Dow Australia Superannuation Fund A guide to your super Account-Based Pension members

Transcription

1 Dow Australia Superannuation Fund A guide to your super Account-Based Pension members ISSUED: 30 SEPTEMBER 2017

2 Contents Your retirement options 1 The Account-Based Pension Section 2 Joining the Account-Based Pension Section 3 How the Account-Based Pension works 4 Your investment choice 7 Risks of membership 24 How your Fund is managed 26 Application forms Your Fund Contact Back cover i A guide to your super Account-Based Pension members ii This guide explains: What you can do with your super benefit in the Dow Fund once you near or reach retirement; and How the Fund s Account-Based Pension Section works, including the Transition to Retirement Account-Based Pension. Product Disclosure Statement This booklet, A guide to your super Account-Based Pension members, was prepared on 30 September 2017 and forms part of the Product Disclosure Statement (PDS) for the Account-Based Pension Section of the Dow Australia Superannuation Fund (ABN ). The other publication that forms part of the PDS is the Fees and Tax Sheet (Pensioners). This booklet was issued by Towers Watson Superannuation Pty Ltd (ABN , AFSL ) as Trustee of the Fund, and describes the main features and benefits of the Fund s Account-Based Pension Section. If there are any differences between the information provided in this PDS and the Fund s Trust Deed, then the Trust Deed is the final authority. Information on tax and superannuation legislation is current as at 30 September 2017 unless otherwise noted. The Trustee reserves the right to correct any errors or omissions. The information provided in this booklet is general information only and does not take into account your particular objectives, financial circumstances or needs. It is not personal or tax advice. Any examples included are for illustration only and are not intended to be recommended courses of action. 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 is subject to change from time to time and may be updated if it changes. Updated information can be obtained free of charge by contacting the Fund Administrator or from the website (see contact details on the back cover). In this booklet, we refer to 'the Company'. This is the employer for employees of Dow Chemical (Australia) Pty Ltd, Dow AgroSciences Australia Limited, Dow Corning Australia Pty Ltd, Rohm and Haas Australia Pty Ltd and affiliated companies.

3 Your retirement options The Dow Australia Superannuation Fund (the Fund ) provides you with a number of super options as you near or reach retirement. Once you reach your preservation age (i.e. at least age 55), you can access your super before you retire, through the Fund s Transition to Retirement Account-Based Pension. You will need at least $50,000 in super to invest. If you are retiring, you can either take your super benefit as a lump sum or you can keep it in the tax-effective super environment through one, or a combination, of the following options: 1 Take 2 3 out an Account-Based Pension through the Fund As a member of the Fund, when you retire you can invest all or part of your lump sum benefit in the Fund s Account-Based Pension Section, provided you have a minimum balance of $50,000. Use this guide to find out more.* Keep your super in the Fund s Retained Benefits Section You can leave your super in the Retained Benefits Section of the Fund and withdraw money when you need it. To find out more, read the Product Disclosure Statement Employee members (including Insurance Only members) or the Product Disclosure Statement Spouse members, as applicable, available from the Fund Administrator (see the back cover for contact details) and the Fund s website, Transfer your super to an external fund of your choice You can also transfer your super to another complying super fund. Speak to the Fund Administrator or your chosen fund for more information. For further information about your options as you approach retirement, refer to the booklet, Countdown to retirement..., available on the Fund s website. * From 1 July 2017, the amount you can have in total in pensions that receive tax-free investment returns such as account based pensions and annuities will be limited to $1.6 million (see page 2 for details). Snapshot of the Account-Based Pension Section An Account-Based Pension aims to provide you with regular and flexible income when you near or reach retirement. Taking an Account-Based Pension through the Fund has a number of benefits: Continue your long-term investment strategy for your super through the Fund s same investment options; Keep your super in a fund that you know; and Flexibility to choose an annual income within limits set by the Government and to make lump sum withdrawals (once you have retired). Note: Some fees apply. See the Fees and Tax Sheet (Pensioners). Transferring to the Fund s Account-Based Pension Section is easy see page 3. This booklet provides you with more information about the Fund s Account-Based Pension Section. Please read it carefully. The Trustee recommends you speak to a licensed financial adviser to see if the Account-Based Pension or the Transition to Retirement Account-Based Pension is the best option for you (see page 25 for more information on how to find an adviser). You should also consider the risks of taking an Account-Based Pension (see page 24). 1 Your retirement options

4 The Account-Based Pension Section 2 The Account-Based Pension Section One of the key features of the Fund is the opportunity for members to take an Account- Based Pension through the Fund on or near retirement. Introducing the Account-Based Pension To take an Account-Based Pension in the Fund, you must be over your preservation age and invest a minimum super lump sum of $50,000. You must also be able to access your benefit in cash. Transferring your benefit into an Account-Based Pension Account effectively turns your lump sum super payment into a regular, flexible income. You have a say in how your Account-Based Pension is invested by choosing from the same investment options available to you in your previous section of the Fund. More information about these options and investing in general is set out on pages 7 to 23. Investment returns are applied to your account according to the investment option(s) you have chosen (and can be positive or negative from time to time). You can choose how much is paid to you each month above a minimum amount set by the Government. You may also make additional lump sum withdrawals from your account. The payments continue until you decide to withdraw all your money, or until your entire lump sum and investment returns have been paid to you in full. An Account-Based Pension is not necessarily a pension for life. Payments continue only for as long as the money in your account lasts. If you die, any remaining balance in your Account-Based Pension Account is paid to your estate or to your reversionary beneficiary (see page 6 for details). No insurance is provided in the Account-Based Pension Section. Limit on amounts transferred to retirement pensions From 1 July 2017, the amount you can have in pensions that receive tax-free investment returns such as account based pensions and annuities will be limited to $1.6 million. This is called the transfer balance cap, and applies to all of your superannuation pension investments in total (it is not a cap on each individual pension). Amounts over this must be withdrawn in cash or transferred back to an accumulation account, such as a retained benefit account. Otherwise, the excess will incur an interest charge payable to the Australian Taxation Office and you will have to pay tax on the interest charge. The ATO also has power to require your super fund to commute the excess without your consent. For these reasons, a maximum amount of $1.6 million applies to transfers to standard Account-Based Pensions in the Fund. Note that this limit does not currently apply to Transition to Retirement Pensions in the Fund as they are not exempt from investment earnings tax. Introducing the Transition to Retirement Account-Based Pension Access your super while you are still working, through the Fund s Transition to Retirement Account- Based Pension, if you are over your preservation age and have at least $50,000 in the Fund to invest. It works the same way as the Fund s standard Account-Based Pension except for the following important differences: You cannot generally make lump sum withdrawals until you fully retire or reach age 65; Your monthly income from your Transition to Retirement Account must be within a minimum and maximum amount set by the Government, whereas the Account-Based Pension is subject to a minimum payment only; If you are an employee, the Company will continue to contribute to your super; Amounts in Transition to Retirement Pensions will not counts towards your transfer balance cap; Your investment earnings on assets invested in transition to retirement pensions are taxed at a maximum of 15%; rather than being tax free; and Your insurance cover in the Fund (if any) will continue (subject to the insurer s conditions) while you are an employee under age 65. The Transition to Retirement Account-Based Pension is designed to give you more flexibility as you approach retirement. For example, it can supplement your income if you decide to reduce your working hours. It may also help you to reduce the amount of tax you pay on your income if you are over age 60. If you have any questions or need more information about the Account-Based Pension Section, or the Fund in general, please contact the Fund Administrator directly (see the back cover for contact details). You can also visit the Fund s website at super/dow. Please note, the Fund Administrator is not licensed to provide you with financial advice. See page 25 if you need to speak to a licensed financial adviser. Account-Based Pension Account = Your opening deposit (lump sum from super fund) +/ Investment earnings Fees, regular payments and amounts withdrawn* * Transition to Retirement Account-Based Pension members generally cannot make withdrawals while still working.

