Investment Objective and Strategy

Transcription

1 Supplementary Report: The Anglican Church of Australia Collegiate School of Saint Peter Superannuation Fund for Teaching Staff ( the Fund ) A division of the PPS Corporate Superannuation Fund This Supplementary Report should be read in conjunction with your Annual Member Statement (Part 1) and the Annual Report (Part 2) for the year ended 30 June 2015 and provides information which is specific to members of the St Peters Superannuation Fund. Investment Objective and Strategy As defined benefit members of the Fund, your benefits are generally calculated in accordance with a formula stipulated in the Trust Deed. As a result, these benefits are not affected by the earning rate of the Fund. However, the earning rate does impact employer funding obligations as monitored by the Fund s actuary from time to time. Note: Past performance is not a reliable indicator of future performance. Investment Returns The Trustee has adopted a policy of fully allocating all of the Fund s earnings to members accumulation accounts effective 30 June using an earning rate (investment returns do not affect the defined benefits of members). The earning rate is based on the net investment performance applicable to the investments of the Fund after the deduction of relevant fees, costs and taxes. The earning rate applied to member s additional accounts within the Fund is as follows: Financial year ended Earning rate 30 June % Over the five years to 30 June 2015, the compound average earning rate for the Fund is as follows: Five year compound net earning rate 6.53% p.a. Allocation of assets to underlying investment/fund managers at 30 June 2015: Fund manager Holding Summit Select Active Defensive* $3,405,314 Westpac Business One Account $3,878,415 Total $7,283,729 1

2 Allocation of assets to underlying investment/fund managers at 30 June 2014: Fund manager Holding Summit Select Active Defensive* $3,217,563 Trust Company Cash Fund $3,321,207 Actuarial Review Total $6,538,770 From 1 July 2013, the Trustee of the Fund must appoint an Actuary to conduct annual actuarial valuations of the Fund to investigate the financial position of the Fund and make recommendations regarding the level of future contributions to be made by The Anglican Church of Australia Collegiate School of Saint Peter (the employer sponsor of the Fund). This is a result of changes to requirements applicable to defined benefit funds announced under Stronger Super reforms and APRA s Prudential Standards effective 1 July 2013 to monitor the Fund s financial strength. Contributions are made in accordance with the actuary s recommendations made on an annual basis. The next actuarial review is due effective 1 July Contributing to the Fund Note: the information about contribution limits and rules shown below is a summary only, based on available information as at the date of preparation of this Annual Report and is subject to change. Please refer to for further information, or speak to a suitably qualified financial adviser (taking into account your personal situation). Eligibility to contribute to superannuation Any person up to the age of 65 may contribute to superannuation, regardless of whether or not they are employed. From the ages of 65 to 74, employer and personal contributions can be made if you have worked at least 40 hours in a continuous 30-day period during the financial year (the work test ). However, mandated employer contributions made under an Award or to satisfy an employer s superannuation guarantee obligations are not subject to the work test. Employers are required to satisfy SG obligations on behalf of eligible employees aged 70 or more. From age 75, no contributions other than mandated employer contributions can be made to superannuation. Contributions made to the Fund in contravention of these eligibility rules must be rejected or refunded by the Trustee in certain circumstances. A refund may be adjusted for any allowable investment fluctuations and reasonable costs. 2

3 Concessional contributions Concessional contributions include any compulsory contributions made by your employer(s) on your behalf, including notional taxed contributions in relation to defined benefits (see below) and any additional contributions you choose to make from your pre-tax salary (salary sacrifice contributions). Notional Taxed Contributions The amount of concessional contributions relating to the accrual of your defined benefits in the Fund each year needs to be estimated. This estimate is referred to as your notional taxed contributions. Your notional taxed contributions for each year are determined in accordance with prescribed principles and rely on actuarially determined factors and assumptions. Each year, the Fund will notify you of your estimated notional taxed contributions in advance, so that you can determine your capacity to make any additional concessional contributions (such as salary sacrifice contributions) to the Fund (or any other superannuation fund) for the coming year. Your notional taxed contributions exclude any contributions (concessional and nonconcessional) that you may be making to the Fund (or other superannuation fund) on your own behalf, which do not form part of your defined benefit. For example, if you are making additional salary sacrifice contributions to the Fund, these will not be included in your notional taxed contribution level advised by the Fund. You will need to add the additional concessional (salary sacrifice) contributions that you are making to the notional taxed contributions advised by the Fund, to determine your total concessional contributions for the year and to ensure you do not exceed the concessional contributions limit. The Trustee is not responsible for monitoring the level of your concessional contributions to ensure that the concessional contribution limit is not exceeded. The rules applicable to concessional contributions relating to defined benefit members are complex and may have taxation implications for you. We recommend you seek advice from a licensed or authorised adviser about how these rules affect you personally. Limits on concessional contributions For the 2014/15 financial year, the concessional contributions limit for individuals aged under 49 years on 30 June 2014 was $30,000. The concessional contributions limit for individuals aged 49 years or over on 30 June 2014 was $35,000. For the 2015/16 financial year, the concessional contributions limit for individuals aged under 49 years on 30 June 2015 is $30,000. The concessional contributions limit for individuals aged 49 years or over on 30 June 2015 is $35,000. These limits apply across all superannuation funds to which concessional contributions are made. The $30,000 limit (for 2014/15) will be periodically increased in line with Average Weekly Ordinary Time Earnings ( AWOTE ) in $5,000 increments. However, the general concessional contributions limit will remain at $30,000 for the 2015/16 financial year, as noted above. The temporary higher limit is not indexed and will cease when the general concessional contributions limit is indexed to $35,000. 3

