TERM PENSION ALLOCATED PRODUCT DISCLOSURE STATEMENT ISSUED: 30 SEPTEMBER 2017

Transcription

1 TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT ISSUED: 30 SEPTEMBER 2017

2 2 TABLE OF CONTENTS ABOUT BUSSQ... 3 WELCOME... 5 FEATURES... 7 COMPARING THE BUSSQ PENSION PLANS WITH OTHER FUNDS FEES AND OTHER COSTS INVESTMENT CHOICE BUSSQ INVESTMENT OPTIONS THE RISK DEATH BENEFITS VALUABLE SERVICES OTHER INFORMATION FORMS IMPORTANT INFORMATION This Product Disclosure Statement (PDS) describes the main features, benefits and conditions of the BUSSQ Term Allocated Pension (TAP). The PDS follows the requirements set by the Australian Securities and Investments Commission (ASIC). It will help you to: Decide whether this product will meet your needs, and Compare this product with others you may be considering. The offer made in this PDS is only available to persons receiving the PDS within Australia. Applications from outside Australia will not be accepted. The PDS should be read in detail before making a decision as to whether this product will meet your needs. The information contained in this PDS is general information only and does not take into account your individual objectives, financial situation or needs. It has also been prepared so as not to conflict with requirements of the Corporations Act 2001 and its Regulations (as amended). If you would like further information about BUSSQ, please call our contact centre on 1800 MY BUSSQ ( ). The Trustee will provide all information that it reasonably believes is needed for you to make an informed assessment of the management, financial conditions and the investment performance of BUSSQ. BUSSQ offers you access to a financial adviser. There is no obligation to use this service. BUSSQ can provide information about the fees and features of this product and general information about superannuation. If you require advice that takes into consideration your personal circumstances, needs and objectives, then you will need to speak to a person licensed to give personal financial advice. You should be aware that the value of your investment in BUSSQ may rise or fall. If you leave BUSSQ or draw money within a few years of joining you may get back less than the amount paid into BUSSQ because of the level of investment earnings, fees and charges and the impact of taxation. BUSS(Queensland) Pty Ltd ABN AFSL RSE L BUSSQ ABN SFN Registration Number: R TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

3 3 ABOUT BUSSQ PURPOSE OF BUSSQ BUSSQ was established in 1985 to provide benefits for all persons working in the Queensland building, construction, civil and allied industries. MANAGING BUSSQ BUSS(Queensland) Pty Ltd, is the Trustee of BUSSQ and the issuer of this Product Disclosure Statement (PDS). Its Board is made up of an equal number of employer and member representative directors who are nominated by our sponsoring employer and member organisations: Master Builders Construction Forestry Mining Energy Union (CFMEU). taking into account your individual financial needs, circumstances and objectives. It should be read in conjunction with the latest annual report. If you have not received an annual report you can download one from the BUSSQ website at We encourage you to assess your own financial situation before making an investment decision based on the information contained in this PDS. You may wish to seek the advice of a qualified and independent financial adviser to help you with your decision-making. BUSSQ offers members advice in relation to their superannuation, provided by our in-house financial planners. The Trustee is responsible for ensuring BUSSQ is managed in the best interests of all members and their dependants. The Trustee also appoints various professional organisations to assist it with running BUSSQ. A Trust Deed governs the operation of BUSSQ and from time to time it may need to be amended. You will be notified of any changes that may adversely affect your benefits. You may inspect a copy of the Trust Deed on request. This PDS provides important information about the features, costs, benefits and risks of investing your money in BUSSQ's Term Allocated Pension. REGULATED FUND BUSSQ is a regulated fund which is operated to comply with the Superannuation Industry (Supervision) Act BUSSQ's Super Fund Number is BUSS (Queensland) Pty Ltd is a Registerable Superannuation Entity licence number L BUSSQ's Registration number is R BUSS(Queensland) Pty Ltd holds a Financial Services Licence (AFSL) and is licenced to provide financial advice on superannuation products. BUSSQ's AFSL number is Australian Administration Services (AAS) is the fund administrator for BUSSQ. GETTING ADVICE The advice in this PDS is of a general nature. Therefore, this PDS has been prepared without

4 4 CONTACTING US Web: Phone: 1800 PENSION ( ) Mail: GPO Box 2775 Brisbane QLD 4001 MAKE SURE WE CAN FIND YOU TOO! If you have changed your address, or if you are about to, don t forget to let us know. This way, you will be sure to continue to receive your important pension statements and other valuable information. TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

