose the level of member contributions you wish to make to suit your personal situation. For example, depending on your budget, lifestyle and age, you can choose to: make no member contributions at all; or make contributions at the rate of 5%, 4%, 3%, 2% or 1% of your salary. Any member contributions you make will be automatically deducted from your salary each pay period. Member contributions can be made from either your before-tax salary (subject to Company approval) also known as salary sacrifice or after-tax salary. If you make member contributions from your before-tax salary, the contribution rate you choose will be increased to cover the contributions tax that is payable on salary sacrifice contributions by the Fund on your behalf (see page 15 for more information on contributions tax). Your before-tax member contributions, together with your employer s notional contribution, count towards your concessional contributions cap. If you contribute at less than 5% during your membership and subsequently wish to increase your level of contributions, you have the option of making contributions at 6% or 7% to enable you to catch up on benefits you previously missed out on whilst contributing at the lower rate. When you have caught up your contributions, your contribution rate will automatically return to the normal maximum rate of 5% of your salary. You can change your rate of member contributions at any time by completing a Your Super Choices Form for Defined Benefit Members and returning it to the IPE Super Fund Administrator (see page 27 for contact details). A form is attached to the back of this booklet. Alternatively, you can download one from the Fund s MySuper website at However, before changing your level of before-tax member contributions, the Trustee recommends that you contact the IPE Super Fund Administrator on to discuss the potential impact (if any) on your notional employer contribution. Additional voluntary contributions If you wish to make contributions to your super above the maximum member contribution rate, you can make additional voluntary contributions either in the form of a one-off payment or by regular deduction from either your before-tax (subject to Company consent) or after-tax salary. Additional voluntary contributions from your after-tax salary count towards your non-concessional contributions cap, while contributions from your before-tax salary count towards your concessional contributions cap. You should note that the Fund cannot accept any after-tax contributions from you unless you have provided your Tax File Number to the Fund. Any additional voluntary contributions are paid into your Additional Accumulation Account in IPE Super (see page 29 for more information on your Additional Accumulation Account) and are maintained by the Fund in addition to your defined benefit. The Trustee invests these contributions on your behalf, which earn investment returns (which may be positive or negative) at the earning rate declared by the Trustee each year. The rate appears in the Fund s Annual Report. You can change the amount you contribute, or cease making additional voluntary contributions, at any time. Your rollovers You can choose to roll over any amounts that you have in other super funds (e.g. with previous employers) into IPE Super. There are no fees charged for rolling over your super into IPE Super. You should check whether your other fund will charge you an exit fee. From 1 July 2007, you cannot roll over termination payments from an employer into superannuation except under certain transitional rules. Contact your employer to see whether the transitional rules apply to you. Any rollovers you make will be paid into your Additional Accumulation Account in the Fund (see page 29 for more information on your Additional Accumulation Account). Your Benefits in IPE Super for Defined Benefit Members 5

8 The super co-contribution If you make super contributions from your after-tax salary and earn less than $58,980 a year, the Government will pay an extra contribution (called a co-contribution ) of $1.50 to your super fund for every $1.00 contribution that you pay. The maximum co-contribution payment is $1,500 for members earning less than $28,980 per year who make after-tax contributions of $1,000 or more. The maximum co-contribution payment of $1,500 reduces by five cents for every dollar of a member s income above $28,980 per year and phases out completely for those with an annual income of $58,980 per year or more. The Australian Taxation Office (ATO) automatically determines your eligibility for the co-contribution after the end of each financial year. If you are eligible, the ATO will make the relevant co-contribution payment to IPE Super on your behalf. How Choice of Fund affects Defined Benefit members Under Choice of Fund laws, you are able to choose a complying super fund other than the default fund nominated by your employer IPE Super. If so, it is important that you first consider the implications for your super, in particular on your defined benefit, your insurance cover and the amount of fees you pay. For example, if you choose another fund: Your defined benefit As a member of the Defined Benefit section of IPE Super, you have defined benefits. If you choose another fund for your super, you will first be required to transfer your defined benefit to IPE Super s Accumulation section. If you wish, you can then request your employer to pay your Superannuation Guarantee (SG) contributions and voluntary contributions (if any) into another complying super fund of your choice. You can also request to transfer your existing benefit into the same or a different complying fund. However, you will not be able to transfer your super back into the Defined Benefit section if you later change your mind. Your insurance cover If you choose another fund for your employer SG contributions, your existing insurance cover for death and disablement (including any voluntary insurance) through IPE Super will cease, with effect from the date contributions are first paid to your new fund. Further, if you choose to transfer your current core entitlement to a new superannuation fund before re-directing your SG contributions, all insurance will cease with effect from the date your core entitlement is transferred to your new fund. ( Core entitlement means the value of your defined benefit and any subsequent benefits included in your Superannuation Guarantee Account.) This means that you will need to make insurance arrangements through your new superannuation fund or take out your own personal cover. You should keep in mind that there may be a period when you are not insured between the date you choose to leave the Fund and the date your membership with your new superannuation fund commences and your new insurance cover (if any) begins. You should check the insurance arrangements of any fund you are considering, as the definitions of permanent disablement and temporary disablement under your new fund s insurance policy may be different to those that apply under your existing cover. You may also need to provide health evidence before your new cover commences. If you do provide health evidence and, as a result, your new insurer either rejects or restricts your cover, you may be legally obliged to disclose this fact on all future applications for personal insurance cover. Fees Currently, IPE Super pays most of the costs associated with administration of your defined benefit and your death and disablement insurance cover. The only fees you incur are investment and management fees that are deducted from the Fund s earning rate before they are applied to your accumulation accounts. If you transfer to the Fund s Accumulation section or choose another super fund, you will need to pay all of the fees and charges associated with your membership, including premiums for your insurance cover. There s certainly a lot to think about. Ultimately though, you need to decide what s best for your super. Consider your options carefully and speak to a licensed financial adviser if you need help. Your Benefits in IPE Super for Defined Benefit Members 6

9 Portability and your super If you have an Additional Accumulation Account in IPE Super that is, you have made additional voluntary contributions or rolled money into the Fund portability laws allow you to transfer some or all of this account balance to another complying super fund of your choice once each year. However, portability does not apply to your defined benefits in IPE Super. If you want to transfer your defined benefit from the Fund, you first must transfer your defined benefit to the Accumulation section of IPE Super. For more information, contact the IPE Super Helpline on Your Benefits in IPE Super for Defined Benefit Members 7

