Product disclosure statement 1 July Equip Rio Tinto Fund Pensions

Transcription

1 Product disclosure statement 1 July 2017 Equip Rio Tinto Fund Pensions

2 2 Equipsuper Pty Ltd ABN , AFSL ( Equip or we or us ) is the Trustee of the Equipsuper Superannuation Fund ( the Fund ) ABN The Rio Tinto Staff Superannuation Fund transferred into the Fund on 1 July 2017 and is, from that date, a sub-division of the Equip Fund. It is referred to as the Equip Rio Tinto Fund. This PDS is issued by the Trustee and contains a summary of the main features available. It should be considered as a guide only. Any Supplementary PDS (SPDS) that may be issued by the Trustee and is relevant to this division should be read together with this PDS. This PDS does not constitute and should not be construed as an offer, invitation or recommendation by the Trustee to apply for membership in the Fund in any state, country or jurisdiction (other than Australia) where such an offer, invitation or recommendation may not be lawfully made. Applications from outside Australia may not be accepted through this PDS. The final authority on any issue relating to Equip is the Trust Deed governing Equip, any applicable Participation Agreement and the relevant insurance policy. This document is for general information only. It has been prepared without taking into account your personal objectives, financial situation or needs. You should consider whether this information is appropriate to your personal circumstances before acting on it and, if necessary, you should also seek professional financial advice. Where tax information is included you should consider obtaining personal taxation advice. If you are considering investing in the Fund, you should read the appropriate PDS before making an investment decision. Neither the Trustee, nor any employees or directors of the Trustee, guarantee the repayment of capital or the performance of the Fund. Past performance is not an indication of future performance. ASIC Class Order 14/1252 applies to this PDS. This document was up to date at the time when it was prepared. There is some information in this document that is subject to change from time to time. If this information is not materially adverse to you, we may update it by insertion on our website at and/or inclusion in the next available edition of our newsletter. Any updated information may be found by logging into the members area of our website or calling our Helpline A paper copy of updated information will be given to you without charge on request. If there is a materially adverse change to the information contained in this PDS, we will advise you of the change in writing and issue a SPDS. Unless otherwise specified in the PDS, you will be given written notice of any material change or significant event within the time frame prescribed in the relevant legislation.

3 3 Explore the benefits of a fund run just for you Why choose a pension from the Equip Rio Tinto Fund Membership in the Equip Rio Tinto Fund is one of the benefits of having worked for a Rio Tinto group employer or Queensland Alumina Limited (QAL) or by being a spouse of an Equip Rio Tinto Fund member. Account based pensions and transition to retirement pensions allow you to invest your super monies while drawing an income. There are different rules governing who is eligible and the income that may be drawn from each account. 1) An account based pension (ABP) This product is available to those members who have unrestricted nonpreserved benefits (typically after they have retired) and are ready to make use of the superannuation they have accumulated during their working life. 2) A transition to retirement income stream (TRP) This product is available to those who want to ease into retirement under a transition to retirement strategy. If you have reached your preservation age you can continue working and start to access your superannuation (including those amounts that would otherwise be preserved) in the form of a transition to retirement pension. More information is provided in the Introduction section of this Product Disclosure Statement (PDS). Working for you Equip is a profit-for-member superannuation fund with a proud heritage of delivering quality products and services to members. We understand that your investment with us reflects the high level of trust you place in our capabilities and reputation. That is why we put member interests first. We keep fees and costs as low as possible without compromising quality of performance and service. At 1 July 2017, Equip had $14 billion of assets invested on behalf of over 75,000 members across Australia. A low-cost option The Fund is run on a profit-for-member basis, that is, solely for the benefit of members. This means that administration fees are kept as low as possible. Investment-related costs, which are reflected in the unit prices, are also kept low because of the Fund s significant size. See the fees and costs section for more details of the fees and costs associated with an ABP or TRP account. Competitive returns The Fund has consistently produced competitive returns for members, and Equip is continually looking for ways to enhance performance. The tables in the investment section show recent returns for the Fund s investment options. The most up-to-date investment returns are shown on the website, However, it is important to understand that the value of investments can go up and down and that past performance is not necessarily indicative of future performance. Flexibility The Fund strives to give members real choice about their superannuation. For example, members can choose from a range of investment options, covering all the major asset classes, to suit the conservative through to the more ambitious investor. Members can also change their investments at any time. Refer to the investment section for more details. Defer paying lump sum tax When you roll over your superannuation benefit into a pension, you don t pay lump sum withdrawal tax at that time (i.e. payment of any tax is deferred). This means that you may have a larger amount invested than if you withdrew your benefit and invested it outside the superannuation system. Lump sum benefits are generally tax free after attaining age 60. There can be a number of tax advantages associated with investing in an account based pension. Refer to the tax and social security section for more details. Consolidate your super If you have superannuation savings in other funds, you may wish to consider rolling over these accounts into Equip. This may offer advantages such as saving on administration fees and investmentrelated costs. If you choose to consolidate your super in Equip, you need to instruct your other funds to transfer the super they are holding for you to your Equip Rio Tinto account before you open a pension account. This will ensure that you only need to open one pension account in the Equip Rio Tinto Fund. You can make a rollover request over the phone by calling the Helpline or you can request a rollover online by signing into your online account on the Fund website. You can also use the Transfer/Rollover authority form. For assistance with this, please contact the Helpline on You should check with your other fund(s) to see what fees they may apply if you withdraw your money. It is a good idea to speak with a licensed or appropriately authorised financial adviser before making decisions about your superannuation investments. As a member of Equip you receive: a welcome letter confirming your choices in this division of the Fund you ll also receive confirmation of any other amounts you transfer in; an annual benefit statement showing changes to your pension account balance; newsletters to keep you informed; online access to an annual report to bring you up to speed on investment performance and what s happened with the Fund over the year; notification of all material changes or the occurrence of significant events; other information and documents as required by law; and an exit statement when you cease to be a member of the Fund.