5 5 WELCOME This pension product is provided by BUSSQ who is committed to helping you achieve a superior lifestyle in retirement. BUSSQ exists only to profit its members. This is very important when you compare BUSSQ's pension products with other pension products that cannot claim profit-for-members status and declare returns after paying shareholder dividends. COOLING OFF PERIOD After you apply to join you have 14 days from the date BUSSQ sends you confirmation of your membership in which to cancel your membership. If the Tribunal accepts your complaint, it will try to resolve the matter through conciliation by helping bring both sides to a mutual agreement. If this is unsuccessful the complaint will be formally referred to the Tribunal for a determination. For the cost of a local call you can contact the Tribunal on to find out whether it can handle your complaint. THE ADDRESS FOR CORRESPONDENCE IS: Superannuation Complaints Tribunal Locked Bag 3060 Melbourne VIC 3001 The amount of refund you receive may be adjusted to take into account movements in investment values during the period between joining and cancelling membership. You will also be liable for any Government taxes and charges paid by BUSSQ on your behalf. If any of the contributions you made were transferred from another super fund and were subject to preservation requirements, they cannot be paid out to you but must be transferred to another super fund of your choice. ENQUIRES AND COMPLAINTS If you are not happy with any aspect of your contact with BUSSQ and wish to make a formal complaint, you should write to: The Enquiries & Complaints Officer, BUSSQ GPO Box 2775, Brisbane QLD 4001 The Enquiries & Complaints Officer will investigate your complaint on your behalf and write to inform you of the results of that investigation within 90 days. After this time, if you are not satisfied with BUSSQ's handling of your complaint or its resolution, you may contact the Superannuation Complaints Tribunal. The Tribunal is an independent body set up by the Federal Government to assist members or their beneficiaries to resolve certain superannuation complaints. It is a free service. The Tribunal may be able to help resolve your complaint, but only after you have taken the step of writing to the BUSSQ Enquiries & Complaints Officer.

6 6 MANAGING YOUR MONEY HOW ARE EARNINGS APPLIED TO MY ACCOUNT? When you invest in a BUSSQ pension, you buy a number of units in the investment option of your choice. The number of units you receive depends on the value of the units (the unit price) at the date they are bought. The value of your investment from then on depends on the number of units that you have, and the value of those units much like owning shares. For example, if you have $150,000 to invest in the TAP Balanced Growth option on 1 July when units in that option are valued at $1, you will start your pension with: Initial investment $150,000 Value of a unit at 1 July $1 Number of units bought 150,000 If on 1 August, the unit price has increased to $1.01, then you will have: Initial investment $150,000 Value of a unit at 1 August $1.01 Number of units owned 150,000 Value of units owned at 1 August $151,500 WILL THE VALUE OF MY UNITS ALWAYS INCREASE? The nature of investment markets means that the value of your units can rise or fall. The unit price reflects the performance of the investments in the option you have chosen, after any investment charges have been deducted. This is why it is important for you to choose an investment option that you are comfortable with, as different options have different levels of volatility. Financial advice is available if you need assistance. WHAT HAPPENS WHEN I MAKE WITHDRAWALS FROM MY ACCOUNT? When payments are made from your TAP, you are really withdrawing a number of units. For example, if a payment of $5,000 is made to you from your TAP when the unit price is $1.01 (and using the above example), then you will have: Withdrawal $5,000 Number of units withdrawn Number of units remaining Value of your remaining units 4,950.5 at $1.01 per unit 145, ,049.5 x $1.01 = $146,500 DETERMINING THE UNIT VALUE The unit value is determined by taking into account the change in value of investments within the relevant investment option and deducting the investment management charges. The unit price is currently calculated weekly. However, in future the unit price may be calculated more frequently and you will be advised beforehand. In times of high volatility, the Trustee reserves the right to calculate units more frequently or suspend the calculation of units. ONLINE ACCOUNTS AND STATEMENTS Online accounts You can access your account details at any time and update your address details online via MemberAccess. Visit the BUSSQ website to access your account details online. Statements - As a member of a BUSSQ TAP you will receive a Member Statement showing your account details as at 30 June each year. You can phone, fax or BUSSQ, or call personally to get information about your account. Contact details can be found on page 4 of this PDS. RESERVING POLICY The purpose of the Fund s reserves are to cover contingency expenses, such as taxation adjustments and other calculation variances. As required by legislation, BUSSQ maintains an operational risk financial reserve of 0.25%. BUSSQ also maintains additional reserves, with total target level of 0.25% of assets. These additional reserves include another small operational risk financial reserve held in the Fund s PST (an internal investment vehicle). TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