4 Concessional contributions made up to the applicable limit are ordinarily subject to tax at the rate of 15% upon receipt by the Fund. If your income and relevant concessional contributions exceed $300,000 for an income year from 1 July 2012, an additional tax at a rate of 15% will be imposed on concessional contributions received by the Fund. Note that this additional tax will only apply to the portion of the contributions that is in excess of the $300,000 threshold (see further details below). For the 2013/14 financial year and subsequent years, any excess concessional contributions made will no longer be subject to excess concessional contributions tax. Rather, the amount of contributions that exceed the limit will be included in your assessable income and taxed at your marginal tax rate. To reduce your tax liability, the Australian Taxation Office ( ATO ) will apply a 15% tax offset for the contributions tax that has already been deducted by the Fund. You may elect to withdraw up to 85% of your excess concessional contributions from a superannuation fund to assist in meeting your income tax obligations as a result of the excess concessional contributions. Any excess concessional contributions withdrawn from the Fund will no longer count towards your concessional contributions limit. An additional excess concessional contributions charge will be levied on the increase in your tax liability. The charge is levied on you personally by the ATO, i.e. you will receive a notice from the ATO requesting payment of the charge. If you do receive a notice from the ATO, please contact the Fund contact (see page 12 of the Annual Report) to ensure the contributions reported to the ATO by the Fund is correctly reflected. As mentioned, any excess contributions that are retained within the Fund will be counted towards your nonconcessional contribution limit (see below). Amounts excluded from the concessional contributions limit Some amounts that can be contributed or transferred to superannuation do not count towards your concessional contribution limit, including: Rollovers (including those from an overseas superannuation fund) subject to some special rules for any untaxed amounts; Government co-contributions; and Non-concessional contributions. Higher tax on concessional contributions where measurable income exceeds $300,000 A higher rate of tax (of 30%) applies from 1 July 2012 to concessional contributions made by individuals whose taxable income exceeds $300,000. Income for this purpose includes taxable income and concessional superannuation contributions up to the concessional contributions limit. If your income is above $300,000, the additional 15% tax (on top of the normal 15% tax deducted by the Fund) will be levied on you personally by the ATO but can be sourced from a superannuation fund (i.e. similarly to tax on excess concessional contributions). This additional tax is not payable on excess contributions that have been taxed at the highest marginal tax rate. However, where your concessional contributions relate to a defined benefit (as is the case for your benefit in the Fund), there will be a separate calculation of the defined benefit contributions to which this additional tax applies. This is a different calculation to the calculation of your notional taxed contributions. Further, where additional tax is payable in 4