4 4 You will also have access to: the Helpline on (or if calling from outside Australia) during business hours. The Helpline can answer your queries and refer you to one of our member advisors for limited advice; your account balance at any time via the Fund s website, which also contains a wealth of information, including interactive planning tools and educational webinars and videos; certain prescribed information and documents required under super law, including information about the remuneration of the directors and executive officers of Equip; a copy of Equip s latest financial statements and accounts which you can obtain free of charge from the website or by calling the Helpline; for those still working for a Rio Tinto employer, access to workplace sessions with specialists who can provide you with general financial product advice; and retirement seminars that are held nationally for those nearing retirement age and their spouses. The seminars look at options regarding pensions, withdrawing lump sums and investment strategies. Customer identification The Fund is required by the Anti-Money Laundering and Counter- Terrorism Financing Act 2006 to adequately identify its members.upon joining the Fund you will have provided us with your full name, date of birth and residential address (as required on the Fund s Retirement Division Application form). Then, upon receipt of any request from you to make a payment from the Fund, we will ask you to update and verify this information. This will not apply for regular pension payments other than when they are first established. To verify your personal information, you will need to provide a certified copy of your driver s licence or passport. Further information on this process can be found on the Fund s Retirement Division Application form attached to this PDS. Let us know if your details change It s very important that you always let us know when your address or other details change. We can only send you information about the Fund and your pension if we have your current address. To update your details please contact the Helpline on or update your details on the Fund s website

5 5 About this Product Disclosure Statement This document is a Product Disclosure Statement (PDS), prepared for members of the Equip Rio Tinto Fund, who are considering opening a pension account on or after 1 July This PDS does not apply to accumulation members. Using this PDS This PDS provides important information about the pension options in the Equip Rio Tinto Fund. Full details on the operation of Equip are contained in the trust deed and rules; copies are available from the Fund s website (or upon request by calling the Helpline). The information contained in this PDS is correct at the time of publication. Changes to legislation, superannuation rules or the Fund s governing rules implemented by Equip after this date may affect its accuracy. Unless the changed information is materially adverse to members, Equip may not always update or replace this PDS to reflect the changed information. In such cases, Equip will provide you with the information you need to understand the nature of the changes through our regular communications, or you can visit the website for details. We can also send you a paper copy of any updated information on request, free of charge. Tax disclaimer This PDS includes general information about certain taxation implications of an investment in the Equip Rio Tinto Fund. It is intended as an overview only, and reflects taxation laws in force as at the date of this PDS. It does not take into account the impact of foreign taxation laws (for example, if you transfer benefits from a foreign fund to the Equip Rio Tinto Fund). You should monitor any changes to taxation laws as they may affect your investment in the Fund. To obtain current or further information about Australian taxation matters refer to the Australian Taxation Office website at the Fund s website or call the Helpline. Getting advice Purchasing an ABP or TRP is something you should consider carefully in the context of your overall financial strategy for your retirement. We recommend you obtain financial advice before entering into an ABP or TRP to ensure it is the right product for you. Some considerations you should think about include: Your financial commitments (both current and on-going); taxation impact on any social security (Centrelink) payments; and your life expectancy beyond retirement. If you would like to arrange to speak to an Equip Financial Planner^, please call ^ Equipsuper Financial Planning Pty Ltd (ABN , AFSL ) is licensed to provide financial planning services to retail and wholesale clients. Equipsuper Financial Planning Pty Ltd is owned by Equipsuper Financial Holdings (ACN ). Knowing the risks and benefits This PDS will help explain the features of, and benefits you will receive as a member of the Equip Rio Tinto Fund. These features and benefits need to be assessed in light of the risks of investing with the Fund. You should read the General information section for details on the risks involved. Contacting the Equip Rio Tinto Fund To open a pension account you need to complete and submit a Retirement Division Application Form to the Equip Rio Tinto Fund, GPO Box 4303, Melbourne, VIC, In order for the fund administrator to deduct tax from your pension at your marginal rate (if applicable) you will need to complete and return an Australian Taxation Office (ATO) Tax file number declaration form to the administrator. Equip will provide information that we believe you will reasonably need to assess the management, financial condition and investment performance of the Fund. If you are seeking further information about your account or Equip, please contact: Inquiries For any further information about your account, the Fund or Equip, please contact: Helpline consultant: Inside Australia: (8.30am to 7.00pm AEST/AEDT, Monday to Friday) Outside Australia: (8.30am to 7.00pm AEST/AEDT, Monday to Friday) > Contact us The Fund Administrator Equip Rio Tinto Fund GPO Box 4303 Melbourne VIC 3001 About the Helpline and website The Helpline and website are administered by the Fund s administrator, Mercer Outsourcing (Australia) Pty Ltd (MOAPL), ABN , AFS Licence # under an agreement with Equip. Any complaints? A formal dispute resolution system has been set up by the Equip Rio Tinto Fund. Details of this system are contained in the General information section. If you need more information or assistance or require either of the forms to be issued to you, please call the Helpline on in Australia or if calling from outside Australia. Make sure you read all the information in this PDS, then follow the steps on the following page to complete the application form. To make it easy, steps of the application form are matched to sections of the PDS. Once you ve completed, signed and dated the application form, return it to the Fund. If you re unsure of your decisions, Equip recommends that you see a licensed or appropriately authorised financial adviser.