7 7 FEATURES PLEASE REMEMBER THAT WHAT YOU DECIDE TO DO WITH YOUR RETIREMENT SAVINGS IS A VERY IMPORTANT DECISION. WE STRONGLY URGE YOU TO SEEK INDEPENDENT FINANCIAL ADVICE FROM A PROPERLY QUALIFIED PROFESSIONAL BEFORE MAKING ANY DECISION ON YOUR INVESTMENTS. It is no longer possible to commence a new TAP. Therefore you can only rollover into the BUSSQ TAP if you already have an existing TAP with another provider. The minimum amount needed to commence a BUSSQ TAP is $25,000. It is a Government regulation that super monies cannot be paid into a TAP once it has been taken in cash. HOW MUCH CAN I RECEIVE IN EACH PENSION PAYMENT? Annual payments will depend on your life expectancy. There is some flexibility you can choose a term anywhere between your life expectancy as set out in the Life Table on page nine, and your life expectancy as if you were up to five years younger. You may also choose a term which is equal to age 100, less your age at your last birthday. For example, if you are 65 years old at the commencement of the TAP, you can select a payment factor based on your life expectancy at age 65; or you can select a payment factor based on your life expectancy as if you are aged 64, 63, 62, 61 or 60. Alternatively you can use a factor of 35, which represents 100 minus 65. If you decide at the start of your pension that your payments will revert to your spouse in the event of your death and your spouse is younger than you are you can, if you wish, base the payment factor on your spouse s life expectancy. Again, the option is there to choose a factor based on an age up to five years younger than your spouse s actual age or to use the age 100 minus your spouse s age at their last birthday. For example, if a member is age 65 and his wife is age 60, the member s options are: OR Choose a term between 19 and 35 years (which are the life expectancies of a 65 and 60 year old male respectively as well as age 100 minus 65), Use his wife s life expectancy, and choose a term between 26 and 40 years (which are the life expectancies of a 60 and 55 year old female respectively as well as age 100 minus his wife s age at her last birthday). The annual payment is calculated by dividing the account balance at 30 June each year by the payment factor based on the remaining term. While the payment factor is fixed, you are able to request that the yearly payment you receive is varied by plus or minus 10%. This option will be offered to you as at 1 July each year. To invest in a BUSSQ TAP, simply complete the application at the end of this PDS.

8 8 TAP WORKSHEET The following is an example of how a TAP works for you in retirement. You may choose a fixed term between two life expectancies and a term based on the period from your last birthday and 100 years of age. You can choose the life expectancy at your age at the commencement of the TAP, or you can select a payment factor based on your life expectancy as if you are up to five years younger or a life expectancy based on the difference between your age last birthday and 100 years of age. Just remember that this is fixed from the outset of your TAP and cannot be changed. For example, if you are a 65 year old male and purchase a TAP for $200,000 on 1st July. Life Expectancy Factor of a 65 year old male: life expectancy, the term available for her will be between: Life Expectancy of a 62 year old female = Life Expectancy of a 57 year old female = Period between age last birthday and 100: 38 Once again the above factors are rounded up to whole numbers, so the term of the TAP can be from 25 to 38 years. For this exercise, you choose a term of 25 years, so the Payment Factor will be $200, = $12, Round this figure to the nearest whole dollar amount. Payment = $12, The Life Expectancy Factor you choose is also used to calculate the annual deductable amount or the tax free portion of your pension payment. Life Expectancy Factor of a 60 year old male: Period between age last birthday and 100: 35 The above factors are rounded up to the nearest whole numbers. For this example, the term of the TAP can be taken between 19 and 35 years. If you take a TAP for 22 years, the payment factor will be (please see the payment factor table following to determine this). $200, = $13, Round this figure to the nearest whole dollar amount. Payment = $13, If you elect to take a reversionary pension (that is to have your pension continue to be paid to your spouse in the event of your death), you may opt to use your spouse s life expectancy when calculating your TAP. The term of your pension will be longer, however the payments will be lower. Based on the above example, if you select an automatic reversion based on your 62-year-old wife s TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

9 9 LIFE EXPECTANCY TABLE (Payments commenced on or after 01/01/2010 to 31/12/2014) Age Male Female Age Male Female

10 10 TAP WORKSHEET continued How much are you investing in the BUSSQ TAP? $ A What is your or your reversionary annuitant s life expectancy? B Based on the Life Expectancy table. Remember to round up to the nearest whole number). Fixed Term Your payment factor for your TAP E Please refer to the Payment Factor Table on the next page A divided by D $ Round this figure to the nearest 10 whole dollars $ F F = Your payment for your BUSSQ TAP $ What is your or your reversionary annuitants life expectancy based on your age five years younger? C Remember to round up to the nearest whole number. What is the period of whole years between you or your reversionary annuitants last birthday and 100 years of age? D You may now choose a fixed term between B and D for your TAP. Reminder that this is fixed from the start of your TAP and cannot be changed! TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