5 Joining the Account-Based Pension Section To take an Account-Based Pension or Transition to Retirement Account- Based Pension through the Fund, you must have at least $50,000 in your accumulation accounts in the Fund to invest in your pension (e.g. Company account, Member account, Rollover account, Spouse account and/ or Retained Benefit account). Your accumulation account balances in the Fund will be reduced by the amount you transfer to your pension. You should choose your initial deposit carefully as you cannot add new contributions or rollovers to your pension once it has started (see page 5). If you have transferred all your super out of the Fund, you cannot transfer it back to take an Account-Based Pension from the Fund. You must also complete an Account-Based Pension Form or a Transition to Retirement Account- Based Pension Form included with this guide. As with all investments, there are certain risks associated with taking an Account-Based Pension in the Fund. Please refer to Risks of membership on page 24 before joining the Fund s Account-Based Pension Section. Cooling-off period If you apply to take an Account-Based Pension through the Fund, you have 14 days from the date your application is accepted to decide if the Fund s Account-Based Pension is right for you. During this time, known as the cooling-off period, you may cancel your membership. If you want to cancel your membership, you must do so by writing to the Fund Administrator (see the back cover for contact details). If you cancel your Account-Based Pension membership, you will get back your initial deposit, adjusted for any taxes that may be payable, any payments that have already been made to you and any investment movements during your membership. No fees (other than investment fees) will be deducted from your Account- Based Pension Account in the Fund during the cooling-off period. Moving from a Transition to Retirement Pension to an Account-Based Pension If you start a Transition to Retirement Account-Based Pension, you will qualify for a standard Account-Based Pension (and receive tax-free investment earnings) when you satisfy a condition of release. Note that there is a transfer balance cap which limits the total amount anyone can have invested in total in standard Account-Based Pensions (where earnings are tax free) to $1.6 million. See page 2 for details. Conditions of release You qualify for the standard Account- Based Pension when you meet a condition of release. These are specified circumstances and include: You retire from the workforce that is : If you are aged between your preservation age and age 60, you have ceased gainful employment and the Trustee is reasonably satisfied that you intend never to again become gainfully employed, either on a full-time or a part-time basis; or You have ceased gainful employment after reaching age 60; or You have reached age 60 and ceased gainful employment and the Trustee is reasonably satisfied that you intend never to again become gainfully employed, either on a full- time or a part-time basis. 'Part time basis' means at least 10 hours per week for this purpose. You reach age 65; or You die, become totally and permanently disabled or have a terminal medical condition (as defined under the law). We will automatically transfer your Transition to Retirement Account- Based Pension to a standard Account-Based Pension at age 65. It is up to you to notify the Fund Administrator when you meet any of the other conditions of release above. To do this, complete and return the Account-Based Pension Form (at the back of this PDS), including an investment choice, and return it as directed. Your Transition to Retirement Pension will be switched to a standard Account-Based Pension: If you are under age 65 from the date that the Fund Administrator receives your completed form and investment instructions. If you notify the Fund Administrator that you satisfy a condition of release but do not provide investment instructions, your account will remain invested in the same investment option(s) as your Transition to Retirement Account-Based Pension. If you are age 65 or over from your 65th birthday. Your account will remain invested in the same investment option(s) as your Transition to Retirement Account-Based Pension. Your preservation age explained You can generally access your super as a lump sum when you retire after reaching your preservation age, which depends on when you were born. Date of birth Preservation age Before 1 July July 1960 to 30 June July 1961 to 30 June July 1962 to 30 June July 1963 to 30 June July 1964 or later 60 3 Joining the Account-Based Pension Section

6 How the Account-Based Pension works 4 How the Account-Based Pension works Choosing your income level You can choose how much you want to be paid each year provided it is more than the minimum amount specified by the Government (see the table to the right). Each year the Fund Administrator will advise you of your minimum amount effective from 1 July, to help you choose your annual income. Minimum payment amounts are pro-rated in the first year based on the period from your start date to the next 1 July. No minimum applies in the first year if you start your pension after 1 June in that financial year. Changing your income level You can vary your income at any time by contacting the Fund Administrator. If you don t notify the Fund Administrator of your preferred income amount by 1 July each year, you will receive the same income as the previous year, provided it complies with the Government's requirements. If you have an Account-Based Pension and your previous income is below your new minimum amount, you will automatically receive the minimum amount. If you have a Transition to Retirement Account-Based Pension and your previous income is outside your minimum and maximum amounts, your payment will be adjusted to fall within the limits. For Account-Based Pensions To calculate the minimum payment amount you receive from your Account-Based Pension each year, take your account balance at 1 July and multiply it by the age-based percentage shown in the table below. The amount is based on your account balance and your age-based percentage and is reset at 1 July each year. * Rounded to the nearest $10. MINIMUM annual income* = Pension account balance Minimum payment percentage based on your age Minimum Account-Based Pension payments as a percentage of your account at 1 July Age Age Under 65 4% % % % % 95 or more 14% % Here s an example Matthew is 68 years old and is fully retired from work. He has $350,000 in his Account-Based Pension Account. According to the table above, he must receive at least 5% of his account balance as income during the year. $350,000 x 5% = $17,500. Matthew needs to receive an income from his Account-Based Pension Account of at least $17,500 this year (rounded to the nearest $10) or $1,460 per month. For Transition to Retirement Account-Based Pensions If you have a Transition to Retirement Pension, your annual income amount is also subject to a maximum annual drawdown limit of 10% of your account balance when your pension starts or at 1 July each year. If you stay in the Fund, your pension will become a standard Account-Based Pension once you've reached age 65 or earlier if you meet a condition of release (see page 5). Transition to Retirement Account-Based Pension limits each year Age payment as a percentage of your account at 1 July* payment as a percentage of your account at 1 July* Under 65 4% 10% *Rounded to the nearest $10. Here s an example Therese is 61 years old and has taken a Transition to Retirement Account-Based Pension. She has $230,000 in her Account-Based Pension Account. The minimum annual amount Therese can receive is: $230,000 x 4% = $9,200. The maximum annual amount Therese can receive is: $230,000 x 10% = $23,000. Therese needs to choose an annual income from her Transition to Retirement Account-Based Pension Account of between $9,200 and $23,000.