6 6 Like to roll in other super money? If you have other super you d like to roll in to the Fund, you can make a rollover request over the phone by calling the Helpline or you can request a rollover online by signing into your online account on the Fund website. You can also complete the Transfer/ Rollover Authority form included with this PDS. Please note that any money you wish to use to purchase either pension product must be rolled into the Fund prior to starting the pension. If further money is received after your pension account is established, a new accumulation account will be opened for you. If you wish to use this amount to purchase another pension within the Fund, you will need to complete another application form in regard to this separate amount or redeem your existing pension and combine amounts to purchase a new pension. Steps Steps 1 and 2 Page 8 Check if you are eligible to commence a pension Read the Introduction section for details to see if you re eligible to commence a pension within the Fund. This might be upon retirement, as part of a transition to retirement strategy or having met another applicable condition of release. If you are eligible, complete Steps 1 and 2 of the application form. Steps 3 and 4 Page 12 Decide the transfer amount, level of income and payment frequency you would like You can elect to be paid an annual amount between minimum and maximum (if applicable) limits and you can also elect your payment frequency. If you do not indicate an amount, an amount equal to the minimum limit will be paid to you. If you do not indicate a payment frequency, monthly payments will be made. The Fund pays pensions directly to your bank account at the payment frequency you request. Equip therefore needs your bank account details as well. Read the Your level of income section for more information and then complete Steps 3 and 4 of the application form. If you are commencing a TRP, you also need to elect the preservation components you wish to transfer from your accumulated superannuation. Steps 5 and 6 Page 14 Choose how to invest your pension account balance Elect where you wish to invest the assets in your pension account. If you have not selected an investment option previously and you do not indicate where you wish to invest your pension account balance, Equip will invest it in the Growth investment option i.e. the Fund s default investment option. Read the Investment section for more information and then complete Steps 5 and 6 of the application form. Step 7 Page 31 Nominate your beneficiaries Who ll get your super if you die? Read the Beneficiaries section for details and then complete Step 7 of the application form. Step 8 Page 33 Confirm your tax file number Don t pay more tax than you have to let us know your tax file number. Read the Tax & social security section for information about how tax affects your pension. Then fill out Step 8 of the application form. Remember to also complete and attach the ATO Tax file number declaration form. Step 9 Attach your certified proof of identity Step 10 Sign the application form Simply sign the application form and send it to Equip.