10 Your benefits in IPE Super As a member of IPE Super, you are entitled to receive a benefit if you: leave your employer, including when you retire, die, become totally and permanently disabled, or become incapacitated and cannot work. Your leaving service benefit If you leave your employer for any reason other than death or disablement, your benefit is calculated as: Multiple 1 x Final Average Salary 2 x Reduction Factor 3 This benefit is payable in addition to your Additional Accumulation Account, less the balance of your Surcharge Account (if any). See the Key super terms section on page 29 for more information. As a former member of the Orica Defined Benefit Super Fund ( Orica Fund ), the way your leaving service benefit is calculated depends on when you joined the Orica Fund, as set out below. If you joined the Orica Fund before 1 July 1992, or you were a former member of the Provident Fund or a Berger Jenson Nicholson (BJN) fund, your benefit is subject to a minimum of your Accumulation Guarantee Benefit see page 28 to see how the Accumulation Guarantee Benefit is calculated. If you were formerly a member of the Provident Fund or one of the BJN funds before joining the Orica Fund, your benefit (including any Accumulation Guarantee Benefit) will also be adjusted if necessary to reflect your membership of your previous fund. Notes: 1. Your Multiple is based on your Accrued Retirement Multiple and your Maximum Fund Multiple. See the Key super terms section on page 28 for more information. 2. Your Final Average Salary (or FAS) is calculated as your highest average annual superannuation salaries during any three consecutive years of membership. This would normally be your three most recent years of membership. 3. To see how your Reduction Factor is calculated, turn to page 29. Once you have reached your Early Retirement Age (see page 29), your Reduction Factor is 1. If you are a former member of the BJN Group Fund and you leave your employer due to redundancy, your Reduction Factor is 1, regardless of age. Under to the Government's preservation laws, you cannot generally take your super benefit as cash until you permanently retire from the workforce and reach your preservation age. Your preservation age depends on when you were born (see the table below). You may, however, be able to take part of your super in cash before your preservation age if it relates to employment before 1 July Date of birth Preservation age Before July July 1960 to June July 1961 to June July 1962 to June July 1963 to June July 1964 or later 60 Your Benefits in IPE Super for Defined Benefit Members 8

11 Your death and total and permanent disablement benefit If you die or are totally and permanently disabled while you are a member of IPE Super s Defined Benefit section, you or your dependants may be entitled to a benefit. The amount of this benefit depends on your age when you die or become totally and permanently disabled. If this happens: before age 62, you (or your dependants) may receive a lump sum benefit equal to the projected lump sum benefit that would have applied if you had retired at age 62, assuming that your salary remained unchanged from your last day at work and that your future contributions would have been at 5% of your salary. after age 62, you (or your dependants) may receive a lump sum benefit calculated as if you had retired on the day you died or became totally and permanently disabled. If you were a member of the Orica Fund who joined that Fund prior to 1 July 1992, and the accrued part of your benefit is less than your Accumulation Guarantee Benefit (see page 28), then your death and total and permanent disablement benefit will be increased accordingly. If you joined the Orica Fund prior to 1 April 1985, the death and total and permanent disablement benefit will not be less than five x your Salary at the date of death or total and permanent disablement, plus your Additional Accumulation Account less your Surcharge Account. If you were previously a member of the Provident Fund, and you joined the Orica Fund on or after 1 August 1982, and your normal retirement date is age 65, your death and total and permanent disablement benefit (as shown above) is also subject to a minimum benefit equal to your (Accrued Benefit Multiple + (12.5% x number of full years from last birthday to age 65) x Salary). This benefit is subject to a maximum of five x Salary. Your Additional Accumulation Account, less your Surcharge Account, would be paid in addition. Some former BJN Fund members may also have minimum benefits which reflect their membership of a previous fund. The amount of your death and total and permanent disablement benefit is shown on your annual Benefit Statement. Statements are distributed after 30 June each year. To qualify for a total and permanent disablement benefit, you must meet the Trust Deed s definition of total and permanent disablement. Total and permanent disablement generally means having been continuously absent from employment with the employer through injury or illness for six months or any shorter period permitted by the Trustee; and in the Trustee s opinion (after considering medical and other evidence satisfactory to the Trustee), having become incapacitated to such an extent as to render you unlikely ever to resume work in or attend to any work for reward for which you are or may become reasonably suited by education, training or experience. In all circumstances, the benefit will be paid to you only if the Trustee and insurer approve your claim. Incapacity benefit If you become ill or injured for an extended period, you may be entitled to receive an incapacity benefit. To qualify, you must have become incapacitated to the extent that you cannot work in your own job again (you must meet the definition of incapacity in the Trust Deed) but you do not meet the definition of total and permanent disablement in the Trust Deed. The incapacity benefit is calculated as: Accrued Multiple x Salary, plus an additional 3.94% of your notional Final Average Salary for each year from your last day at work to age 62 Incapacity generally means a failure of mental or physical health which, in the opinion of the Trustee (after consideration of evidence), permanently prevents you from doing ordinary work for your employer and which, in the opinion of the Trustee, is not your own fault. Subject to the terms of the Fund s Trust Deed and insurance policy, in certain limited circumstances a benefit may also be payable if you become terminally ill prior to age 65 while a member of the Fund and employed by your employer. For more information about your benefits in IPE Super, call the IPE Super Helpline on Your Benefits in IPE Super for Defined Benefit Members 9