5 relation to defined benefit contributions, the additional tax will not become payable until the underlying defined benefit becomes payable from the Fund (except in the case of some payments such as release of benefits on hardship grounds). The rules applicable to this extra tax on high income earner s concessional contributions (in particular, as they relate to high income earners who are defined benefit members) are complex and may have taxation implications for you. We recommend you seek advice from a licensed or authorised adviser about how these rules affect you personally. Non-concessional contributions Non-concessional contributions are contributions you make to superannuation from your after tax salary. You could make up to $180,000 of non-concessional contributions to superannuation for the 2014/15 financial year. This limit is maintained at six times the $30,000 limit on concessional contributions (see above). The non-concessional contributions limit will not increase for the 2015/16 financial year. If you are under age 65, you can average this limit over three years, i.e. you can make contributions of $540,000 in one year, provided you do not make any additional nonconcessional contributions for the following two years. Where a bring-forward has been triggered, the two future years' entitlements are not indexed. For example, if you triggered the case of some payments, such as release of benefits the bring-forward on 15 March 2014, your bring-forward cap for the three years will be $450,000, even though the non-concessional contributions limit changed to $180,000 on 1 July Non-concessional contributions made up to the applicable limit will not be taxed by the Fund. From 1 July 2013, any contributions you make in excess of the limit will no longer be subject to excess non-concessional contributions tax. You may elect to release an amount equal to the excess non-concessional contributions plus 85% of the associated earnings on those contributions, from your superannuation fund to assist in meeting your income tax obligations as a result of the excess non-concessional contributions. The full associated earnings amount will be included in your assessable income and taxed at your marginal tax rate. The ATO will apply a 15% tax offset on associated earnings to recognise any tax paid by the Fund. Alternatively, you can choose to leave your excess non-concessional contributions in the Fund and they will be taxed at the top marginal income tax rate. Either way you choose, the tax liability must be paid (released) from your superannuation fund. Single contributions in excess of the applicable non-concessional contributions limit will be rejected or refunded by the Fund. The Trustee does not monitor whether your non-concessional contributions (over a year) will result in you exceeding the limit. It is your responsibility to monitor your ongoing contributions to the Fund for tax purposes. Inability to make non-concessional contributions without a TFN You will be unable to make non-concessional contributions to the Fund if you (or your employer) have not provided your TFN. Any non-concessional contributions that you attempt to make to the Fund will be returned where required by law, after taking into account any 5

6 allowable adjustments for investment fluctuations and reasonable costs. You are not obliged to provide your TFN to the Fund. However, this and other consequences may apply. Other amounts measured against the non-concessional contributions limit The following amounts also count towards your non-concessional contributions limit: Any excess concessional contributions you make which are in excess of the concessional contributions limit (which have not been withdrawn or refunded); and The non-taxable portion of any benefit transferred from an overseas superannuation fund. Amounts excluded from the non-concessional contributions limit Some amounts that can be contributed or transferred to superannuation are not counted towards your non-concessional contribution limit. They include: Rollovers from within the superannuation system; The taxable portion of a benefit transferred from an overseas superannuation fund. Note the untaxed portion will count towards your non-concessional limit; Government co-contributions; Proceeds from the sale of qualifying small business assets which have been held for 15 years or are subject to the CGT retirement exemption (subject to a lifetime limit which varies from year to year); and Settlements for injuries resulting in permanent disablement made to the Fund within 90 days of receiving the payment. Government co-contributions Some members of the Fund may be eligible to receive the Government co-contribution. The Government co-contribution applies to personal (non-concessional) contributions made by low and middle income earners. The Government co-contribution is made in respect of eligible personal non-concessional contributions made by qualifying low and middle-income earners, up to a specified amount. The Government co-contribution is paid annually to qualifying low and middle-income earners superannuation funds. The maximum co-contribution for the 2015/2016 financial year is $500 and is available to people earning an assessable income plus reportable fringe benefits and reportable employer superannuation contributions of $35,454 or less. The maximum co-contribution amount phases out completely for incomes of $50,454. The Government co-contribution (the amount contributed by the Government) does not count towards either your concessional or non-concessional contribution limits. Refer to to determine eligibility criteria for the Government co-contribution (including income thresholds and the available co-contribution amount) applicable from year to year. Reportable Employer Superannuation Contributions ( RESC ) RESCs are generally concessional amounts made by an employee via a salary sacrifice arrangement and do not include contributions made to satisfy an employer s SG or award obligations or to fund defined benefits. 6

7 RESCs are treated as income for the purposes of various Government support payments. This includes support programs such as the Government co-contribution scheme, other superannuation related financial assistance delivered through the tax system (including spouse contribution rebates and tax deductible member contributions) and a range of welfare benefits. The inclusion of these amounts within the assessment of an individual s income is intended to limit individuals and their families accessing a range of government support payments than would be possible if their salary-sacrificed contributions were paid as salary or wage income. Members who currently make concessional contributions via a salary sacrifice arrangement to the Fund and envisage claiming a Government co-contribution may wish to review their circumstances before making the necessary contribution to superannuation in the coming year. Superannuation Surcharge Tax Whilst the superannuation surcharge was abolished with effect from 1 July 2005, the ATO may still issue assessments in relation to previous years. Any assessments received in relation to individual members of the Fund, will be reflected in their Surcharge Tax account balance and deducted from their benefit upon leaving the Fund. Any amount deducted in relation to the superannuation surcharge tax during the year is reflected in the account details shown on your Member Statement (if applicable). Your Surcharge Tax account will continue to accrue earnings until you leave the Fund. The earnings applied to your Surcharge Tax account is the Fund s earning rate. Withdrawing benefits from superannuation The preserved component of your superannuation benefit must remain within the Australian superannuation system, generally until your permanent retirement from the workforce after you reach your preservation age. Your preservation age is determined in accordance with the following: Date of birth Preservation age Before 1 July July June July June July June July June After 30 June