7 7 Contents Section 1 Introduction 8 Eligibility to join 8 Opening your account 8 How your account works 9 Closing your account 11 Dealing with super on relationship breakdown 11 Section 2 Your level of income 12 Calculating your minimum and maximum payment limits 12 You can vary your income stream 12 How long will it last? 13 How often and where will it be paid? 13 Section 3 Investment 14 An overview of your choice 14 Learn the investment basics 16 What choice is right for you 18 Making your decision 19 Diversified investment options 21 Sector-specific investment options 25 Benchmark indices 30 Section 4 Beneficiaries 31 In the event of your death 31 Nominating your beneficiaries 31 Insurance 32 Section 5 Tax and social security 33 Declaring your tax file number 33 What taxes apply to your pension accounts? 33 Social security implications 34 Section 6 Fees and other costs 35 Fees and other costs table 35 Additional explanation of fees and costs 37 Section 7 General information 42 Glossary of terms 48

8 8 Section 1 Introduction Your super may be one of the largest amounts of savings you ll ever have. In this section you ll find information on: 8 Eligibility to join 8 Opening your account 9 How your account works 9 Units and pricing 10 What goes into the account? 10 What comes out of the account? 11 Closing your account? 11 Dealing with super on relationship breakdown Eligibility to join In order to open a pension account, you will need to invest a minimum of $5,000. Your eligibility to open an account will also depend on the preservation components that make up your accumulated superannuation. All superannuation benefits will consist of at least one of the following preservation components: unrestricted non-preserved, restricted nonpreserved and preserved benefits. Each of these components has different conditions under which the amounts may be released (or taken) from the superannuation system and cashed by the member. Unrestricted non-preserved benefits, as the name suggests, may be taken at any time. Restricted non-preserved benefits can generally be taken when you leave your current employer. Preserved benefits may only be released when a member meets what is known as a condition of release. Once a condition is met, these amounts become unrestricted non-preserved benefits and can be taken as a cash benefit. The most common conditions of release that will result in unrestricted non-preserved benefits are: 1) permanently retiring from from the workforce at or after your preservation age (see table below); or 2) leaving an employer after turning age 60; or 3) reaching 65 years of age; or 4) becoming permanently incapacitated at any age. There is also another restricted condition of release that will allow those who have reached their preservation age to have access to their preserved benefits by way of a non-commutable income stream, such as a transition to retirement pension (TRP). A TRP, taken out under this condition of release, is subject to slightly different rules to those taken at retirement. Your preservation age depends on your date of birth as shown in the table below: Date of birth Preservation age Before 1/7/ /7/ /6/ /7/ /6/ /7/ /6/ /7/ /6/ After 30/6/ Opening your account Transferring members If you were a pension member of the Rio Tinto Staff Superannuation Fund on 30 June 2017, you were automatically transferred to the Equip Rio Tinto Fund and became a member of that fund on 1 July Upon retirement (or satisfying another unrestricted condition of release) To commence an account based pension (other than under a transition to retirement strategy as described further below) you will need to have superannuation benefits that are classed as unrestricted non-preserved benefits. These are the only amounts that you will be able to use to purchase a pension that is not a transition to retirement pension. If you are transitioning to retirement To commence a Transition to Retirement Pension (TRP) as part of a transition to retirement strategy, you must have reached your preservation age and have existing superannuation benefits that you wish to access. You will not be able to nominate the proportion of tax-free and taxable components of your super used to establish your TRP. The amount you elect to transfer from your accumulation account into your TRP account will comprise tax-free and taxable amounts in the same proportion as existed in your accumulation account immediately prior to the transfer. You will need to select which preservation components of your accumulated superannuation benefit you wish to use to open your account. You can elect from your preserved and non-preserved components. In the event that you do not make an election, the amount taken out of your superannuation account will come from your non-preserved component first (if any), followed by your preserved component. Once your TRP account is opened, you should be aware that the pension income you receive will be taken from the unrestricted non-preserved component first, followed by the restricted non-preserved component and lastly from the preserved component.