12 Lifetime pension option On retirement, you have the option of taking your benefit as a lifetime monthly pension. If you choose this option, the amount that will be paid to you each year will be equal to 10% of the lump sum defined benefit (excluding the Additional Accumulation Account or Surcharge Account). If you wish to, you can convert part of this benefit back to a lump sum. When you die, and if a spouse survives you, subject to certain circumstances he or she may receive an amount equal to 60% of the standard pension benefit. Pension payments will cease at your death or on the death of your spouse, whichever applies, unless the total benefits that have been paid are below a certain level. If so, the residual will be paid to your estate or your dependants. There is no provision in the Fund s Trust Deed for indexation of the pension. If any indexation occurs, it will be at the discretion of your employer. For more information on IPE Super s lifetime pension, including the risks associated with receiving your benefit as a pension, see the Product Disclosure Statement (PDS), Lifetime and Deferred Pension Benefit Options. This PDS can be downloaded from the MySuper website at or obtained by calling the IPE Super Helpline on About your insurance cover The benefits payable on death or total and permanent disablement will be met in part from insurance policies taken out by the Fund. The cover is provided by IPE Super at no cost to you. Your insurance cover in IPE Super is subject to the terms and conditions of the Fund s insurance policies. If you make a claim, you should be aware that there may be delays in processing your claim or gathering the data necessary to assess your claim. From time to time, you may be asked to submit evidence of good health to the Fund's insurer. Your insurance cover on exercising Choice of Fund will cease (as explained on page 6) without extended cover and continuation options. If you subsequently redirect SG contributions to IPE Super after previously exercising Choice of Fund, you will rejoin as an Accumulation member and you must provide evidence of good health to the insurer before any new cover will be provided. In certain circumstances, the Trustee may have the power to adjust your death and disablement benefits if insurance cover is restricted or refused. What happens to my super benefit if I separate from, or divorce, my spouse? Under superannuation law, divorcing or separating couples can split the future superannuation payment of one or both of the partners as part of their property settlement. This can be done either by Court Order or by agreement between the separating couple after legal advice has been sought. If this applies to you, your super benefits will be reduced accordingly. More information on the splitting of super benefits can be obtained by contacting the IPE Super Helpline on Refer to page 20 for details of the fees that apply. Your Benefits in IPE Super for Defined Benefit Members 10

13 Super contributions and bankruptcy Contributions to super (excluding Superannuation Guarantee contributions) made by you, or on your behalf, may be recoverable by creditors in the event of your bankruptcy. This applies to contributions (excluding Superannuation Guarantee contributions) made on or after 27 July 2006 if these contributions are demonstrated to have been made with the specific intention of defeating bankruptcy. You will be advised if this affects you. Providing for your family Your death benefit can generally be paid only to your legal dependants usually your spouse (including de facto partner), your children, any person who is financially dependent on you, or to a person with whom you had an interdependency relationship. Interdependency is defined as where: two people have a close personal relationship, and they live together, and one or each of them provides the other with financial support, and one or each of them provides the other with domestic support and personal care. However, if two people have a close personal relationship but they do not satisfy the other conditions because one or both of them suffer from a physical, intellectual or psychiatric disability, then their relationship still meets the definition of interdependency. The law includes details of various matters that the Trustee must consider in deciding whether two people have an interdependency relationship. You can advise the Trustee who you wish to receive your death benefit by completing a Your Super Choices Form for Defined Benefit Members, advising the Trustee to whom and in what proportion you would like your death benefit to be paid. If you prefer, or if you have no legal dependants, you may nominate your estate. When the Trustee pays your benefit to your estate, it will be distributed according to your Will, so it's important that you keep it up to date. The Trustee has the power to pay your benefit to another person (e.g. a parent) if you do not have any dependants and no legal personal representative is appointed to your estate. The Trustee will use your nomination as a guide when deciding who should receive your death benefit, but will also consider other factors that are relevant to your situation at the time of your death. You can change your nomination at any time by completing a Your Super Choices Form for Defined Benefit Members and returning it to the Fund Administrator as instructed. Your Benefits in IPE Super for Defined Benefit Members 11

14 How your super is invested Your defined benefit is calculated using a formula, so it is protected against market conditions and variations in investment earnings. Your accumulation-based benefit, together with your rollovers and additional voluntary contributions (if any), are invested in the same way as your defined benefits. These amounts achieve earnings at the rate declared by the Trustee each year. Earnings can be positive or negative. The investment objectives and strategy for the Fund s defined benefit investments are shown below. Member Investment Choice is not available to Defined Benefit members. Investment objectives The Trustee and IPE Super s investment adviser have established investment objectives, or broad goals, to assist in managing the Fund s assets. The Trustee s general investment objectives are to: invest the assets as permitted by the Trust Deed and by superannuation law, and to exercise those investment powers prudently, ensure that the Fund s assets are adequately diversified, ensure that there are sufficient assets to meet benefit payments when they are due, and ensure that investment managers appointed by the Trustee exercise integrity, prudence and professional skill in fulfilling the investment tasks that are delegated to them. The Trustee has also established specific investment objectives for the Fund s defined benefit assets, namely to: achieve an expected rate of return (net of investment fees and tax) that exceeds the growth of inflation (CPI) by at least 3.0% p.a. over moving three-year periods, and outperform the Median Balanced Pooled Fund Manager (Mercer Pooled Survey) over moving three-year periods. Investment strategy The Fund s assets are also invested according to a specific investment strategy. This is the plan that the Trustee follows to achieve the investment objective. The Fund s investment strategy requires the Fund to invest across a diversified mix of assets or investment types. For example: Growth assets include shares and property. Growth assets generally offer higher returns over the long term (say five or more years) than other types of assets. They also usually have a higher risk in the short term because returns can vary widely from year to year. Investment returns from growth assets may also be significantly negative on occasions. Income assets include cash deposits and fixed interest investments, such as government bonds and corporate debt. The alternative assets (i.e. Absolute Return Funds) in which the Fund invests are also classified as income assets. Assets in this category are generally regarded as lower-risk investments; however, they also generally offer lower returns over the long term. They also have a low likelihood of negative annual returns. The specific investment strategy established by the Trustee for the Fund s defined benefit investments is to invest around 60% in Australian and international shares and property, with around 40% in fixed interest, cash and alternative investments. Your Benefits in IPE Super for Defined Benefit Members 12