7 How your income is paid You will be paid a monthly income from your Account-Based Pension Account. Your monthly amount is paid directly into your nominated bank account. If applicable, PAYG (Pay As You Go) tax will be deducted from your monthly payment automatically (see the Fees and Tax Sheet (Pensioners) for more tax information). Making lump sum withdrawals If you have retired from the workforce or reached age 65, you can withdraw some or all of the money in your Account-Based Pension Account at any time as a lump sum, provided you withdraw at least $2,000 each time. If your account balance is less than $10,000 and you want to make a lump sum withdrawal, you must withdraw the total balance of your account. An exit fee will apply to all lump sum withdrawals, see the Fees and Tax Sheet (Pensioners) for details. If you are under age 60, lump sum withdrawals may be taxed differently to your regular income payments from your account. See the Fees and Tax Sheet (Pensioners) for more information. If you want to make a lump sum withdrawal, please contact the Fund Administrator (see the back cover for contact details). For Transition to Retirement Account-Based Pensions If you are receiving a Transition to Retirement Account-Based Pension, you generally cannot make lump sum withdrawals until you meet a condition of release (see page 3), other than in certain limited circumstances. These circumstances include: Withdrawing an unrestricted non-preserved amount; Paying the superannuation surcharge or a release authority for excess contributions tax; Making a family law payment split; and Under financial hardship or compassionate grounds. Once you meet a condition of release (explained on page 3), your Transition to Retirement Account-Based Pension is no longer subject to preservation and will become a standard Account-Based Pension in the Fund. Your benefits will only become fully unrestricted non-preserved when you satisy a condition of release. Your preservation age is based on when you were born as shown on page 3. Making additional deposits Any additional deposits or transfers you want paid into your Account- Based Pension or Transition to Retirement Account-Based Pension Account should be paid in before starting your pension. Once you have started drawing an income from your pension account, you cannot contribute or roll over additional lump sums into your existing account. You will need to take out a new Account-Based Pension or Transition to Retirement Account-Based Pension with the Fund for any additional rollovers or contributions. Keep in mind that the minimum initial investment of $50,000 will apply before starting each pension. Family Law Under superannuation law, divorcing or separating couples can split the superannuation benefit of one of the spouses (including married and de facto couples of either sex) 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 may be reduced accordingly. The Fund Administrator can provide you with more information on the splitting of super benefits and any fees that may apply (see the Fees and Tax Sheet (Pensioners) on the website for more information). 5 How the Account-Based Pension works

8 Closing your account Death benefits and insurance cover How the Account-Based Pension works 6 You can close your Account- Based Pension Account at any time by withdrawing the balance (if you are eligible to do so) or by transferring the remaining balance to another complying superannuation fund. If you have a Transition to Retirement Account-Based Pension, you can also close your account by returning it to the Employee or Spouse member Section of the Fund (as applicable). You should write to the Fund Administrator to close your account (see the back cover for contact details). Your investment options The amount in your Account- Based Pension or Transition to Retirement Account-Based Pension Account will be invested in the same option(s) as your existing accounts, unless you instruct otherwise. For more information about the objectives and strategy of the Fund s investment options, refer to pages 7 to 21. The value of your investment will vary over time depending on the investment returns earned (which can be positive or negative in any given year) and the level of income you receive. Changing your investment option(s) If you decide to change your investment option(s), you can complete the Account-Based Pension Form or the Transition to Retirement Account-Based Pension Form, or you can make the change online through the Fund's website. A switching fee applies if you change your investment option (other than the first switch in any calendar year). See the Fees and Tax Sheet (Pensioners). There is no insurance provided under the Fund s Account- Based Pension Section. If you have a Transition to Retirement Account- Based Pension and remain a Company employee, your insurance in the Employee member Section of the Fund will continue until age 65 (subject to the insurer s restrictions). Generally, the insurance cover you had as a member of the Fund stops when you cease your employment with the Company. However, you may decide to take advantage of the continuation option that is available to members at that time. This means you may be able to take out a personal policy (at your own cost) with the Fund s insurer without the need to provide evidence of good health if you are under age 65 (see below for more details). If you die, any amount remaining in your Account-Based Pension Account will be paid to your estate, or you can request the Trustee to continue to pay the balance of your account to your spouse (including de facto and same- sex partner). This is known as a reversionary beneficiary nomination. Your spouse will receive regular pension payments until the balance of the account is exhausted. Alternatively, your spouse may request the balance to be paid as a lump sum. If your spouse dies before you (or you and your spouse separate or divorce), and your nomination is not amended, the balance of your account will be paid to your estate. To make a reversionary beneficiary nomination, complete the applicable form at the back of this booklet. Continuing your insurance when you leave the Company If you leave the Company and are under age 65, the level of death and disablement cover you had on the date you left your employment may continue for up to 60 days. Within 60 days of leaving your employment, if you were a permanent employee, you have the opportunity of continuing the death and disablement cover you had as an Employee member of the Fund by purchasing a personal insurance policy through the Fund s insurer. Your level of cover under the personal policy must not exceed the cover you had prior to leaving the Company. The cost of this personal policy will be based on the insurer s current retail premium rates, which will be different to the fee applicable while you were a member of the Fund. If the Company doesn't advise the Fund that you have stopped employment within 60 days, cover may be denied. To be eligible to take advantage of this continuation option, you must satisfy certain conditions. See the Product Disclosure Statement for Employee members for details or contact the Fund Administrator. If you take out a personal policy with the Fund s insurer under this option, evidence of good health will not normally be required. However, any restrictions, loadings or other special terms that applied to your cover while you were a member of the Fund will continue to apply to your personal policy and you must provide a smoker declaration to the insurer. The Fund Administrator can provide you with more information on continuing your insurance cover when you leave the Company (see the back cover for contact details).

9 Your investment choice One of the most important choices you make as a member of the Dow Australia Superannuation Fund is how you invest your super. There are eight different investment options in the Fund, which cater for a wide range of people with differing financial needs and goals. 1 You can either keep it simple by investing in one of the Fund s three packaged investment options; or 2 You can do it yourself by building your own portfolio across any combination of the eight options listed on pages 14 to 21. Your choice will depend on your circumstances as well as your interest in investing. If you would like to know more about investing, please refer to the following pages on investment basics. We also encourage you to speak to a licensed financial adviser (see page 25 if you need an adviser). Your investment options * Packaged options keep it simple Assertive 100% in shares (30% in Australian, 10% in emerging markets and 60% in international shares) Growth around 75% in growth assets (including diversifying assets) and 25% in income assets Conservative around 45% in growth assets (including diversifying assets) and 55% in income assets Asset class options do it yourself International Shares approximately 50% hedged in Australian dollars Australian Shares 100% in Australian shares Property 100% in global listed property (includes Australia) Fixed Interest 75% in Australian assets and 25% in international assets Cash * Your pension account will be invested in the same investment option(s) as your existing accounts in the Fund, unless you instruct otherwise. You can read about the packaged and asset class options on pages 14 to 21. Weighing up your choices We encourage you to read all the information in this guide, but here is a summary of the pros and cons of keeping it simple or doing it yourself. Keep it simple approach Invest in one packaged option Simple choice choose a packaged option designed by the Trustee and its expert advisers. Instant diversification two of the packaged options invest across a broad range of asset classes. Less monitoring as long as your investment needs don t change, there is no need to change your investment choice or rebalance your portfolio. BUT You have one option only: Do it yourself approach Tailor your investment portfolio from any of the eight investment options More choice you have the ability to create your own investment strategy to meet your needs. More flexibility you can change your investment mix as your circumstances change. BUT You have more responsibility: You should regularly monitor and assess whether to rebalance your portfolio. You can only pick one of the three packaged options. You must be satisfied that it meets your investment needs. You should ensure your portfolio is adequately diversified across the asset classes to meet your needs. 7 Your investment choice