8 From 1 July 1999, all superannuation contributions (including member contributions) and earnings are preserved. Any component of your benefit that was non-preserved at 1 July 1999 will continue to be non-preserved and can be taken in cash at any time. Your ability to claim preserved benefits other than at retirement (as described above) is restricted, however, the law does allow for the release of benefits where you are an Australian citizen, New Zealand citizen or permanent resident* and otherwise satisfy a condition of release, including as follows: When you reach preservation age (55 to 59 years of age) and permanently retire from the workforce; When your employment terminates at or after age 60; When you reach age 65; When you die; When you suffer a terminal medical condition as defined in superannuation legislation (this condition of release is subject to the provisions of the Trust Deed); When you have ceased gainful employment with your employer and your account balance is less than $200; If in the Trustee's opinion you are "permanently incapacitated" in accordance with superannuation law (this condition of release is subject to provisions in the Trust Deed); If the Trustee approves the early release of preserved benefits on the grounds of severe financial hardship. Should you wish to apply for a benefit on these grounds, the application form is available by contacting the Fund contact (details on page 12 of the Annual Report; If the Department of Human Services ( DHS ) determines preserved benefits should be released on pre-defined specified compassionate grounds ( compassionate grounds ), such as to cover palliative care or funeral costs; and Where the law otherwise permits (for example, to satisfy an ATO Release Authority). * Different rules apply to temporary residents. Some (but not all) of the conditions of release outlined above apply to temporary residents (e.g. death, permanent incapacity) and a former temporary resident may be able to access their superannuation benefits as a Departing Australia Superannuation Payment ( DASP ) on permanently departing Australia and expiry or cancellation of their visa. More details are available by contacting the Fund contact. The law allows the payment of a benefit in the form of a Transition to Retirement Pension ( TRP ), once a member has reached their preservation age, but chooses to continue employment. At the date of this document, the Fund does not offer TRPs. You should consult an appropriately licensed adviser should you wish to obtain more information regarding TRPs. How long can you leave benefits in superannuation? 8

9 You can leave your benefits in the superannuation system indefinitely. There is no requirement to remove benefits from superannuation once you reach a certain age or retire, however benefits must be paid (or commence to paid) as soon as practicable after the death of a member of the Fund. Portability of Benefits Subject to some exceptions, you can request a transfer of some of your benefits to another superannuation fund at any time. Upon receipt of all necessary information, superannuation funds have a maximum period to transfer benefits where requested to do so by a member (depending on the nature of the investments). Additional information may be required in the case of a request to transfer benefits to a self managed superannuation fund. Note, if you elect to transfer part of your superannuation benefit to another fund, you must retain at least $5,000 in the Fund after the transfer. Also, as the Fund is a defined benefit fund, you can only transfer amounts from your additional accumulation accounts (for example, your additional voluntary contributions and amounts you have previously rolled over into the Fund). To request a transfer of benefits you must complete a transfer request form (with some standard proof of identity requirements). This can be done in writing, using a form available from the Fund contact (details on page 12 of the Annual Report). Any partial payment of superannuation benefits from superannuation must be withdrawn from the exempt (tax-free) and taxable components in proportion. Proof of Identity Please refer to the main Annual Report for details of the Trustee s proof of identity requirements in accordance with Government reforms. Eligible Rollover Fund The Trustee has selected the Super Safeguard Fund ( SUSA ), as the Fund s nominated Eligible Rollover Fund ( ERF ). An ERF is a fund designated by the Australian Prudential Regulation Authority ( APRA ) to receive and invest the entitlements of superannuation members in certain circumstances. Subject to any legislative requirement for the Trustee to transfer lost accounts to the ATO, your benefit may be transferred to the ERF if: You leave the employment of your employer without providing benefit payment instructions within 30 days of leaving; or You become a "lost member", where two pieces of mail are returned to sender and the Fund no longer has updated contact details for you and is otherwise unable to contact you. If your benefit is transferred to SUSA, any insurance cover that you may have will cease as at the date of transfer. 9