15 The investments in the Fund s Defined Benefit section are allocated across various asset classes. As at 1 July 2007, the Fund s long-term strategic asset allocation was: Asset class Asset allocation Australian Shares 30% International Shares (unhedged) 15% Property 15% Alternative Investments* 10% Fixed Interest 20% Cash 10% 100% *Absolute Return Funds Investment adviser and managers JANA Investment Advisers (JANA) is investment adviser to IPE Super. Part of the National Australia Bank Group, JANA specialises in providing tailored investment advice to major superannuation funds and other institutional investors. The majority of the Fund s assets are managed through an MLC Life insurance policy. As the Fund s investment adviser, JANA assists the Trustee in setting appropriate long-term investment objectives and strategies for the Fund. JANA is responsible for implementing the Fund s investment strategies for example, by appointing, monitoring, and where appropriate, terminating the professional investment management companies used to manage assets on behalf of the Fund. The following investment managers were retained by the Trustee as at 1 July 2007: Australian Shares Acadian Asset Management Balanced Equity Management Concord Capital Cooper Investors GMO Australia Maple-Brown Abbott Investment Managers Paradice Investment Management Perpetual Investment Management Renaissance Asset Management State Street Global Advisors Wallara Asset Management International Shares Acadian Asset Management Baillie Gifford BIAM Australia Capital International Goldman Sachs Asset Management Marathon Asset Management Marvin & Palmer Associates Pzena Investment Management State Street Global Advisors Wellington International Management Company, LLP Absolute Return Funds Harris Alternatives GMO Australia Diversified Fixed Interest Blackrock Investment Management PIMCO Australia UBS Asset Management Your Benefits in IPE Super for Defined Benefit Members 13

16 Property AMP Capital Investors Charter Hall DB Real Estate Australia Cash National Specialist Investment Management Reserves The Fund does not maintain investment fluctuation reserves. All investment returns earned by the Fund (net of tax and investment and administration fees as shown on page 18) are distributed to members accounts each year at the rate declared by the Trustee. Actuarial review At least every three years, the Fund s actuary conducts a review of the Fund to ensure that it has sufficient assets to meet its liabilities, including benefit payments to members. An actuarial review must be conducted within 12 months of IPE Super s inception (i.e. by 1 November 2007). Additional investment information Derivatives The Trustee does not invest directly in derivatives. However, part of IPE Super s assets, (approximately 10%) are invested in Absolute Return Funds (or alternative assets ). The underlying managers for this investment may actively use derivatives as a tool to assist in achieving their stated objectives. In relation to the Fund s other investments, the relevant investment managers may use derivatives for risk-control purposes or to efficiently shift asset allocations. Superannuation law requires the investment managers to adopt a Derivatives Risk Statement. This Statement outlines the controls that are in place to safeguard the Fund s investments against the improper use of derivatives. Socially Responsible Investments The Trustee does not take into account social, ethical or environmental considerations or labour standards for the purpose of selecting, retaining or realising the Fund s investments. Importantly, the key objective is for the Fund s investments to produce the highest return after considering the associated level of investment risk. Need financial advice? Here s how. Superannuation can be complex. So, when you need to make important decisions about your super, speaking to a licensed financial adviser can help you determine which super choices are the most appropriate for your personal situation and needs. Watson Wyatt Australia Pty Ltd has arrangements in place to offer members of IPE Super financial planning services through qualified financial planners. Watson Wyatt has financial planners in its Melbourne office. In Sydney, Watson Wyatt has engaged ipac securities limited (ABN ) to provide financial planning services. You can take advantage of these arrangements at any time, including when you leave the Fund. To speak with a licensed financial adviser from Watson Wyatt in Melbourne, contact Susan Rio on (03) To speak with a licensed financial adviser from ipac in Sydney, contact ipac on If you live outside Melbourne or Sydney and wish to find a licensed adviser in your area, contact the Financial Planning Association on or visit their website at The Australian Securities & Investment Commission (ASIC) has produced a booklet entitled Getting advice to help you obtain the financial advice you need. It contains some practical guidelines on how to choose an adviser and evaluate whether the advice they give you is appropriate for your situation. You can access and download a copy of this booklet by visiting ASIC s website at and clicking on the Getting advice link. You can also request a copy of the booklet by ing ASIC at infoline@asic.gov.au (remember to include your name and address) or by phoning Your Benefits in IPE Super for Defined Benefit Members 14

17 Taxes, fees and your super What taxes apply to my super? A number of taxes may apply to your super. These are: 1. Contributions tax at the rate of 15%, which is deducted from all concessional contributions that is, employer contributions and any contributions you make from your before-tax salary (by salary sacrifice). If you have not provided your Tax File Number to your super fund, the rate of tax that applies to concessional contributions increases substantially to the top marginal personal tax rate (plus the 1.5% Medicare Levy). However, if you were a member prior to 1 July 2007, the higher tax rate only applies if your concessional contributions are in excess of $1,000 p.a. 2. Tax on investment earnings at the rate of 15% less any applicable deductions that may be available to the investment managers of the Fund. This tax is deducted from the Fund s investment earnings before being applied to your account(s). 3. Excess contributions tax may apply if your contributions exceed the contribution caps set by the Government. See below for more information. 4. Tax on benefits that are paid in cash. The amount of tax payable depends on a number of factors including: what type of benefit is paid (retirement, disability or death); who receives the benefit; how you receive the benefit (e.g. lump sum amount or pension); and your age when you receive the benefit. For example, if you are aged 60 or over, all lump sum payments and pensions paid to you from a taxed super fund (such as IPE Super) will be tax free. If you are less than age 60, any lump sum amounts paid to you will consist of only two tax components a tax-free component and a taxable component. 5. The superannuation surcharge an additional tax of up to 15% levied against the employer and beforetax (salary sacrifice) contributions of high-income earners. The surcharge was abolished with effect from 1 July 2005, however the Fund may still receive assessments from the Australian Taxation Office for members affected by the surcharge for prior years. If so, any surcharge amounts will be deducted from your account(s) in the Fund. For more information about the surcharge, contact the IPE Super Helpline on Tax limits A number of limits which are indexed annually as at 1 July affect how super contributions and benefits are taxed. The limits that apply for the period 1 July 2007 to 30 June 2008 are given below. Cap on employer and before-tax contributions A flat $50,000 p.a. cap applies to concessional contributions, including employer contributions and any contributions you make to super from your before-tax salary (i.e. by salary sacrifice). Contributions in excess of the cap will be taxed at the top marginal personal tax rate (45%) plus the Medicare Levy (1.5%). This rate includes the Government s 15% contributions tax. Excess contributions will also count towards your non-concessional contributions cap (see below). A higher transitional limit of $100,000 p.a. applies for the period 1 July 2007 to 30 June 2012 to anyone who attains age 50 during that period (i.e. the higher limit applies from the year in which a member reaches age 50). Your Benefits in IPE Super for Defined Benefit Members 15