11 11 PAYMENT FACTORS TERM REMAINING (YEARS) PAYMENT FACTOR TERM REMAINING (YEARS) PAYMENT FACTOR TERM REMAINING (YEARS) PAYMENT FACTOR or less 1.00

12 12 HOW OFTEN IS MY TAP PAID? You can have your TAP payments deposited directly into your bank, building society or credit union account fortnightly, monthly, quarterly, half yearly or yearly. Payments will only be made into Australian bank accounts and in Australian dollars. You must receive at least one payment per year. Payments are made into your nominated account on or around the 15 th of the month. You can change how your pension payments are made to you and the amount you receive at any time by contacting BUSSQ. WITHDRAWING EXTRA FUNDS Generally, lump sum withdrawals cannot be made from a TAP. The exceptions are that withdrawals can be made: RISKS Within the first six months of the commencement of the TAP To purchase another complying pension To pay a superannuation contribution surcharge, or To make a payment split under family law. A BUSSQ TAP does not guarantee your payments will last through your lifetime. Irrespective of the BUSSQ investment option chosen, your account balance will decline if the return on your investments is less than the amount you draw as payments from your BUSSQ TAP each year. Once your BUSSQ account reduces to zero, your TAP payments will cease. CHECKLIST FOR JOINING A BUSSQ TAP 1. Complete a BUSSQ Term Allocated Pension application. This tells BUSSQ the amount that you plan to roll over into the TAP. The form also includes decisions on the amount you want to receive and when you want it to be paid. 2. If you are under 60 years of age, complete the ATO s Tax File Number Declaration form. This allows BUSSQ to deduct the correct amount of tax. If you are aged 60 or over then the ATO Tax File Number Declaration form is not required. 3. Complete the Request to transfer funds to BUSSQ (if required). This form is required if you wish to transfer your TAP held with another provider across to BUSSQ. This form can be photocopied. TRANSFER BALANCE CAP From 1 July 2017 a transfer balance cap limits the amount of superannuation an individual can hold in the tax-free retirement phase, including Term Allocated Pensions. To determine the Transfer Balance Cap of a Term Allocated Pension your annual entitlement is multiplied by the number of years remaining in your Pension Term, rounded up to the nearest whole number. BUSSQ's financial planning team can assist you with calculating your Transfer Balance Cap. For more information please see bussq.com.au or ato.gov.au. Your TAP payments will continue while funds remain in your account. It is important to remember that your TAP account may not provide you with a pension for the rest of your life. WHEN DO PAYMENTS COMMENCE? You can receive pension payments as soon as your TAP has been set up. TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

13 13 COMPARING BUSSQ WITH OTHER PENSION FUNDS When comparing BUSSQ to other funds, you should compare: For example: Peter is age 56 and has in his super fund account $400,000. His super includes a tax free component of $100,000 and a taxable component of $300,000. Peter uses all of his super to purchase a TAP on 1 August The tax free percentage of Peter s superannuation interest when the superannuation income stream commenced would be: Tax free component = $100,000 = 25% TAX Total Fees payable now and in the future Ease of access to information regarding your account Crediting rates over three, five and 10 years Additional services available i.e. Access to financial advice and homes loans. Investment choices. Value of the plan $400,000 The taxable percentage of Peter s superannuation plan would therefore be 75%. Peter receives a BUSSQ pension income stream benefit of $2,000 on 1 September The tax free component of this benefit would be: $2,000 x 25% = $500 The taxable component of this superannuation plan would therefore be $1,500 ($2,000 - $500). IF YOU ARE 60 YEARS OF AGE OR OLDER All pensions and lump sums paid from a BUSSQ pension are tax free. You will not be required to put any of these amounts into your tax return. IF YOU ARE UNDER 60 AND REACHED YOUR PRESERVATION AGE Your pension income stream will have two components The taxable component will be taxed at your marginal tax rates plus Medicare. However, it will attract a 15% tax offset, therefore reducing the tax payable. The above is only an overview of how benefits from a TAP will be taxed. We suggest that before a decision is made to purchase one of these products that you obtain advice that relates to your personal circumstances. 1. A tax free component, and a 2. A taxable component All payments will be made pro rata from these components