10 Once your benefit has been transferred to SUSA, you will have no entitlement to benefits from the Fund. Instead, you will become a member of SUSA and be subject to its governing rules. If the Trustee holds your current address or contact details, you will be provided with a Product Disclosure Statement ( PDS ) from SUSA upon transfer of your benefit to them. This PDS will outline the operational and membership details of SUSA. Please contact SUSA for further information (contact details below). The investments, fees and costs in relation to SUSA will be different from those of the Fund. In addition, SUSA does not offer insurance benefits in the event of death or disablement. As such, apart from any grace cover period applicable to members insurance benefits on termination of employment, any insurance benefits you may have in the Fund will cease at the time your benefit is transferred to SUSA. The Trustee of the Fund is also the trustee of SUSA and receives remuneration in this capacity. Members wishing to locate their benefit after it has been transferred from the Fund, or members who have any enquiries on the nominated ERF, should contact SUSA at the following address: Postal Address Super Safeguard Fund GPO Box 3426 MELBOURNE VIC The Trustee is currently reviewing its ERF policy and the transfer of members to SUSA due to changes in superannuation law and obligation of member benefit protection. Where benefits are transferred to the ATO under Government legislation, they can be claimed by contacting the ATO (go to for more information). Policy Committee There has been no activity involving a Policy Committee during the year. Fees and Costs For all defined benefit members of the Fund, the School contributes an amount, based on actuarial advice, to fund your benefit inclusive of all fees and costs (including insurance premiums and tax). To this end, no fees or costs are deducted directly from your entitlements in the Fund. Insurance 10

11 Please refer to your annual Member Statement for details of the insurance cover provided to you by the Fund. Fund Reserves The Fund operates an operational risk reserve. Please refer to the Operational Risk Financial Requirement section in the PPS Corporate Superannuation Fund Annual Report. Legislative Update Note: This update was compiled as at September 2015 and is subject to change. For up to date information go to or contact the Fund contact. This section contains changes announced by the Government (but which are still not law) as well as changes that have recently been implemented. Extending concessional tax treatment to deferred lifetime annuities The previous Government proposed provide deferred lifetime annuities ( DLAs ), the same concessional tax treatment that superannuation assets supporting income streams receive. This proposal is subject to a government commissioned review and is not yet law. Temporary Budget Repair Levy The Federal Government has introduced a temporary budget repair levy (of 2%) for financial years between 1 July 2014 and 30 June 2017 applicable to that part of a person s taxable income which exceeds $180,000. As a result of the temporary application of this levy, some consequential changes have been made to other tax rates that are based on the top marginal tax rate (including tax rates relevant to superannuation). For example: The excess non-concessional contributions tax rate increases from 47% to 49%; Tax on amounts that are assessable income of an individual (such as excess concessional contributions and the taxable component of benefit payments received by an individual) may increase by 2% if the individual s taxable income in the relevant income year exceeds $180,000; Taxation of the taxable component of Departing Australia Superannuation Payments increases from 35% to 38%; and No-TFN tax on contributions and withholding on benefit payments where no TFN has been provided also increase by 2%. Please visit for information about the Temporary Budget Repair Levy or see a qualified taxation adviser for an explanation of how these changes may affect you. The changes are complex and the summary we have provided above does not taken into account your personal circumstances. Changes to the qualifying pension age 11

12 The Federal Government has proposed to increase the eligibility age to 70 years. It is proposed that the age pension will increase from 1 July 2025 by six months every two years from the qualifying age of 67 to gradually reach 70 years by 1 July People born before 1 July 1958 will not be affected by this change. This change is not yet law. Low Income Superannuation Contribution The Federal Government has passed legislation which means that the low income superannuation contribution ( LISC ) currently available to eligible low income earners (in respect of their concessional contributions) will cease for concessional contributions made for the 2017/18 financial year and later financial years. Changes to schedule for increasing Superannuation Guarantee rate The Federal Government has passed legislation which will freeze the Superannuation Guarantee contribution rate at 9.5% until the financial year ending 30 June The Superannuation Guarantee contribution rate will increase by 0.5% from 1 July 2021 until it reaches 12% for financial years on or after 1 July Changes to release of benefits for terminal illness The Federal Government has announced that, from 1 July 2015, the life expectancy period that must be medically certified for superannuation account balances to be released in the case of terminal medical condition will be increased from 12 months to 24 months. Please note, eligibility for insurance benefits depends on the relevant insurance policy. The Government s proposed change does not necessarily alter the requirements that must be met for insurance benefits to be paid under an insurance policy. 12