18 The Australian Taxation Office (ATO) determines whether any excess tax applies and if so, will forward a tax assessment and a release authority directly to the affected member. It is then up to the member to either pay the excess tax directly to the ATO, or arrange with their super fund to pay the tax on their behalf and deduct it from their benefit by giving the release authority to the fund. Time limits apply to the payment of the tax. The tax cannot be paid from any part of your super that is in defined benefit form. Cap on after-tax contributions Any non-concessional contributions you make to super are subject to a cap of $150,000 p.a. Non-concessional contributions include any amounts you contribute from your after-tax salary. They also include: any contributions made for you by your spouse, amounts you transfer from overseas funds (except to the extent an election applies for them to be taxed in the fund), excess concessional contributions, and certain other less common amounts. Contact the IPE Super Helpline on for more information. If necessary, limits for the following two years can be brought forward to enable members under age 65 to make larger one-off payments to a maximum limit of $450,000. Super funds are unable to accept individual lump sum amounts in excess of the maximum limits ($450,000 if you are aged less than 65, $150,000 if not), and any such payments will be returned to you. If you exceed the cap, the excess will be taxed at the top marginal personal tax rate (45%), plus the Medicare Levy (1.5%). The same ATO assessment process applies as for concessional contributions (see page 15 for more information). However the excess non-concessional contributions tax must be paid from your super fund. Providing your Tax File Number Providing your Tax File Number (TFN) to your super fund is not compulsory; however, doing so ensures that you don t pay any more tax on your contributions than you need to. Significant consequences apply to members of super funds who have not advised their super fund of their TFN. These include: taxing their concessional (employer and before-tax) contributions at the top marginal tax rate of 45% (plus the 1.5% Medicare Levy), and prohibiting super funds from accepting any non-concessional contributions from these members. If you have not previously provided your TFN to the Fund and you wish to do so, contact the IPE Super Helpline to obtain the appropriate form. Alternatively, you can your TFN to the Fund Administrator at ipesuper@watsonwyatt.com.au (be sure to include your full name and membership number in your ). Your Benefits in IPE Super for Defined Benefit Members 16

19 Fees and other costs Did you know? Small differences in both investment performance and fees and costs can have a substantial impact on your long term returns. For example, total annual fees and costs of 2% of your fund balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $100,000 to $80,000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. You may be able to negotiate to pay lower contribution fees and management costs where applicable. Ask the fund or your financial adviser. To find out more If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website ( has a superannuation fee calculator* to help you check out different fee options. * Please note, the ASIC fee calculator does not apply to defined benefits. This section shows fees and other costs that you may be charged. These fees and costs may be deducted from your money, from the returns on your investment or from the Fund s assets as a whole. Taxes and insurance costs are set out in the notes on page 20. Please note that the Trustee of IPE Super has already negotiated (and will continue to monitor) the fees and management costs of the Fund on your behalf. There is no scope to negotiate lower fees and management costs on an individual basis. You should read all of the information about fees and costs because it is important to understand their impact on your investment. Your Benefits in IPE Super for Defined Benefit Members 17

20 Type of fee or cost Amount How and when paid Fees when your money moves in or out of the Fund Establishment fee: This is the fee to open your investment. Contribution fee: The fee on each amount contributed to your investment either by you or your employer. Withdrawal fee: The fee for each amount you take out of your investment. Termination fee: The fee to close your investment. Management costs The fees and costs for managing your investment. The fees charged for investing the Fund s assets. Service fees 1 Investment switching fee: This is the fee for changing investment options. Nil Nil Nil Nil 0.15% p.a. of assets ($1.50 per $1,000). 0.61% to 0.71% p.a. of assets ($6.10 to $7.10 per $1,000). Nil Not applicable Not applicable Not applicable Not applicable This fee applies only to benefits that are linked to investment returns (e.g. additional voluntary contributions, rollovers, etc.). It does not apply to defined benefits. This fee is deducted from the Fund s net investment return before it is applied to your accounts in the Fund. This fee applies only to benefits that are linked to investment returns (e.g. additional voluntary contributions, rollovers, etc.). It does not apply to defined benefits. Investment management fees are deducted from the Fund s net investment return before it is applied to your accounts in the Fund. Not applicable 1 Details of other service fees are described in the Additional explanation of fees and costs on the following pages. Your Benefits in IPE Super for Defined Benefit Members 18

21 Additional explanation of fees and costs 1. Investment and administration fees Fees and investment taxes are deducted from the Fund s investment return before it is applied to your accounts (where applicable). Tax is deducted at the rate of 15% from the investment returns earned by each investment manager prior to setting the unit prices that apply to the Fund s investments. This tax is reduced by any applicable deductions that are available to the investment managers or the Fund. Some of the Fund s investment managers charge performance-based fees. A summary of the basis for determining these performance-based fees for each manager is shown in the table below. Estimated performance fees have been included in the management costs range shown in the table on page 18 and in the table below. It is not possible to determine the exact fees in advance, as they depend on the Fund s actual investment performance in any financial year. Any management costs not deducted from your accounts or investment returns are met by additional Company contributions to the Fund. Investment manager Basis for determining performance fee Estimated performance fee Acadian Asset Management 15% of gross return above benchmark. 0.45% BIAM Australia Charter Hall Cooper Investors GMO Australia Goldman Sachs Asset Management 0.04% of funds under management once an agreed target has been achieved. 15% 20% of any performance above an agreed return benchmark. 20% of out-performance above the relevant Index. 20% of out-performance above the manager s benchmark. 20% of the excess performance above benchmark. 0.04% 0.50% 0.60% 1.00% 0.60% Harris Alternatives 10% of new earnings. 1.00% Paradice Investment Management Perpetual Investment Management Renaissance Asset Management State Street Global Advisors 10% of out-performance above the relevant benchmark. 20.5% of out-performance above a return equal to the relevant Index. 10% of out-performance above the relevant benchmark. Total fee is capped at 2.5% p.a. 20% of the excess performance above benchmark. 0.30% 0.62% 0.30% 0.60% Your Benefits in IPE Super for Defined Benefit Members 19