14 14 FEES AND OTHER COSTS BUSSQ Pension Plan contribution fees and management costs BUSSQ does not charge its members contribution fees. Management costs are incurred on BUSSQ by its service providers (such as administrators and investment managers) and cannot be negotiated individually by BUSSQ members. To find out more: If you would like to find out more, or to see the impact of the fees based on your own circumstances, the Australian Securities and Investment Commission (ASIC) website (moneysmart.gov.au) has a superannuation investment fee calculator to help you check out different fee options. BUSSQ PENSION PLAN S FEES AND OTHER COSTS This document shows fees and other costs that you may be charged by BUSSQ. These fees and costs may be deducted from your money, from the returns on your investment or from the fund assets as a whole. Taxes are set out in another part of this document. You should read all the information about fees and costs because it is important to understand their impact on your investment. CONSUMER ADVICE WARNING: Did you know? Small differences in both investment performances and fees and costs can have a substantial impact on your long-term results. For example, total annual fees and costs of 2% of your fund balances rather than 1% could reduce your final return by up to 20% over a 30-year period (for example, reduce it from $100,000 to $80,000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. You may be able to pay lower contribution fees and management costs where applicable. Ask the fund or your financial adviser. TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

15 15 FEES TABLE

16 16 ADDITIONAL EXPLANATION OF FEES AND COSTS BUSSQ may be charged a performance fee by underlying investment managers. A performance fee is payable when an investment manager achieves investment performance in excess of pre-agreed benchmarks. This fee will vary depending on the investment option chosen and will change year to year. During the financial year 2010/2011 this fee was between -0.86% and 2.58% depending on your chosen option. This fee is included in the management costs shown in the table on page 18 and is not an extra cost to members. Information regarding tax can be found on page 30. The Trustee of BUSSQ reserves the right to increase fees, however you will be given 30 days notice. As BUSSQ returns all profits to members, any fee increase will only be required to cover the costs of running the fund. In any period where total earnings are less than the total administration fees, small member accounts may be debited $10 to help pay for the operating costs of BUSSQ. The costs of protecting members with small balances is deducted from earnings before BUSSQ declares a crediting rate. In 2009/10 financial year, this cost equaled 0.02% of BUSSQ assets and is included in the management costs shown in the table on page 18. EXAMPLE OF ANNUAL FEES AND COSTS This table gives an example of how the fees and costs in the Balanced Growth option can affect your superannuation over a one-year period. You should use this table to compare this product with other superannuation products. BALANCED GROWTH Contribution fees PLUS Management costs EQUALS Costs of fund AMOUNT Nil HOW AND WHEN YOU PAY For every $5,000 that you put in, you will be charged $ % And for every $50,000 you have in BUSSQ, you will be charged $570 each year. If you had a balance of $50,000 throughout the year, you would be charged a total of $570 per year. No commissions are payable by BUSSQ to any adviser for giving advice regarding BUSSQ products The fees and charges may change due to changes in: The underlying investment managers, or Legislation, or Management expenses. The fees and charges include GST payable by BUSSQ and GST attributable investment costs. Management costs shown have been calculated using the 2010/2011 audited accounts. TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

17 17 ADDITIONS OR ALTERATIONS TO FEES AND CHARGES The Trustee has the power to alter, increase or introduce new charges at its discretion. You will be advised of the charges before they are altered, and you will be given at least 30 days notice. BUSSQ is unable to negotiate lower fees and management costs. IT S IMPORTANT TO COMPARE FEES When shopping around for a super fund, many people compare investment returns, but it is just as important to compare all the fees and charges of the different funds in which you are interested. This exercise can be difficult, especially when fees are charged in different ways and particularly when they are not clear or explained properly, or are misleading. A difference of a few cents a week can have a substantial impact on your account balance over the longer term. Some funds charge members entry fees and withdrawal fees based on a percentage of the account balance. So, be discerning and choose carefully. COMMISSIONS No commissions are payable by BUSSQ to any financial planner for advice to use any product in the BUSSQ portfolio.