9 9 Cooling off period A 14 day cooling off period applies to your pension investment. If during the cooling off period you decide that the account based pension does not meet your needs, then simply advise Equip in writing and your investment will be either returned to you or transferred to the superannuation arrangement of your choice if the amounts are to remain preserved. The 14 days starts from the earlier of: you receiving confirmation of your membership; and five business days after your account application is accepted by Equip. The amount returned or transferred upon cancellation will be based on the unit price applicable on the date of cancellation. The unit price(s) will reflect market movements in your chosen investment option(s) since your pension account was established. Under the current investment policy, the amount returned to you will not be reduced for transaction and administration costs (other than those relating to buy-sell spreads) incurred by Equip in cancelling your investment. However, we will deduct any tax or duty incurred which is not subject to refund by the relevant revenue authority. As a result, the amount returned to you may be less than your original investment. How your account works Your pension provides an income stream which continues for as long as you have funds in your pension account.you can select which investment option or mix of options you would like your pension account balance to be invested in by completing the relevant section of your Retirement Division Application form. You should be aware that if you do not select an investment option on your application form, your investment option will stay the same as that which applied to your accumulation account. If you have multiple accumulation accounts for which you have selected different investment options, and we are unable to determine which options are to apply to your pension account, you will be taken as having selected the Fund s default investment option, currently Growth, for the full balance. The Fund s default option also applies if you have not previously made an investment choice and you do not select an option on your application form. Units and unit pricing A unitised investment Your account balance is recorded as a unit holding in your chosen investment option, or a series of unit holdings if you have selected more than one investment option. Each unit in a chosen investment option has an equal value (unit price) and at any given time your account balance is simply equal to the number of units in your account multiplied by the current unit price(s) for your chosen option(s). When your pension account is opened, your account buys units in your chosen investment option(s) at the time the Fund s administrator processes your application to open an account. Further, when payments are made from your account (e.g. your regular pension payments), or when the account is closed, your account sells units at the time the Fund s administrator processes your transaction. The unit price used for buying units is different to the unit price used for selling units. For an explanation of the difference see the fees and costs section. For more details on units and unit pricing see the investment section. If you transfer from an accumulation account into a pension account and retain all of your super in the same investment option, no buy-sell spread applies. To obtain historical and current unit prices you can go to the Fund s website at or call the Helpline on Unit prices in respect of the previous Melbourne business day will be released on the website and to the Helpline usually after 4.30pm on each Melbourne business day. Unit prices applicable to transactions Equip adopts a forward unit pricing approach. This means that for transfers received, the buy price used is generally the next one calculated after the relevant transaction is processed. For super payments (including regular pension payments and withdrawals) and deductions from member accounts (e.g. partial lump sum withdrawal fees) the sell price used is generally the one prevailing at the time the relevant transaction is processed. This approach protects members by reducing arbitrage opportunities. Equip can only allocate units when it receives all the information necessary to invest. Suspension of issue or redemption of units Equip may suspend the issue (or redemption) of units during any period in which we believe that the buy price (or sell price) of those units cannot be calculated in a manner that is fair to all members holding those units (for example, due to the closure of markets as a result of a global incident). Equip may also suspend the redemption of units if we are unable to realise a sufficient amount of the underlying assets of the investment option in order to satisfy a redemption request. How and when unit prices are calculated Unit prices are calculated daily and reflect the changing value of the underlying investments in each investment option. Since the value of the underlying investment can rise and fall, unit prices go up and down to reflect these movements. Equip may recalculate unit prices more frequently, e.g. in cases of extreme market volatility. Where the amount ascertained by the allocation or redemption of units does not exactly equal the amount received or to be paid, then Equip may issue or redeem a fractional unit equal to the proportion of a whole unit that is outstanding. The net asset value of an investment option is equal to the value of that option s underlying assets less an allowance for accrued fees and other relevant liabilities including any levies. With unit pricing, the buy price

10 10 and/or sell price reflects the net asset value of the relevant investment option (after making an allowance for a buy-sell spread where necessary) divided by the number of units (or part thereof) which are referable to that option on issue at the calculation date. Unless Equip determines otherwise, the value of the underlying assets of the investment options will be market values determined by an external custodian or investment manager. The valuation methods and policies used result in the calculation of a unit price that is independently verifiable. In determining the buy and sell unit prices, a notional allowance may be made for any applicable buy-sell spread. For an explanation of the buysell spread and an example of how it applies when you switch between investment options, see the worked example of buy-sell spread when switching under "Additional explanation of fees and costs" in the Fees and costs section. Unit prices are calculated to the fourth decimal place. A fractional unit has a value equal to the proportion that it bears to a whole unit. Unit prices may rise or fall depending on fluctuations in the underlying value of the investments in each investment option. What goes into the account? Transfer of your super benefit Your account balance starts with the transfer of your superannuation benefit into pension phase. As a minimum, you need to invest $5,000 to start an account based pension as your first investment. However, you should note that once you have started your pension, you cannot make further contributions to your pension account. A $1.6 million cap (known as the transfer balance cap ) applies on the total amount of superannuation that can be transferred into a retirement account (or that can remain in an existing retirement account) where investment returns are exempt from tax. The limit applies to all of your pension accounts combined (including any pension account in funds other than the Equip Rio Tinto Fund.) The transfer balance cap will be indexed in line with the Consumer Price Index (CPI). Investment returns Investment returns are applied to your account via daily unit prices. Unit prices reflect the net investment return on your chosen investment option(s) after an allowance for investment-related costs and any levies. An increase in the daily unit price means that returns have been positive since the last unit price was calculated. Conversely, a fall in the unit price means that returns have been negative since the last unit price was calculated. Investment returns on assets supporting TRPs are taxed at 15%, less applicable tax credits the same level of tax that applies to investment returns on super accounts. For an explanation of unit prices see "Units and unit pricing" on the previous page. What comes out of the account? Pension payments You can opt to have your regular pension payments made monthly, quarterly, half yearly or annually. Your regular pension payment is paid from your account on, or as close as possible to, the 15th of the relevant month. Your regular pension payment must be within a legally prescribed range as explained in the Your level of income section and relevant tax is deducted from your regular pension payment before it is made. The payments will be paid directly to your nominated bank, building society or credit union account. Withdrawals You can also make lump sum withdrawals at any time from your account but, if you have a TRP account, only from the unrestricted non-preserved component. If you have a TRP with no unrestricted non-preserved component you will only be able to withdraw (commute) your pension to a lump sum in the circumstances allowed under superannuation law, which include: you reach your preservation age and permanently retire from the workforce; you cease employment after age 60 (even if to work elsewhere); you reach age 65, even if you are working; you become permanently incapacitated; you have a terminal medical condition; you die (in which case your dependants will receive a benefit); you need to pay a superannuation surcharge debt; you have to meet a Family Law payment split. You may also transfer all or part of your TRP account balance back to an existing or new accumulation account in the Equip Rio Tinto Fund. For more details please call the Helpline on You can make a partial withdrawal request online by signing into your online account on the Fund website. Alternatively you can complete and submit a Receiving a payout from the Equip Rio Tinto Fund form which is available on the Fund s website or can be mailed to you by contacting the Helpline. A fee (currently $75.00) applies to each partial lump sum withdrawal from your account with the exception of your last withdrawal where there would be no charge. No fee is currently payable on your pension payments. If you need more information or require assistance, please call the Helpline on in Australia or if calling from outside Australia.