10 Your investment choice 8 Start with the basics: asset classes The assets in which super is invested are typically cash, fixed interest investments, diversifying assets such as property, and shares. This section provides a brief overview of the main types of assets. Selecting the right mix of assets can make a huge impact on the amount of super you have when you retire. Cash Cash investments are often placed in a cash management trust. Cash can also be invested in short-term government bonds and company debentures for periods of less than 90 days. Cash typically brings the lowest returns of the asset classes over the longer term. But it is also the lowest-risk investment. Fixed interest Corporate and government bonds offer financing through sophisticated loan structures. When institutions like governments or companies want to borrow money, they can offer fixed interest investments, such as bonds (government and semigovernment bodies) and debentures (companies), for different lengths of time sometimes for 10 years or more. Fixed interest investments offer a return to the investor of the money invested (the capital), plus any interest earnings. Over the long term, investment earnings tend to be lower than those possible from shares or property investments. It is important to know that the value of a bond will change as the interest rate changes. Diversifying assets This is a broad category of investments and investment strategies that sit outside the traditional asset classes. They include property, individual hedge funds, alternative risk premia, structured beta funds and derivatives. Diversifying assets will typically perform differently to traditional asset classes (such as shares and fixed interest). This means that investors often use diversifying assets to help diversify their investment portfolios. On their own, diversifying assets can produce high returns, but with the risk of high shortterm volatility. However, when combined with traditional asset classes, their unique risk and return characteristics can help smooth longer-term returns and reduce volatility. The Fund currently invests in property, real return funds, risk parity (structured beta) funds (see pages 14 to 21) and alternative risk premia. Key terms Asset classes are different types of investments. For super, that generally means: Cash; Fixed interest investments; Diversifying assets (including property); and Shares (or equities). Property Investing in property generally means investing in industrial or commercial real estate or through a property trust. Like shares, property will produce both income and capital growth. And the value of the property can move up and down depending on the market. Over the long term, property is expected to produce higher returns than fixed interest investments, but lower than shares. Shares A share is a unit of ownership in a company it gives ownership of a real asset. Owning shares or stock gives an investor a share of the profits the company earns a dividend. A company raises money according to how many shares it can sell and at what price. If the value of the share goes up, shareholders receive a capital gain. If the value of a share goes down, there is a capital loss.

11 Risk and return Understanding risk Risk and return are at the centre of all talk about investments. Investments are not neatly divided into safe or risky. In fact, there are many levels and types of risks that you need to be aware of before you make your investment choice. While some investments may be considered safe because they will not generally decline in value, no investment is 100 per cent safe. With any investment, there is a level of risk that you have to accept. If you want higher potential returns, you must be willing to accept more volatility it s a trade off you have to be willing to make. Three types of risk you should know about market risk, inflation risk and liquidity risk are described below. Market risk One type of risk is market risk. Market risk is short-term volatility or ups and downs in the return of an investment. A risky investment typically means that the value of the investment will vary over short periods. A less risky investment does not fluctuate as much over the short term. Your ability to invest aggressively is directly related to the amount of time you have until you will need to use your savings. Over time, market risk will go down, because the ups and downs of the market start to even out. Inflation risk While you may not hear as much about inflation risk, it is just as important to understand. Inflation risk is the risk that your investment may not keep pace with inflation over time. If your investment is growing at less than the average rate of inflation, you will end up with less buying power because your investment will not be worth as much. So, the longer you hold on to an investment, the greater your exposure to inflation risk if your investment does not produce a return that beats the rate of inflation over the long term. Market risk vs. inflation risk The chart below illustrates how market risk and inflation risk work over time. You ll notice that, over time, market risk goes down because you have the time to ride out the ups and downs of the market. However, if investments are too conservative, there is a risk that the investment will not keep up with inflation and will not be worth as much over time. Risk Key terms Market risk Inflation risk Time Liquidity risk Liquid assets are assets that can be readily converted to cash. Liquidity risk is the risk that some assets may not be able to be converted to cash when needed to pay benefits or process investment switches. Risk The ups and downs in the return on your investments. There is a certain amount of risk that applies to every investment. Return The amount of money an investment earns. 9 Your investment choice

12 Return The return on an investment is simply the amount of money the investment earns or loses. The return can be income, in the form of interest. The return can also be an increase or a reduction in the value of an investment. For example, if the value of your shares increases over time, then the shares become a more valuable asset while you own them. When you sell the shares, you receive more than you paid for them. Generally, the longer you hold shares, the more likely they are to increase in value. It s important to know that a return can also be negative. If an investment return is negative or an investment loses value over time when you sell the investment, you will receive less than you paid for it. Why would anybody want to invest in a riskier investment? Because they also tend to produce a higher return over the longer term. Investments with the most potential for return have greater market risk. As an investor, you have to decide how much risk you are prepared to take to get a potentially higher level of long-term return. It s your choice. Risk and return summary Market risk is short term. There s a trade off between risk and return. If you want a higher return, you have to be willing to take more risk. The investments with the most potential for higher returns over the long term will also be the most unpredictable over the short term. Inflation risk is just as important to consider as market risk. Market risk can be reduced through diversification. Only you can decide how comfortable you are with the level of investment risk you choose. Your investment choice 10

13 Three key investment concepts There are three key concepts or principles that will help you make an educated investment choice and begin to control the risk you assume when you invest. These concepts are diversification, asset allocation and time horizon. Diversification One important thing to know about business cycles is that, generally, while one type of investment or asset is doing poorly, others can be doing well. That s why it s smart to diversify your investments. To diversify simply means spreading your investments over different kinds of assets in other words, not keeping all your eggs in one basket. For example, if you have your entire investment portfolio invested in a single company and the value of that company s shares falls, the value of your portfolio will decline by exactly as much as the stock fell. Likewise, if you are equally diversified across two stocks and one declines, you will only have a 50% exposure to that loss. And so on. Diversification is one way to help you reduce investment risk and improve the consistency of your returns. Diversification in the Dow Fund The Fund s packaged investment options Assertive, Growth and Conservative are diversified across different asset classes or are invested in shares that have different levels of risk. For example, the Assertive option is made up entirely of shares, including Australian, emerging markets and international shares. And within each of these asset classes, your super is invested across shares in different industries, and many different companies. At any one time, some of those companies may be doing very well and producing good returns, while others may be lagging behind. The Growth and Conservative options also invest to varying degrees in fixed interest and diversifying assets, which spread the risk even more widely. Generally, when shares as a whole aren t doing well, fixed interest investments are likely to produce a good income. DIY diversification You also have the flexibility to choose your own level of diversification across asset classes by combining any number of the Fund s packaged options and asset class options. You should keep in mind that if you decide to do it yourself, you may need to rebalance your portfolio from time to time. See pages 22 to 23 for information about rebalancing. Asset allocation Asset allocation means investing across a range of asset classes that offer different levels of risk. You can do this by choosing shares from different industries. But the most important way to take advantage of a diversified portfolio is to invest in different types of assets. You may want to look at the total asset allocation of your investment portfolio, including your super and any other outside investments you may have. Asset allocation in the Dow Fund Each of the Fund s investment options has a pre-determined target or benchmark asset allocation. You need to choose an option or a combination of options that is consistent with your investment objectives and time horizon. See pages 14 to 21 for details of the benchmark asset allocations for the options. The actual allocations are shown in the Fund's latest Annual Report. 11 Your investment choice