18 18 INVESTMENT CHOICE IT S YOUR CHOICE BUSSQ understands that members have different views about the way they would like to see their super savings invested. That is why BUSSQ lets you choose an investment strategy that will best suit your investment style and lifestyle needs in retirement. With a BUSSQ pension you can choose from investment options that deliver the potential for higher returns, greater relative security or a mix of both whatever suits your investment objectives, time frame and tolerance for risk. Importantly, you are not tied down to one investment strategy. You can choose to invest 100% in only one of the following investment options or you can mix and match them to suit your needs. The choice is yours. Pre-mixed options representing pre-set investment strategies are: Defensive Balanced Growth High Growth Single asset class options allow you to build your own investment strategy. Cash Diversified Fixed Interest Australian Shares International Shares Australian (Larger Companies) Shares Australian (Small Companies) Shares All Shares International (Emerging Markets) Shares Of course, this doesn t mean you are locked into the default option forever. You have the flexibility to choose your own investment options at a later time if you wish. WHY MAKE A CHOICE? The decision to choose an investment option or mix of options means that your TAP can be invested in a way that best suits your financial circumstances. Aspects such as your age, your tolerance to risk and your future expectations all impact your investment decision. When making your choice we recommend you seek financial advice from a licenced financial adviser. BEFORE YOU START TO INVEST It is important that you take the time to learn the basics, as it will help you to understand your risk and return expectations and will put you in a better position to select the investment option or mix of investment options that are best suited to you. INVESTMENT BASICS BUSSQ invests your savings across four main types of investments of asset classes: Shares (Australian and overseas) Property (Australian) Fixed Interest (or bonds) Cash These asset classes are grouped into two types GROWTH assets and DEFENSIVE assets. BUSSQ offers members advice about their super at no extra cost. To talk to a BUSSQ financial adviser call 1800 PENSION ( ). You can change your strategy as your financial or personal circumstances change. IF YOU DON T MAKE A CHOICE You don t have to make an investment choice when you join a BUSSQ pension. If you don t choose an investment option or mix of options your super will automatically be invested in the default option, Balanced Growth. TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

19 19 GROWTH ASSETS Growth assets are more risky but can potentially deliver higher returns over the long-term. Growth assets include: Shares Companies listed on a stock exchange issue shares (also known as equities or stocks) to raise capital. You become a shareholder and part owner when you purchase shares in the company and that means you are entitled to performance, industry conditions or movement in the share market can impact share prices making them rise and fall. Property Includes land and buildings that can be bought, sold or leased. Investing in property through a super fund lets you and other members pool your money to enable you to part-own properties that would otherwise be too expensive for you to acquire on your own. For example, office buildings and shopping centres. Like shares, property is influenced by many factors including supply and demand and market conditions. DEFENSIVE ASSETS Defensive assets are less risky therefore can be used to protect your investment against loss. However, they generally deliver lower returns. Defensive assets include: Fixed interest When an investor lends money to governments, semi-government bodies and corporations, interest is paid at an agreed rate, which is fixed for the term of the loan. These investments are also known as bonds. Fixed interest investments can be held until they mature or traded at any time before maturity. If they are sold before maturity, the price will depend on the interest rate at the time. Returns from fixed interest investments occur from regular interest payments and any change in value caused by movements, either up or down, in interest rates. Fixed interest is usually a more stable investment than shares, but can be affected by currency movement and is still subject to volatility. Cash Investments in cash includes money invested in term deposits or bank bills and interest is earned on the cash invested. This is similar to having money in a bank account. Over the long term, cash is likely to produce the lowest return of all the main asset classes. OVERSEAS INVESTMENTS Investments in shares and fixed interest can be made in Australia or overseas. In fact, the Australian share market accounts for less than 2% of the world share markets. When investing overseas, returns can also be affected by changes in the value of the Australian dollar. These changes can enhance overseas returns (when Australian dollar is falling) or detract from overseas returns (when Australian dollar is rising). UNDERSTANDING INVESTMENT RISK Because your money is invested in financial markets, you are exposed to investment risk. Investment risk is the degree to which returns go up and down in value over time. You cannot consider return without risk and generally, the higher the potential return, the higher the risk. In order to achieve higher returns you must be willing to take on more risk. While shares, property and fixed interest securities might offer higher long-term returns than cash, they also expose you to higher levels of risk, particularly in the short-term. In financial terms, there is also a risk of not having enough assets or money to provide you with the lifestyle you desire in retirement. Therefore, if you try to avoid volatility altogether you may in fact not save enough to provide you with this lifestyle. In fact, it may not even keep pace with inflation. Your tolerance to risk is an important factor to consider before making your investment choice. Everyone has a different tolerance to risk and you need to be comfortable with the level of risk that is associated with the investment option or mix of options you choose.