11 11 Administration fees and investment related costs An administration fee of 0.10% p.a. of your account balance (to a maximum of $750 a year) plus $3.50 per week is deducted from your pension account. You will receive at least 30 days notice, or other notice as required by legislation, of any increase in existing fees or of the introduction of any new fees. Investment-related costs are deducted from the assets of each investment option before the daily unit price is determined i.e. before net investment returns are allocated to members accounts. In addition, a levy to reimburse the Fund s defined benefit asset pool, which was used to fund part of the Operational Risk Reserve, is deducted from the assets of each investment option before the daily unit price is determined i.e. before net investment returns are allocated to members accounts. Refer to the Fees and costs section of this PDS for information. Closing your account If you wish to close your pension account you can do so at any time. This can be done by completing and submitting a Receiving a payout from the Equip Rio Tinto Fund form which is available on the Fund s website or can be mailed to you by contacting the Helpline. For more information, contact the Helpline on If you are eligible to withdraw part or all of your investment in cash, any tax payable at that time will be calculated and deducted according to the superannuation and tax laws applicable at the time. If you are not eligible to receive your investment in cash, you must elect to transfer it to another superannuation fund. If you have a TRP account, you can choose to transfer your TRP balance back to an accumulation account. Your balance will retain its unrestricted non-preserved, restricted non-preserved and preserved components. When you meet a condition of release the restricted non-preserved and preserved components will become unrestricted non-preserved which can then be accessed in cash. Your final benefit will be equal to the number of units in your account multiplied by the prevailing sell unit price(s) of the chosen investment option(s) at the time of closing your account. Please note that Equip recommends that before making any decisions about your super you should obtain independent advice that takes into account your particular circumstances. Dealing with super on relationship breakdown The Federal family law regime allows separating couples to split their superannuation entitlements as part of a property settlement. Whilst previously limited to married couples, from 1 March 2009 the Federal family law regime (including the Federal family courts) has been extended to matters relating to the breakdown of de facto relationships (including same-sex relationships) including the splitting of superannuation entitlements. As at the date of this PDS, the Federal regime applies to de facto relationships that breakdown on or after 1 March 2009 in Australian States (other than South Australia and Western Australia), mainland Territories and Norfolk Island. In South Australia the regime applies to de facto relationships that breakdown on or after 1 July The laws do not apply to the breakdown of de facto relationships in Western Australia. Should you require information about your super for a family law property settlement you should, in the first instance, seek information about your benefit from the Helpline. Following this you might need to complete an application form and make a Declaration, which indicates that you are eligible to ask for information. The law prevents the Fund from telling you whether your spouse has made a request for information about your super benefits. For more details please call the Helpline on In respect of family law matters, it is recommended you obtain professional legal advice. Also see the Fees & costs section for information on any fees that may apply.