14 Time horizon The most important thing to consider when you are determining how much risk you can take is your time horizon or the amount of time you have until you will need your savings. If you are investing for the long term generally, more than seven years you might be more comfortable with a more risky portfolio. If you are making a short-term investment generally, one to three years you might need to consider building a less risky portfolio. Either way, the key is to develop a portfolio with a degree of risk that is appropriate for your needs. Again, the choice is yours. Your investment options See pages 14 to 21 to learn more about the Fund s investment options. You can also see up-to-date investment information by visiting the Fund's website. Accessing the Fund's website You can visit the Fund's website at Your investment choice 12

15 Making your choice After you ve taken the time to read this guide and understand the basics of investing and the investment options that are available through the Fund, it s time to make your choice. How to make your choice Once you decide on your option(s), complete the Account-Based Pension Form (or Transition to Retirement Account-Based Pension Form, as applicable) at the back of this booklet or download one from the Fund's website. The super in your account will be invested according to the choices you make. If you don t make a choice If you don t choose an option or mix of options, your pension account will be invested automatically in the same investment option(s) as your existing accounts in the Fund, until you instruct otherwise. Ask for advice Remember, super is only one part of your financial portfolio. You may want to seek assistance from a licensed financial adviser to help you make a choice that is best for you. You can change your option You can change or switch your choice of investment option(s) at any time. Simply complete and submit your form to the Fund Administrator so that they receive it before the end of the month, and your new choice will take effect from the first day of the following month. Alternatively, you can make the change online directly through the Member Centre on the Fund's website. Once your switch has been processed, you will be sent confirmation of the transaction. Remember, as most Australians are living longer, your super might need to last a while. Long-term investments shouldn t necessarily be influenced by short-term fluctuations in investment returns. However, if your financial situation changes, you might want to discuss investment changes with a licensed financial adviser before you decide to do anything. Cost to switch There may be some costs associated with changing or switching your option(s), namely: A switching fee, for the work involved in rearranging investments and producing a confirmation statement. This fee is waived for your first switch in each calendar year, but applies for subsequent switches in the same calendar year; and A buy-sell spread, to cover costs charged by the Fund s investment managers. This includes the stamp duty and brokerage fees involved in buying and selling assets. Costs vary depending on the type of assets you re investing in. Currently you are not charged a buy-sell spread in the Fund. For information on the current fees that apply, see the Fees and Tax Sheet (Pensioners) or visit the Fund's website. 13 Your investment choice

16 Comparing investment options Your packaged options Assertive Overview* This option invests in a diversified mix of Australian and international shares. It may suit members who: Aim to achieve a high return over the long term by investing purely in shares. Will not be concerned with potentially significant fluctuations in returns over shorter time periods. May not need immediate access to all of their benefit. Investment objectives To achieve a return (after investment fees) that is at least 4% per year more than movements in the Consumer Price Index (CPI) over moving 10-year periods. To limit the probability of achieving a negative return over moving 1 year periods to approximately 6 years in 20. Investment strategy To invest totally in shares, with about 30% in Australian shares, 10% in emerging markets (unhedged) and 60% in international shares. Approximately half the international shares are currency hedged into Australian dollars. Target asset allocation # 10% 30% 60% Asset class Assertive Range % Australian shares International shares** Emerging markets shares 0 10 Property Risk parity (structured beta) Real return Alternative risk premia Australian fixed interest International fixed interest Cash Minimum suggested investment horizon* 7 years or more Estimated number of negative annual returns over the next 20 year period*** 5 Volatility level #*** High # Note: Over the 12 months ending February 2018, the option's assets are being progressively transitioned to the target asset allocation shown above. Over this period the assets will be invested within the ranges shown above but will not necessarily reflect the final target allocation shown. The volatility level shown is that expected on completion of the transition. * Note that the information about the suitability of particular options is general in nature. It is not intended to be a recommendation or statement of opinion in relation to any particular option. Members are encouraged to seek their own advice if they are uncertain as to which option might be most appropriate for them. ** Approximately half hedged to Australian dollars. *** The volatility level shown is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. It is based on the Standard Risk Measure developed by the industry and is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. Your investment choice 14

17 Growth Overview* This is a diversified option that invests across the major asset classes, but with a significant weighting towards growth assets. This option may suit members who: Aim to achieve a reasonably high return over the medium to long term by investing in a broadly diversified range of investments. Will not be concerned with potentially moderate fluctuations in returns over shorter time periods. May not need immediate access to all of their benefit. Investment objectives To achieve a return (after investment fees) that is at least 3% per year more than movements in CPI over moving 10-year periods. To limit the probability of achieving a negative return over moving 1 year periods to approximately 5 years in 20. Investment strategy To invest about 75% in shares with some exposure to currency and diversifying assets (including property, risk parity [structured beta], real return and alternative risk premia) and about 25% in fixed interest and cash. Target asset allocation # 6% 12% 19% 24% 10% 9% 9% 7% 4% Asset class Growth Range % Australian shares International shares** Emerging markets shares 0 6 Property 3 9 Risk parity (structured beta) 4 13 Real return 6 11 Alternative risk premia 0 12 Australian fixed interest International fixed interest 4 9 Cash 0 2 Minimum suggested investment horizon* 5 years or more Estimated number of negative annual returns over the next 20 year period*** 4 Volatility level #*** Medium to high # Note: Over the 12 months ending February 2018, the option's assets are being progressively transitioned to the target asset allocation shown above. Over this period the assets will be invested within the ranges shown above but will not necessarily reflect the final target allocation shown. The volatility level shown is that expected on completion of the transition. * Note that the information about the suitability of particular options is general in nature. It is not intended to be a recommendation or statement of opinion in relation to any particular option. Members are encouraged to seek their own advice if they are uncertain as to which option might be most appropriate for them. ** Approximately half hedged to Australian dollars. *** The volatility level shown is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. It is based on the Standard Risk Measure developed by the industry and is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. 15 Your investment choice