20 20 DIVERSIFICATION HELPS REDUCE RISK Because you cannot tell how each asset class will perform over a future period, diversifying or spreading your investments across a range of asset classes has the potential, over time, to smooth out any ups and downs associated with investment returns. The risk/return profile of each of BUSSQ's Pre-mixed options is determined by how much is allocated to growth assets relative to defensive assets. The greater the proportion of growth assets, the riskier the investment become, but similarly, the greater the potential return over the longer-term. THE MAGIC OF COMPOUND INTEREST Compound interest is, put simply, earning interest on interest. Example: If you invest $1,000 and the annual return is 6%, the investment earnings in the first year is $60 (6% x $1,000). You now have an account balance of $1,060. If in the second year you did not contribute at all and the annual return was again 6%, the investment earnings would be $64 (6% of $1,060) and so on. THINK ABOUT YOUR INVESTMENT TIMEFRAME Your investment time frame is the length of time you believe you will need to receive an income. This period becomes very important when choosing your investment option or mix of options. After retirement at say age 60, the average person can expect to live at least another 20 years. The longer your investment time frame, the more time you have to ride out the ups and downs. If you have a short time frame then stability in the value of your investment may be more important to you. TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

21 INVESTMENT OPTIONS 21

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23 23

24 TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT 24

25 25 INVESTING YOUR MONEY An Investment Committee, appointed by the BUSSQ Trustee board, makes recommendations to the Board about where BUSSQ's money should be invested. The Investment Committee and the Board obtain professional investment advice from its investment consultant, Frontier Investment Consulting. Assets are allocated within ranges set by the BUSSQ Board after consultation with its investment consultant. The Board reviews these ranges on a regular basis. Specialist investment managers are interviewed and selected for each of the asset classes. They are selected on a management and performance basis and they are required to report regularly to the Board. The investment managers are constantly monitored by the Trustee. Details of where the money is invested can be found on our website in the latest annual report, or you can call BUSSQ on 1800 PENSION ( ) and request the information. LABOUR STANDARDS AND ENVIRONMENTAL, SOCIAL AND ETHICAL CONSIDERATIONS BUSSQ has a policy to take account of labour standards, environmental, social and ethical considerations when selecting, retaining or redeeming the investments of BUSSQ. However, investments and investment managers are selected primarily on their ability to contribute toward the achievement of BUSSQ s investment objectives. SWITCHING OPTIONS Currently BUSSQ gives you the flexibility to switch your investment option or mix of options at no extra cost. Unit prices are declared weekly. All switch requests received in the period 6.01pm Friday to 6pm the next Friday (EST/EDT*), will be processed with an effective date as at the next Wednesday following the declaration of the weekly unit price. How do I notify BUSSQ about my switch? There are two ways to change your investment selection. Online simply log in to MemberAccess at and follow the prompts. Use a Member Investment Choice Form You can obtain this form by downloading it from our website or by calling BUSSQ on 1800 PENSION ( ) and request one to be sent to you. Once you have completed your Member Investment Choice form you can mail it to: BUSSQ GPO Box 2775, Brisbane QLD 4001 * EST = Eastern Standard Time (during winter e.g. 6pm Queensland) EDT = Eastern Daylight Time (during summer e.g. 5pm Queensland) YOU DON T HAVE TO CHOOSE If you don t want to make an investment choice, you don t have to. Your BUSSQ account will be automatically invested in the default option, Balanced Growth. Remember, you can always exercise investment choice at a later time if you change your mind. DERIVATIVES BUSSQ, through it s investment managers, uses derivative investment instruments such as futures, swaps, forwards and options. These derivative positions are closely monitored by the Fund s investment team and it s Investment Committee. Derivative instruments are generally used by the Fund as a tool to mitigate risk or improve the efficiency of large financial transactions.

26 26 THE RISK There are various types of risk associated with investing in a super fund and the most important are discussed here. All investments are subject to varying risks and generally all investments change in value over time. Different asset classes perform differently at different times. The significant risks that relate to investing in BUSSQ are: Inflation, market risk, individual investment risk, interest rate risk, currency risk and derivatives risk. The effect of these risks is reduced by diversification, that is, by investing in a wide range of different types of investments, such as those in which BUSSQ invests. The risk profile and investment objectives of BUSSQ's investment options are outlined on pages 21 to 24. Other risks that may have an impact when investing in BUSSQ include: Regulatory risk, timing risk, taxation risk and insurance risk. TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

27 27 RISK PROFILE Because each of BUSSQ's investment options have a different investment mix, the risks of investing in each option are different. While each of the risks identified can happen, the risks marked in this table are the ones we believe are the most significant for each.