22 2. Insurance premiums The Fund pays all insurance premiums and related expenses for Defined Benefit members of IPE Super. 3. Other fees and taxes Your benefits are reduced to reflect the accumulated value of any superannuation surcharge assessments received on your behalf from the ATO. While the superannuation surcharge was abolished with effect from 1 July 2005, you may still be liable for the surcharge in relation to periods prior to this date. If you, or your spouse, require information on your benefit in relation to a Family Law matter, a fee of $220 will be charged for each date at which information is required. You, or your spouse, are required to pay this fee at the time of any request for information it is not deducted from your accounts. In addition, if your super is split under a Family Law agreement or Court Order, fees will apply for the splitting of your super and the payment of an amount to your former spouse. These fees are normally shared evenly between you and your former spouse, unless your agreement or Court Order provides otherwise. The fees may be paid by you and/or your spouse by cheque, or otherwise will be deducted from the applicable benefit. The fees are: Establishment of an entitlement to your spouse: $165 Annual maintenance fee (non-member spouse): $12.35 Payment of an amount to your spouse after establishment of the split: $165 The Fund s adviser receives a commission of 0.25% per annum ($2.50 per $1,000) of the assets held in the Fund s bank account. This fee is neither negotiable nor rebatable. All fees include GST where applicable. 4. Fee changes Some of the fees are dependent on the fees charged by the Fund s service providers. Some of these fees may be indexed annually (e.g. in line with increases in Average Weekly Ordinary Time Earnings); others depend on the services provided to the Fund each year. The Trustee reserves the right to increase the fees without your consent if necessary in order to manage the Fund. You will be given at least 30 days notice of any fee increases. The fees shown above and in the table on page 18 are current as at 1 July Your Benefits in IPE Super for Defined Benefit Members 20

23 Linking you with your super Staying in touch As a member of IPE Super, you have access to a range of regular communications to keep you up-to-date with the latest news about super and the Fund. For example: The Fund s MySuper website at provides around-the-clock access to information about the Fund s features and benefits and investment performance. Using your Personalised Identification Number (PIN), you can also enter the Access MySuper section of the site for information on your personal super benefit. The IPE Super Helpline on is available during normal business hours to provide you with assistance and answer your queries. The Fund s Annual Repor tells you about the Fund s investment performance during the year under review, who manages your super and how, the Fund s fees and charges, recent and proposed changes to superannuation law and the taxes that impact on your super. The Fund s first Annual Report will be for the period ending 30 June 2007 and will be distributed after this date. Your Benefit Statement, which accompanies the Annual Report, provides specific information about your super benefit, including the balance of your account at the end of the year under review, your benefit entitlements, the transactions into and out of your account during the year and your dependant nomination(s). Your first Benefit Statement from IPE Super will be distributed after 30 June So, now you have the tools you need to stay in touch with your super and the Fund. Enquiries and complaints Initial enquiries and complaints, including privacy-related enquiries, should be directed to the IPE Super Helpline on In most cases, your enquiry can be dealt with promptly and efficiently over the phone. If you are not satisfied with the response you receive, there is a formal process through which the Trustee reviews enquiries and complaints. To make a formal enquiry or complaint, you can do so in writing to: The Fund Secretary IPE Super C/o Watson Wyatt Australia Pty Ltd Level 4, 1 Collins Street Melbourne VIC 3000 The Fund Secretary will usually respond within 30 days. If you are not happy with the Fund Secretary s response, you can submit a written enquiry or complaint for consideration at a meeting of the Trustee. The Trustee will respond within 90 days. If you are not happy with the Trustee s handling of your complaint, you may then contact the Superannuation Complaints Tribunal (except in the case of privacy-related matters). The Tribunal is an independent body set up by the Federal Government to deal with certain enquiries or complaints that the Trustee has not dealt with to your satisfaction. You can contact the Tribunal on There are some complaints that the Tribunal cannot consider, such as those relating to the management of the Fund as a whole. In addition, time limits apply to certain complaints relating to total and permanent disability claims and to complaints about objections to the payment of death benefits. If your complaint is in relation to one of these areas, please contact the Fund Administrator or refer to the Tribunal s website at as soon as possible for further information. For privacy-related matters, the Federal Privacy Commissioner may review your complaint. You can contact the Privacy Commissioner on Your Benefits in IPE Super for Defined Benefit Members 21

24 Protecting your personal information To ensure that you receive the correct superannuation benefit and insurance, the Fund keeps precise records about you. This means that the Fund holds a great deal of information about you, such as your contact details, date of birth, Tax File Number, and so on. Under the privacy legislation, you have the right to access personal information the Fund holds about you, subject to any applicable exceptions. If you believe that the information is inaccurate or incomplete, you are entitled to request that the Fund amend your personal information. The privacy legislation also requires your consent before your personal information is collected and passed to third parties. The Trustee believes your privacy is important and so has developed a privacy policy to protect your personal information. The policy outlines how the Fund collects and manages your personal information. A copy of the policy is available by calling the IPE Super Helpline on If you would like to access or update your personal information, please contact: The Fund Administrator IPE Super Locked Bag 14 Collins Street East VIC 8003 Helpline: Your Benefits in IPE Super for Defined Benefit Members 22

25 Your options on leaving your employer When you leave your employer, you will receive a statement showing the balance in your account and information outlining the options you have for your super. If you have more than $2,000 in your account, your super will be automatically transferred into the Retained Benefits section of IPE Super, which is part of the Fund s Accumulation section. Here, your benefit will be invested in the Cash investment option until you provide the Fund Administrator with other instructions about the payment of your benefit. Keeping your super in the Retained Benefits section has a number of advantages: You can stay with the Fund you know a super fund with a proven record of sound management and prudent investment practices. You can decide how your super is invested by choosing from the Fund s range of investment options. The Retained Benefits section has no entry fee, so it costs you nothing to retain your membership of the Fund on leaving your employer. If you have less than $2,000 in your account when you leave, you will have 90 days to provide your instructions to the Fund Administrator on how you wish your benefit to be paid. In the meantime, your super will be invested in the Cash investment option. If no instructions are received from you within 90 days, your super will be rolled into the Fund s nominated Eligible Rollover Fund (ERF), namely: AUSfund (formerly the Australian Preservation Fund) Level 29, 2 Lonsdale Street Melbourne VIC 3000 Tel: Contact: The Administrator If your benefit is transferred to the ERF, you will no longer be a member of, or have any rights under, the Fund, and you will need to contact the ERF directly in relation to your benefit. You should also note that the investment and crediting rate policy of the ERF may be different to those that applied in the Fund. In addition, the ERF does not offer any insurance cover. The ERF may not be a suitable long-term investment vehicle for your super, as the returns may be lower than those available from other products. Other options on leaving your employer If you do not wish to remain a member of the Retained Benefits section, you have a number of options. You can: 1. Take a cash payment If you have any non-preserved super (refer to your Benefit Statement), you can withdraw all or part of that amount in cash. If you are under age 60, tax may apply to the taxable component (i.e. previously known as the post-june 1983 component) of this amount (if any). For partial payments, the tax components of the payment will be in proportion to your total benefit. You cannot choose, for example, to withdraw only your tax-free component. Amounts paid by the Fund to members aged 60 or over are tax free. For more information on the tax payable on benefits, refer to page Roll over your benefit to another super fund You can roll over your super into another super fund of your choice, providing it is an approved superannuation fund under the law. 3. Take a pension If you leave your employer after your early retirement age (generally 55 years) or as a result of total and permanent disablement, you can choose to take your benefit in the form of an Allocated Pension or Lifetime Pension. If you are eligible, you will be provided with more details when you leave employment. For more information on the choices that are available to you, contact the IPE Super Helpline on Your Benefits in IPE Super for Defined Benefit Members 23