12 12 Section 2 Your level of income The level of income you elect to be paid is governed by minimum and maximum limits and the purchase price of your elected pension account. In this section you ll find information on: 12 Calculating your minimum and maximum payment limits 12 You can vary your income 13 How long will it last? 13 How often and where will it be paid? Government regulations require your pension payments to be made at least once a financial year from your pension account. This applies unless you open your pension account after 31 May in a given year. If you open your account on or after 1 June you are not required to receive any pension for that financial year. The regulations also specify that your income must be between minimum and maximum (if applicable) limits. Calculating your minimum and maximum payment limits The minimum annual pension payments are simply determined as a percentage of your account balance. The particular percentage to be used each year will depend on your age at 1 July (see table below). Minimum annual payment The table below shows the minimum percentage that applies depending on your age. Age* Minimum %^ Under Maximum annual payment ABP: There is no maximum limit applicable when determining your annual pension payments if you receive an ABP. TRP: A maximum limit of 10% of your account balance per annum applies between your preservation age and 64 for TRPs. This means that your total accumulated payments in a year cannot exceed 10% of your TRP account balance at the start of the financial year. Pension payments example The following example demonstrates how minimum and maximum (where applicable) pension amounts are calculated. Let s assume that Bill s account balance at 1 July 2016 is $205,000 and his age at that date is 61. Bill s maximum payment limit If Bill has taken out a TRP, then the maximum payment limit is equal to $205,000 (account balance) multiplied by 10% (maximum applicable for all transition to retirement pensions) = $20,500 for the financial year 1 July 2017 to 30 June If Bill has an ABP, then there is no maximum payment limit. Bill can receive his whole pension account balance at any time. Bill s minimum payment limit The minimum payment limit is equal to $205,000 (account balance) multiplied by 4% (minimum percentage for age 61, see the table on the left) = $8,200 for the financial year 1 July 2017 to 30 June The Fund would pay Bill his pension by funds transfer to his nominated bank account based on the payment frequency he requests, which may be monthly, quarterly, half yearly or annually. You can vary your level of income Equip gives you the flexibility of varying your regular income stream payments. For example, in certain times when you may have more or less expenses than normal, you can withdraw more or less from your pension account as required. Please be aware however that changing your income stream may affect future payments, as your total payments need to be within the pension limit rules outlined earlier. You should also be aware that your entitlement to the age pension may be affected by any variation to your regular income stream. For more information please call the Helpline on * Age is your age as at the start of the financial year or when you start a pension in the case of the first year. ^ In the year in which your pension commences, the minimum payment is based on the number of days remaining in the financial year. No minimum payment is required if the pension commences after 31 May.

13 13 How long will it last? A number of factors influence how long your pension will last. These include: the initial balance of your pension account; how much you withdraw each year; the net investment returns applied to your pension account; and your age (as minimum limits are based on your age). You will receive regular income payments for as long as there is money in your account. Remember, neither of the pension products offered by the Fund is guaranteed to be paid for your lifetime (or your spouse s lifetime) and the investment risk is yours. Your account balance could decrease because of negative investment returns. See the General information section for more details on risks. How often and where will it be paid? You can specify the frequency of your pension payments as either monthly, quarterly, half yearly or annually. Please note that if you do not select an annual pension amount, payments at the prescribed annual minimum amount will be made. If you do not select a payment frequency, monthly payments will be made. If you select a pension amount that is outside the legally defined range, Equip will adjust this amount so that it falls within this range, either by increasing your pension amount or reducing your pension amount. Your first payment will be made around the 15 th of the month after your application is processed, unless you postpone your first payment. You can postpone your first payment to any date in the current financial year but, if you open your pension account prior to 1 June in any year, the payments made during the year need to be at least equal to the prescribed minimum amount. If you open your pension account after 31 May, you can postpone your first payment to any date in the next financial year. However, the payments made in that financial year need to be at least equal to the prescribed minimum amount. Pension payments will be made directly to your nominated bank account net of any tax required to be deducted by Equip.