18 Conservative Overview* This option is a diversified option that has exposure to all the major asset classes but with a weighting towards income assets. It may suit members who: Aim to achieve a modest return ahead of inflation over the medium to long term by investing in a broadly diversified range of investments. Are concerned with relative consistency in returns but not with an occasional negative return over shorter time periods. Accept that returns may be lower than those achieved by other investment options in the long term. Might potentially need access to their benefit in the near future. Investment objectives To achieve a return (after investment fees) that is at least 1.5% per year more than movements in CPI over moving 10-year periods. To limit the probability of achieving a negative return over moving 1 year periods to approximately 3 years in 20. Investment strategy To invest about 45% in shares with some exposure to currency and diversifying assets (including property, risk parity [structured beta], real return and alternative risk premia) and about 55% in fixed interest and cash. Target asset allocation # Minimum suggested investment horizon* 3 years or more Estimated number of negative annual returns over the next 20 year period*** 2 10% Volatility level #*** Medium 15% 30% 6% 12% 5% 6% 6% 8% 2% Asset class Conservative Range % Australian shares 6 10 International shares** Emerging markets shares 0 2 Property 3 5 Risk parity (structured beta) 6 8 Real return 6 8 Alternative risk premia 0 8 Australian fixed interest International fixed interest Cash # Note: Over the 12 months ending February 2018, the option's assets are being progressively transitioned to the target asset allocation shown above. Over this period the assets will be invested within the ranges shown above but will not necessarily reflect the final target allocation shown. The volatility level shown is that expected on completion of the transition. * Note that the information about the suitability of particular options is general in nature. It is not intended to be a recommendation or statement of opinion in relation to any particular option. Members are encouraged to seek their own advice if they are uncertain as to which option might be most appropriate for them. ** Approximately half hedged to Australian dollars. *** The volatility level shown is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. It is based on the Standard Risk Measure developed by the industry and is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. Your investment choice 16

19 Your asset class options International Shares Overview* This is an aggressive option that invests only in international shares. This option may suit members who: Aim to achieve a high return over the long term by investing in a diversified portfolio of international shares. Will not be concerned with potentially significant fluctuations in returns over shorter time periods. Want to build their own investment strategy when combined with other single asset class options. May not need immediate access to all of their benefit. Investment objectives To achieve a return (after investment fees) that is at least 4% per year more than movements in CPI over moving 10-year periods. To limit the probability of achieving a negative return over moving 1 year periods to approximately 6 years in 20. Investment strategy To invest totally in a diversified portfolio of international shares (including emerging markets - unhedged), with approximately half the remaining international shares currency hedged into Australian dollars. Target asset allocation # Minimum suggested investment horizon* 7 years or more Asset class International Shares Range % Australian shares International shares** Emerging markets shares 0 10 Property Risk parity (structured beta) Real return Alternative risk premia Australian fixed interest International fixed interest Cash Estimated number of negative annual returns over the next 20 year period*** 5 Volatility level #*** High 10% 90% # Note: Over the 12 months ending February 2018, the option's assets are being progressively transitioned to the target asset allocation shown above. Over this period the assets will be invested within the ranges shown above but will not necessarily reflect the final target allocation shown. The volatility level shown is that expected on completion of the transition. * Note that the information about the suitability of particular options is general in nature. It is not intended to be a recommendation or statement of opinion in relation to any particular option. Members are encouraged to seek their own advice if they are uncertain as to which option might be most appropriate for them. ** Approximately half hedged to Australian dollars. *** The volatility level shown is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. It is based on the Standard Risk Measure developed by the industry and is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. 17 Your investment choice

20 Australian Shares Overview* This is an aggressive option that invests only in Australian shares. This option may suit members who: Aim to achieve a high return over the long term by investing in a diversified portfolio of Australian shares. Will not be concerned with potentially significant fluctuations in returns over shorter time periods. Want to build their own investment strategy when combined with other single asset class options. May not need immediate access to all of their benefit. Investment objectives To achieve a return (after investment fees) that is at least 4% per year more than movements in CPI over moving 10-year periods. To limit the probability of achieving a negative return over moving 1 year periods to approximately 7 years in 20. Investment strategy To invest totally in a diversified portfolio of Australian shares. Target asset allocation 100% Asset class Australian shares International shares Emerging markets shares Property Risk parity (structured beta) Real return Alternative risk premia Australian fixed interest International fixed interest Cash Minimum suggested investment horizon* 7 years or more Estimated number of negative annual returns over the next 20 year period** 7 Volatility level** Very High * Note that the information about the suitability of particular options is general in nature. It is not intended to be a recommendation or statement of opinion in relation to any particular option. Members are encouraged to seek their own advice if they are uncertain as to which option might be most appropriate for them. ** The volatility level shown is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. It is based on the Standard Risk Measure developed by the industry and is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. Your investment choice 18

21 Property Overview* This option invests only in a diversified portfolio of global listed property. It may suit members who: Aim to achieve a reasonably high return over the long term. Will not be concerned with potentially significant fluctuations in returns over shorter time periods. Want to build their own investment strategy when combined with other single asset class options. May not need immediate access to all of their benefit. Investment objectives To achieve a return (after investment fees) that is at least 3% per year more than movements in CPI over moving 10-year periods. To limit the probability of achieving a negative return over moving 1 year periods to approximately 6 years in 20. Investment strategy To invest totally in global listed property trusts (including listed property in Australia) which is totally currency hedged into Australian dollars. Target asset allocation 100% Asset class Australian shares International shares Emerging markets shares Property Risk parity (structured beta) Real return Alternative risk premia Australian fixed interest International fixed interest Cash Minimum suggested investment horizon* 7 years or more Estimated number of negative annual returns over the next 20 year period** 6 Volatility level** Very High * Note that the information about the suitability of particular options is general in nature. It is not intended to be a recommendation or statement of opinion in relation to any particular option. Members are encouraged to seek their own advice if they are uncertain as to which option might be most appropriate for them. ** The volatility level shown is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. It is based on the Standard Risk Measure developed by the industry and is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. 19 Your investment choice

22 Fixed Interest Overview* This option invests only in a diversified portfolio of bonds. It may suit members who: Aim to achieve a modest return ahead of inflation over the medium to long term. Are concerned with relative consistency in returns but not with an occasional negative return over shorter time periods. Accept that returns may be lower than those achieved by other investment options in the long term. Want to build their own investment strategy when combined with other single asset class options. Might potentially need access to their benefit in the near future. Investment objectives To achieve a return (after investment fees) that is at least 1% per year more than movements in CPI over moving 10-year periods. To limit the probability of achieving a negative return over moving 1 year periods to approximately 3 years in 20 Investment strategy To invest totally in a diversified portfolio of government and non-government bond investments, including about three quarters in Australian and a quarter in international bond securities. The currency exposure for the international bond securities is fully hedged into Australian dollars. Target asset allocation 25% 75% Asset class Australian shares International shares Emerging markets shares Property Risk parity (structured beta) Real return Alternative risk premia Australian fixed interest International fixed interest Cash Minimum suggested investment horizon* 3 years or more Estimated number of negative annual returns over the next 20 year period** 2 Volatility level** Low to medium * Note that the information about the suitability of particular options is general in nature. It is not intended to be a recommendation or statement of opinion in relation to any particular option. Members are encouraged to seek their own advice if they are uncertain as to which option might be most appropriate for them. ** The volatility level shown is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. It is based on the Standard Risk Measure developed by the industry and is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. Your investment choice 20