26 Risks of membership There are certain risks associated with your membership of IPE Super; risks that are common to all superannuation funds. These risks generally fall into two categories investment risk and non-investment risk. Non investment risks There is the risk that the employer will cease making contributions to the Fund in the future. If that were to happen, the Trust Deed determines how the Trustee must react. There is also the risk that the superannuation fund will lose its compliance status and therefore lose its tax concessions. The Trustee manages this risk by ensuring that the Fund is administered professionally, and that it operates in accordance with the requirements of the Trust Deed and law. There is a risk that a member may suffer injury or illness such that they cannot work but not be sufficiently injured or ill to satisfy the Fund s definition of disablement. In such cases, a disablement benefit will not be paid. Refer to page 9 for more information. Changes are frequently made to superannuation law, which may affect a member s ability to access their superannuation benefits. Changes can also occur to the taxation of superannuation, which may affect the value of a member s superannuation benefits. Pensions risk There are risks associated with electing to receive your retirement benefit as an Allocated Pension or Lifetime Pension. These risks are set out in the Product Disclosure Statements (PDSs) entitled Your IPE Super Allocated Pension Guide and Lifetime and Deferred Pension Benefit Options. These PDSs are available for downloading from the MySuper website at or by calling the IPE Super Helpline on You should consider these risks carefully before deciding to receive your benefit in the form of a pension. Investment risks Investment risks only affect that part of your benefit that depends on investment earnings. The main investment risks that exist are described below: Inflation risk The rate of inflation may exceed the rate of return achieved on your investment and hence your investment would not retain its purchasing power. Individual investment risk Individual investments can (and do) fall in value. This risk mainly affects investments in shares and property, although it can also affect investments in fixed interest. Market risk Changes in the investment markets resulting from changes in economic, political and legal conditions or market sentiment can affect the value of the investments. Interest rate risk Changes in interest rates can have a positive or a negative impact directly or indirectly on investment value or returns. Currency risk Some investments are made in other countries. If their currencies change in value relative to the Australian dollar, the value of the investment can change. Derivatives risk There are a number of risks associated with investing in derivatives contracts, which include: the value of the derivative failing to move in line with the underlying asset; the risk that the derivative may not readily be converted to cash; the risk that the Fund may not be able to meet payment obligations as they arise; and counterparty risk, where the other party to the derivative contract cannot meet its obligations under the contract. Your Benefits in IPE Super for Defined Benefit Members 24

27 Managing IPE Super The Trustee Watson Wyatt Superannuation Pty Ltd (ABN , AFSL , RSE Licence No. L ) is Trustee of Incitec Pivot Employees Superannuation Fund. This company has been approved and licensed to act as a trustee of superannuation funds by the principal regulator of super funds in Australia, the Australian Prudential Regulation Authority (APRA). The Trustee Company is responsible for: protecting your rights and interests as a member, operating IPE Super in line with the Trust Deed and superannuation law, investing IPE Super s assets prudently according to the Fund s investment objectives, paying benefits when they are due, and keeping you informed of relevant details. Watson Wyatt Superannuation Pty Ltd is a subsidiary of Watson Wyatt Australia Pty Ltd, a company that also acts as administrator (in partnership with IBM SuperLife Services Pty Limited see page 26 for more information), actuary and secretary to IPE Super. Policy Committee In managing the Fund, a Policy Committee represents the interests of members and employees. The Committee consists of an equal number of members who are appointed by Incitec Pivot Limited and members who are elected periodically by members of IPE Super. As at 1 April 2008, members of the Policy Committee were: Company-appointed Shane Day Cyndy Burnham Simon Atkinson Member-elected Darren McGrath (Mackay) Mark Samuell (Phosphate Hill) Ken Thomas (Gibson Island) The next Policy Committee election will be held in early For a copy of the Policy Committee s election policy, please contact the IPE Super Helpline on Trust Deed The Trustee is responsible for managing the Fund in accordance with the Trust Deed the legal document that sets out the rules and operating requirements of the Fund and with the laws and regulations governing superannuation in Australia. A complying fund The Incitec Pivot Employees Superannuation Fund is a complying superannuation fund for tax purposes. The Trustee has lodged all necessary returns and certificates with the Australian Prudential Regulation Authority. Indemnity insurance The Fund Trustee is currently covered by a Professional Indemnity insurance policy that protects the Fund s assets from a legal liability to the extent permitted by law and the policy conditions. Your Benefits in IPE Super for Defined Benefit Members 25

28 Specialist advisers to the Fund The following organisations have been retained by the Trustee to provide specialist services to the Fund: Consultant, Actuary and Fund Secretary Watson Wyatt Australia Pty Ltd Fund Administrator Watson Wyatt Australia Pty Ltd From 1 April 2008, Watson Wyatt Australia Pty Ltd changed its outsourced provider of administration services to IBM SuperLife Services Pty Limited (ABN , AFSL ). Investment consultant JANA Investment Advisers Legal advisers Mallesons Stephen Jaques Freehills Auditor Deloittes Insurer CommInsure The Trustee does not receive commissions or other similar payments from any of its specialist advisers. Your Benefits in IPE Super for Defined Benefit Members 26