14 14 Section 3 Investment You choose how your super is invested. In this section you ll find information on: 14 An overview of your choice 16 Learn the investment basics 18 What choice is right for you? 19 Making your decision 21 Diversified investment options 25 Sector-specific investment options 30 Benchmark indices Your super your choice We understand that choosing the right investment option can be a difficult experience. This guide provides a structured path as outlined below to help you to make a choice that meets your investment needs and objectives. An overview of your choice Read this section to understand what you need to do and what your choices are. Learn the investment basics This section runs through the investment basics to help you understand the differences between the investment options offered. It also describes Equip s investment philosophy and approach. What choice is right for you? Consider the factors that will influence your choice. Remember you should speak to a licensed, or appropriately authorised, financial adviser if you need help with your investment choices. Making your decision You re now ready to make a decision, and to assist you we have provided detailed information about each of the Fund s investment options. A table of past performance is also included. But remember, past performance is not a reliable indicator of future performance. An overview of your choice The rate at which your pension grows depends to a large extent on the way it is invested. In recognition of this, the Fund offers members a choice of nine investment options with different risk/return profiles, allowing you to implement an investment strategy that best suits your personal circumstances. The Fund allows you to select more than one option, giving you more control through the opportunity to mix-and-match to select your desired asset class mix and level of risk and return. An important consideration in any investment strategy is diversification. Diversification involves spreading investments among many different assets, asset classes, investment managers or countries to reduce the risk of owning and relying on the performance of any single investment. If you want to change your chosen option(s), you can do so at any time. However, you should read more about the fees and costs that may apply when you change your investment option(s), including the buy-sell spread, in the Fees and other costs section of this PDS. If you invest in more than one investment option, remember that your overall mix of investments will change over time (due to differing performance of those options). Therefore, it s important to regularly monitor your investment mix to make sure it remains appropriate for your personal circumstances, as it may be necessary to adjust (or rebalance ) your investment option choice(s) from time to time. It s recommended that you seek advice from a licensed or appropriately authorised financial adviser before you choose your option(s) or later change your choice(s). Flexibility and simplicity Equip offers you a choice of four diversified options complemented by five sector-specific options. You can choose any one or more of the investment options either diversified or sector-specific options or a mix of both. The Fund also allows you to make two separate elections in relation to how your pension is invested. Firstly, by completing Step 5 on the Retirement Division Application Form, you can make an election as to how you would like your account balance to be invested. Secondly, by completing Step 6 of the Retirement Division Application Form, you can elect a method by which your pension payments will be drawn from your chosen investment options if you have selected more than one. Method 1 involves your regular pension payments simply being drawn down in proportion to the amount held in each investment option at the time of payment (which may, over time, be different to the percentages originally applicable due to differing performance of those options).

15 15 Method 2 allows you to elect one particular investment option (from those which you have chosen) from which your regular pension payments will be drawn. In the event that your elected option is exhausted over time through you not having made subsequent changes to your investment choice, future payments would be drawn down in proportion to the amount held in each of the remaining investment options at the time of payment. Of course, you do not have to make an election, in which case your regular pension payments will simply be drawn down in proportion to the amount held in each investment option at the time of payment (which may, over time, be different to the percentages originally applicable due to differing performance of those options) as per Method 1. You can make your investment choice election by completing the relevant section of your Rio Tinto Retirement Division Application Form. It s recommended that you seek advice from a licensed or appropriately authorised financial adviser before you choose your option(s) or later change your choice(s). The diversified investment options The diversified options are a suite of investment options where Equip has selected the mix of asset classes. This allows you to pick one or more investment option(s) that you think best suits your needs without having to decide how to allocate your super to the different asset classes. The Fund s diversified strategies range from growth (holding mainly shares and property) to conservative strategies (holding mainly fixed interest and cash). The diversified options are: High Growth Growth (default) Conservative Growth Conservative These options are described in more detail later in this section. The sector-specific investment options The remaining investment options make up the sector-specific options. These options are based on the underlying asset classes in which the Fund mainly invests. Some members may wish to take a more active role in choosing which asset classes their super is invested in and so has provided the following specific sectors from which members can choose: Australian Equity International Equity Property Diversified Fixed Interest Cash If you don t make an investment choice You should be aware that if you do not select an investment option in your application form your pension account balance will be invested in the same investment option(s) that applies or applied to your other benefits in the Fund and in the same proportion(s). If you have not previously made an investment choice (e.g. if you were a defined benefit member without any additional accumulation style benefits) and you do not select an investment option on your Retirement Division Application Form, the Fund s default investment option, currently the Growth option, applies to your full account balance. The default option also applies if you have multiple accumulation accounts for which you have selected different investment options, and Equip is unable to determine which option is to apply to your pension account. A pension can only be commenced with money from your Equip Rio Tinto Fund account It should be noted that you can only commence an ABP or a TRP by transferring money from an existing super account within the Fund. If you wish to commence either of these pension accounts from multiple memberships held within the Equip Rio Tinto Fund, you will need to combine those balances into one account within the Fund prior to transferring into a pension account. To do so, you should complete a Receiving a payout from the Equip Rio Tinto Fund form clearly indicating which account you would like to transfer money from and which account you would like to transfer money to. This form is available from the Fund s website or by contacting the Helpline. Changing investment option(s) You can switch investment options at any time by: 1) Signing into your account via the Fund s website com.au/riotinto and visiting the Investments section, or 2) Completing a Changing your investment option(s) Retirement Division form which is available by visiting the website at com.au/riotinto or you can request a form through the Helpline on There is currently no switching (or other administration) fee charged for changing investment options. The unit price used to process your switch will be that which applies for the day the Fund Administrator processes your switch. If you instruct Equip to change your investment option and your completed and signed instruction is received by the Fund administrator before 4pm Melbourne time on a business day, that day s unit prices will usually be used to process your switch. If your instruction is received after 4pm Melbourne time, the next day s unit prices are usually used. Unit prices for a particular day are not calculated until the following business day. Business day means Monday to Friday excluding National and Melbourne public holidays. These options are described in more detail later in this section.