23 Cash Overview* This option invests solely in cash and similar assets. It may suit members who: Aim to achieve a low-risk stable investment return over the short term by investing in cash investments. Are concerned about protecting capital and therefore have a low tolerance to any negative returns, even over short time periods. Accept that returns may be lower than those achieved by other investment options in the long term and are not seeking to increase the real value (or spending power) of their retirement savings. Want to build their own investment strategy when combined with other single asset class options. Are likely to need access to their benefit in the near future. Investment objectives To achieve a return (after investment fees) that is at least 0.5% per year more than movements in CPI over moving 10-year periods. To minimise the probability of a negative annual return. Investment strategy To invest totally in cash investments such as bank deposits, bank bills, and short-dated securities. Target asset allocation 100% Asset class Australian shares International shares Emerging markets shares Property Risk parity (structured beta) Real return Alternative risk premia Australian fixed interest International fixed interest Cash Minimum suggested investment horizon* Up to 3 years Estimated number of negative annual returns over the next 20 year period** 0 Volatility level** Very Low * Note that the information about the suitability of particular options is general in nature. It is not intended to be a recommendation or statement of opinion in relation to any particular option. Members are encouraged to seek their own advice if they are uncertain as to which option might be most appropriate for them. ** The volatility level shown is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. It is based on the Standard Risk Measure developed by the industry and is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. 21 Your investment choice

24 Your investment choice 22 Your questions answered What are my investment options? You can choose from eight investment options. See pages 14 to 21 for more information about these options. Can anyone help me make my investment choice? Only you can decide which investment option(s) are best for you. It is recommended that you consult a licensed financial adviser to discuss your overall financial goals before deciding. See page 25 for more information. Under no circumstances will the Trustee, the Company or the Fund Administrator provide you with personal advice in relation to your investment choice. Will I be charged any fees to make or change my investment choice? You don t have to pay a fee to make your initial investment choice. Fees may apply each time you change your investment option(s), although the switching fee is waived for your first switch in any calendar year. See the Fees and Tax Sheet (Pensioners) for more information. What happens if I don t make an investment choice for my Account-Based Pension Account? Your pension account will be invested in the same investment option(s) as your existing accounts in the Fund, unless you instruct otherwise. See pages 14 to 21 for more information on the investment options. Can I change my mind later? Yes, you have the opportunity to switch your investment option(s) effective the first day of each month; however, you may incur a switching fee (other than the first switch in any calendar year). See the Fees and Tax Sheet (Pensioners) for more information. Under what circumstances would I change my investment option(s)? Generally, most people change their investment option in response to a change in their personal or financial situation. Continually changing options to chase short-term returns (e.g. in response to improved share market performance) could mean that your super earns less over time. You may wish to consult a licensed financial adviser for more information. Can I choose more than one option for my Account-Based Pension Account? Yes. You can keep it simple by investing in one of the three packaged options, or you can do it yourself by investing in any combination of the packaged options and the five asset class options. What investment fees apply and how are they charged? The Fund s investment managers charge fees for managing the Fund s investments which are passed on to members. The actual fees for each investment option vary depending on the type of assets in which the option is invested. Refer to the Fees and Tax Sheet (Pensioners) which includes the current level of investment fees for each option. Investment fees are deducted from each option s investment returns before the Declared Earning Rate(s) are applied to your account. How do investment returns affect my Account-Based Pension Account? It is important to understand that the Fund's investment returns can be positive or negative, depending on market performance and the nature of the investment option. The Declared Earning Rate(s) of your chosen investment option(s) will be applied to your Account- Based Pension or Transition to Retirement Account-Based Pension Account each year. The Declared Earning Rate is the actual investment return for an investment option after the deduction of investment fees and administration fees (and tax, for Transition to Retirement pensions). When the Declared Earning Rate(s) earned by your chosen investment option(s) are positive, your Account-Based Pension Account will increase in value. When the Declared Earning Rates are negative, the value of your Account-Based Pension Account will decrease. No tax is deducted from returns applied standard Account-Based Pension accounts. However, investment returns for Transition to Retirement Pension members are taxed from 1 July Regardless of which option(s) you choose, neither returns nor your capital are guaranteed. Interim rate for withdrawals or switches Earning rates are calculated each month. If your pension needs to be paid out before monthly earning rates have been calculated, or if you switch investment options, an interim earning rate will be used. This will cover the period from the date that investment earnings were last calculated until the date your withdrawal is paid or your transfer request is processed. The interim rates for each investment option are based on the Fund s estimated monthly net investment returns. Monitoring your super Greater responsibility for DIY If you decide to do it yourself and invest in the asset class options, you will need to take more responsibility in monitoring your Account-Based Pension Account than if you simply invest in one of the packaged options. Here are some things you will need to think about when you do it yourself : You will be responsible for regularly monitoring the performance of your investments to ensure that the overall investment strategy you have chosen remains suited to your needs. Remember that if you diversify your investment (i.e. spread your investment across a range of asset classes instead of investing in just one or two options) this can reduce risk and improve the consistency of your investment returns.

25 In this way, if one asset class is performing poorly, the impact on your super could be cushioned or offset by the options that are performing better. You may need to rebalance your portfolio from time to time. For example, because each asset class option typically performs differently over time (i.e. some may achieve very high returns while others may perform poorly or earn negative returns), the percentage of your Account- Based Pension Account that is invested in each option will change (i.e. you will have more invested in the higher performing options and less in the poorer performing options). This means that, over time, the spread of your investments may end up being quite different from what you originally intended. Helping you monitor your super You will want to know how your investment option(s) perform and how that performance affects your own Account-Based Pension Account. The Fund helps you keep track of your super, providing you with access to information in a number of ways: Online access to your Fund The Fund's website is your complete source for general Fund information and the lastest investment returns. Your Each year the Fund's Annual Report, available on the website, will show how each of the investment options has performed and lists the Fund's investment managers. Your annual Benefit Statement Your annual Benefit Statement will show you the Declared Earning Rate(s) for each investment option. Managing your super investments The Trustee, with the assistance of an independent investment adviser, appoints professional investment managers and companies that invest the Fund s assets in accordance with strict guidelines. Each option is managed by one or more investment managers. When making investment decisions, the Fund s investment managers take into account the expected return and performance of companies and other assets in which they invest. The investment managers are chosen on the basis of research and professional advice and because their investment approach and style is consistent with the objectives of the Fund s various investment options. The Trustee reviews each investment manager s performance regularly and may change the Fund s investment managers or products from time to time without prior notice to or consent from members. The Trustee may also change the investment objectives. You will be advised if this affects you. For further details on the Fund s investment managers, see the Fund s latest Annual Report. Socially responsible investments The Trustee does not take into account social, ethical or environmental considerations, or labour standards when selecting, retaining or realising the Fund s investments. When the Fund s investment managers were selected, the Trustee did not consider whether the managers took these factors into account. Reserves Operational Reserve The Trustee may maintain an operational reserve and it is expected that this reserve will be of the order of 0% to 0.25% of assets. The operational reserve is used to facilitate the efficient operation of the Fund and is invested in the Growth option. The Trustee does not maintain investment reserves and all investment earnings are generally distributed to members (though a small portion may, from time to time, be transferred to the operational reserve). ORFR Reserve From 1 July 2013, super funds have been required to set aside financial resources to address the fund s operational risks. The Trustee has established an Operational Risk Financial Requirement (ORFR) Reserve in the Fund for risk management purposes. The ORFR Reserve is set at around 0.25% of Fund assets. The Trustee has decided that the ORFR Reserve is invested in the same way as the Growth option. The Trustee updates members on the status of the ORFR Reserve each year in the Annual Report. Bankruptcy Any personal contributions to super made on or after 27 July 2006 (excluding the Company s Superannuation Guarantee contributions) may be recoverable by creditors in the event of your bankruptcy if these contributions are demonstrated to have been made with the specific intention of defeating creditors. You will be advised if this affects you. 23 Your investment choice