29 Who to contact To find out more about your super benefits and/or IPE Super, you can: visit the MySuper website at or call the IPE Super Helpline on If you have questions about the Fund, or the information in this, please contact: The Fund Administrator IPE Super Locked Bag 14 Collins Street East VIC 8003 Tel: Current members of the Fund can also request copies of the Trust Deed and Risk Management Plan by contacting the Fund Administrator. Your Benefits in IPE Super for Defined Benefit Members 27

30 Key super terms Accrued Retirement Multiple The Accrued Retirement Multiple depends on your rate of contributions throughout your Fund membership. For each rate of contribution available in the Fund, there is a corresponding Accrual Rate. For each year (or part year) that you contribute at a given rate, your Accrued Retirement Multiple increases by the corresponding Accrual Rate as shown in the table below. The Accrual Rate is pro-rated for part years. Contribution rate (if made from after-tax salary) Contribution rate (if made from before-tax salary) Accrual rate 0% 0.00% 4.7% 1% 1.18% 7.7% 2% 2.35% 10.7% 3% 3.50% 13.7% 4% 4.71% 16.7% 5% 5.88% 19.7% 6%* 7.06%* 22.7% 7%* 8.24%* 25.7% * Note: The contribution rates of 6% and 7% from after-tax salary or 7.06% and 8.24% from before-tax salary are only available to members who have not yet attained their Maximum Fund Multiple (see below and page 29 for more information). Accumulation Guarantee Benefit Former members of the Orica Defined Benefit Super Fund who joined that fund prior to 1 July 1992 along with certain former Provident Fund members and BJN members, have an Accumulation Guarantee Benefit. This means that on leaving service, they receive either an Accumulation Guarantee Benefit or Defined Benefit, whichever is greater. The Accumulation Guarantee Benefit is calculated as the sum of notional Company contributions and your member contributions, plus or minus investment returns (which can be positive or negative), less taxes and fees. The rate depends on your own contribution rate, as shown in the table below. (Note: This notional Company contribution rate is not the same as the notional employer contribution that is assessed against your concessional contributions cap.) Your contribution rate (if made from after-tax salary) Your contribution rate (if made from before-tax salary) Notional Company contribution rate (% of salary) 0% 0.00% 6.0% 1% 1.18% 6.5% 2% 2.35% 7.5% 3% 3.50% 8.5% 4% 4.71% 9.0% 5% 5.88% 10.0% 6%* 7.06%* 11.0% 7%* 8.24%* 12.0% * The contribution rates of 6% and 7% from after-tax salary or 7.06% and 8.24% from before-tax salary are only available to members who have not yet attained their Maximum Fund Multiple (see page 29 for more information). No tax is deducted from notional Company contributions when calculating the Accumulation Guarantee Benefit. Your Benefits in IPE Super for Defined Benefit Members 28

31 Additional Accumulation Account Your Additional Accumulation Account is calculated as: Additional voluntary contributions and rollovers +/- Investment returns (which can be positive or negative) - Taxes and fees Early Retirement Age If you were a former member of the Orica Defined Benefit Super Fund who joined prior to 1 July 1992, your early retirement age is generally 55. However, if you joined your employer before 1 July 1987 and the Orica Fund before 1 October 1987, you may be entitled to receive an early retirement benefit at an earlier age if you have completed a minimum number of years of Fund (and Orica Fund) membership, as follows: Age at retirement Years of Fund (and Orica Fund) membership Above * Note: The benefit may be required to be preserved if you receive it prior to your preservation age (usually at least age 55, see page 8). Reduction Factor The Reduction Factor is multiplied by the Accrued Retirement Multiple to determine the Resignation Multiple prior to reaching the Early Retirement Age. It is determined by the time between when you join the Fund and exit date, and the time between when you joined the Fund and your 55 th birthday. At the time of joining the Fund, the factor is 70% and it increases evenly to 100% at age 55. The Reduction Factor is calculated as follows: [(Period from date joined Fund to Date of Exit) (period from date joined Fund to age 55) x 0.3] Maximum Fund Multiple The Maximum Fund Multiple is calculated as a member s number of years of Fund membership (including part years) x 19.7%. It represents the maximum multiple that the member can accrue over their period of membership. Members who may not have attained their Maximum Fund Multiple will be members who: Contributed less than 5% at any time during their membership, or Joined the Orica Fund prior to 1 July Members whose Accrued Retirement Multiple is less than their Maximum Fund Multiple are able to contribute at 6% or 7% until they attain their Maximum Fund Multiple. Normal Retirement Age Normal retirement age is 70 for all members. Your Benefits in IPE Super for Defined Benefit Members 29

32 Prospective Final Average Salary Your Prospective Final Average Salary is calculated as your Final Average Salary at age 62, assuming that your superannuation salary remains the same between the date of calculation and your 62 nd birthday. Salary Your salary, for superannuation purposes, is defined as your base salary including salary sacrifice (before-tax) contributions. In some cases, your salary may also include permanent allowances where this has been agreed and forms part of an industrial agreement or Enterprise Bargaining Agreement. Final Average Salary Your Final Average Salary (or FAS) is used in determining your defined benefit. It is calculated as your highest average annual superannuation salaries (see above) during any three consecutive years of membership. This would normally be your three most recent years of membership. Your Benefits in IPE Super for Defined Benefit Members 30

33 Issued by Watson Wyatt Superannuation Pty Ltd (ABN , AFSL , RSE Licence No. L ), as Trustee of the Incitec Pivot Employees Superannuation Fund (ABN , RSE Registration No. R ). Your Benefits in IPE Super for Defined Benefit Members 31

34 Your Super Choices Form for Defined Benefit Members If you are a Defined Benefit member, you can use this form to CHANGE your super choices in IPE Super. How to complete this form To change your super choices, you must complete Parts A and E together with: Part B to change your rate of member contributions, Part C to change your rate of additional voluntary contributions, and/or Part D to update your nomination of dependants. When you have completed and signed your form, return it to: The Fund Administrator IPE Super Locked Bag 14 Collins Street East VIC 8003 Part A Personal details (please print) Title (please tick): Dr Mr Ms Mrs Miss Membership no.: Given name: Surname: Home address: Telephone: (Business hours) ( ) Date of birth: / / please turn over to complete please turn over to complete