26 Risks of membership There are certain risks associated with taking an Account-Based Pension in the Fund. Some of the risks associated with membership of this Fund are common to all superannuation funds. For example, there is the risk that the employers will cease making contributions to the Fund in the future, or the Fund will close or wind up. If that were to happen, the Trust Deed determines how the Trustee must react. 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 or income, which may affect the value of your superannuation benefits or the net pension benefit paid. The Fund may also be exposed to other risks such as changes in the economic and political climate, fraud or other criminal activities (including identity theft). Not all of these risks can be controlled by the Trustee. Pension risks Some of the risks associated with choosing to receive part or all of your benefit as a pension include: The risk that your lump sum may run out. There is no guaranteed payment period for the pension payments; The risk that any negative investment returns earned by your chosen investment option(s) will reduce your account balance; With a Transition to Retirement Account-Based Pension, the risk that the maximum annual payment permitted by the Government may not be sufficient for your needs; The risk that the income payments you elect to receive may not keep pace with inflation; The risk that the pension payable from the Fund may not be the most appropriate type of pension for your needs. You should note that the Fund s Account-Based Pension is not an exempt income stream for the purposes of determining eligibility for the Age Pension or other Centrelink benefits; and The risk that a more valuable pension may be available by using your lump sum benefit to purchase a pension or annuity from an external provider (rather than from the Fund). You should consider these risks carefully and, if necessary, obtain professional financial advice to ensure that obtaining your benefit as an Account-Based Pension is the best choice for you. Investment risks There are certain investment risks associated with being a member of a superannuation fund, including this Fund. As with all investments, there are risks associated with a decision to invest and also in choosing a particular investment option. Different asset classes perform differently at different times. Since each investment option has a different investment mix, the risks of investing in each option are different. See page 9 for a description of the main investment risks. Risks of membership 24

27 Do you need financial advice? You may want to seek the assistance of a licensed financial adviser when deciding on your super choices and what will best suit your personal needs. Here are some tips for choosing a licensed financial adviser: Ask if the financial adviser is licensed by ASIC, the Government regulator. Check that the financial adviser has indemnity insurance and is a member of a professional body such as the Financial Planning Association of Australia. Find out how long the financial adviser has been in business and ask about their research facilities. Check how they will charge you. Do they charge a fee for service or rely on commissions from the amount of money you might invest? Make sure they are professional and impartial. Ask yourself if you are comfortable with your licensed financial adviser. The Financial Planning Association of Australia can put you in touch with a licensed financial adviser in your area. Call them on or visit 25 Risks of membership

28 How your Fund is managed How your Fund is managed 26 Looking after the Fund The Fund s Trustee Towers Watson Superannuation Pty Ltd (ABN , AFSL ) is Trustee of the Dow Australia Superannuation Fund (ABN ). This Company has been licensed to act as a trustee of superannuation funds by the prudential regulator of super funds in Australia, the Australian Prudential Regulation Authority. The Trustee is responsible for: Protecting your rights and interests as a member; Operating the Fund in line with the Trust Deed (the legal document that sets out the rules and operating requirements of the Fund) and superannuation law; Investing the Fund s assets prudently according to the Fund s investment objectives; Paying benefits when they are due; and Keeping you informed about the Fund and your benefit. Policy Committee A Policy Committee is responsible for ensuring that the interests of members and the Company are represented in the management of the Fund. The Committee consists of an equal number of members who are appointed by the Company and members who are elected periodically by members of the Fund. Account-Based Pension members are not eligible to stand for election to the Policy Committee. Financial advice The Trustee may use the services of Towers Watson Australia Pty Ltd (Australian Financial Services Licence No ) to provide general financial product advice to members. Enquiries and complaints If you join the Fund s Account- Based Pension Section or are already a member, you should direct your enquiries to: The Fund Administrator Dow Australia Superannuation Fund PO Box 1442 Parramatta NSW 2124 Phone: dowsuper.australia@ towerswatson.com In most cases, your enquiry will be resolved over the phone. If not, you may be asked to write to the Fund. The matter will be referred to the Trustee and you should receive a reply within 90 days. In certain circumstances, you may be able to request the Trustee s reasons for its decision on your complaint. A copy of the Trustee s Enquiries and Complaints Policy and Enquiry or Complaint Form is available from the Fund s website at super.towerswatson.com/super/ dow. If you are not satisfied with the Trustee s response, you may wish to contact the Superannuation Complaints Tribunal (SCT). The SCT is an independent body set up by the Federal Government to deal with enquiries or complaints that the Trustee has not dealt with to your satisfaction. The SCT may mediate the dispute. You can contact the SCT on or write to: The Secretariat Superannuation Complaints Tribunal Locked Bag 3060 Melbourne VIC info@sct.gov.au If your complaint concerns a privacy issue, please direct your matter to the Office of the Australian Information Commissioner (OAIC). You can contact the OAIC on or by to enquiries@oaic.gov.au. Protecting your personal information The following is a summary of the Trustee s Privacy Policy. The full Privacy Policy is available on the Fund s website. The Trustee needs to collect information about you to determine your benefit entitlements in the Fund, and to administer the Fund in accordance with superannuation and taxation laws. Typically this includes your name, address, date of birth, gender, and nominated dependants as well as salary and contribution details (where applicable). If you do not provide the information required, your application to join the Fund may not be approved or your benefits may be restricted. In most circumstances, this information will be collected directly from you. However, it is sometimes more practical to collect some information from the Company, e.g. your salary and contribution information. The Trustee will abide by the Australian Privacy Principles as set out in the Privacy Act Your personal information will be used by the Fund Administrator and insurer (if applicable) to determine your benefits and may be disclosed to other parties such as the Fund s auditors, and legal and professional advisers. If you believe any information the Fund holds about you is incorrect, or you want to find out what personal information the Fund holds about you, please contact the Fund Administrator (see to the left for contact details).

29 Keeping you informed The Trustee wants you to know about the Fund and your Account- Based Pension. As a member of the Fund, you will receive: Access to the Fund s, which will be available online. This will tell you how your super is being managed and how it has performed over the past year. It will also keep you up to date with any changes that may affect your super (e.g. legislation, administration or management changes); An annual, which will show you the value of your super and any transactions made during the previous 12 months; and Access to the Fund's website which has general information about the Fund and super, including copies of the Fund s newsletters, booklets and forms as well as various Trustee policies. You can access the website at 27 How your Fund is managed