28 28 DEATH BENEFITS CHOOSE YOUR BENEFICIARIES Before you start your pension, it s important to consider who you would like to receive any money left in your pension account when you die. If you die and have a pension account with BUSSQ, any remaining balance will be paid to your dependants and/or your legal personal representative. The balance of your account is made up of any money remaining in your account, less outstanding fees and taxes. WHO GETS YOUR PENSION IF YOU DIE? The treatment of death benefits can be complex, which is why we recommend you obtain advice on the most effective way to plan your estate. BUSSQ can provide advice on your super at no extra cost. Your BUSSQ pension gives you two options to provide for your dependants in the event of your death prior to your BUSSQ pension account running out. 1. Nominate a reversionary beneficiary (see page 29) and 2. Nominate your preferred beneficiaries (see page 29) If your child is permanently disabled, regardless of their age, they can be paid a pension until it runs out. DEFINITION Dependant For superannuation purposes, the following definition of dependant applies: Your spouse (legal or de facto) Children Any person financially dependent on you at the time of your death, or Any person who is in an interdependency relationship with you at the time of your death. Two people are in an interdependent relationship if: They have a close personal relationship, and Live together, and One or each of them provides the other with financial support, and One or each of them provides the other with domestic support and personal care. An interdependent relationship also exists if two people have a close personal relationship, but the other requirements are not satisfied because either or both of them suffer from a physical, intellectual or psychiatric disability. Your legal personal representative is the executor of your will or the administrator of your estate. PAYMENT OPTIONS In most situations, under the reversionary pensioner option, the benefit will be paid as a pension. However, a pension cannot be paid to your child if they are aged 18 or over unless they are: Between age 18 and 25 and financially dependent on you immediately prior to your death, or Permanently disabled. If your child is under age 25, your pension account can be paid to them as a pension until they turn 25 (unless it runs out sooner). At age 25 the balance will then be paid to them as a lump sum. TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

29 BENEFICIARY OPTIONS 29

30 30 TAX ON A DEATH BENEFIT PAID AS A REVERSIONARY PENSION The taxation of a death benefit paid as a reversionary* pension (as opposed to a lump sum) will depend on the age of the deceased member and the reversionary pension recipient. If the deceased member was aged 60 or over at the time of death, then payments to the reversionary beneficiary will be tax exempt. If the deceased member was under age 60 at the time of death, the pension will be taxed at the reversionary beneficiary s marginal tax rate (less any deductible amount and pension offset) unless, or until, the reversionary beneficiary is aged 60 or over, in which case any residual pension becomes tax exempt. Death benefits will be able to be paid as a pension to a dependent child, although when the child turns 25 the balance of the pension account will have to be paid as a lump sum (tax free) irrespective of the age of the deceased member at the time of death. If the child, at age 25, is permanently disabled, a pension can continue to be paid. A deceased member s death benefit pension, if left to a non-dependant, will be paid as a lump sum as it is not able to be paid as a pension. *For information about reversionary pensions see page 29. TAX ON LUMP SUM DEATH BENEFIT A lump sum death benefit payment will be tax free if paid to a person who is a dependant. A dependant for these purposes is: A spouse (or former spouse), A child under 18 years of age, A person with whom you had an interdependency relationship just before you died, or Any other person who was totally dependent on you just before you died. If the lump sum death benefit is paid to a person who is a non-dependant, the taxable component will be taxed at 15%. TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

31 31 VALUABLE SERVICE FOR BUSSQ MEMBERS FINANCIAL ADVICE AT NO EXTRA COST TO MEMBERS BUSSQ provides members with financial advice. The advice is available at any time, whenever your circumstances change or if you want to review your situation. You can talk to a financial adviser about: Making your super savings work better for you Ways to minimise tax Working out how much insurance you need Determining which investment options are best for you. Call 1800 PENSION ( ) and ask to speak to a financial adviser about your super or pension over the phone or in person. SOCIAL SECURITY Centrelink administers the payments and services for people who are retired or planning retirement and may not have the funds to be totally selfsufficient. They assist with: Asset assessments for entry to residential aged care Grandparents and carers who raise and care for children. The Age Pension is a safety net for older people who are not able to fully provide for themselves in retirement. It is paid to people who have reached pension age and who do not have an adequate income. AUTOMATIC CENTRELINK SUBMISSION SERVICE If you receive a social security benefit, such as the Age Pension, Centrelink needs to find out information about your BUSSQ pension twice a year. This information helps Centrelink calculate your social security benefit. Centrelink needs to know how much income you have received from your BUSSQ pension, as well as your current pension account balance and commutation details. For some members this can be a difficult task, so we have teamed up with Centrelink to automate the process and make it as easy for you as possible. In February and August each year, BUSSQ electronically advises Centrelink of the relevant data for all pension members, which saves you time and effort. Age Pension Wife Pension Advance payments Utilities Allowance Pharmaceutical Allowance Commonwealth Seniors Health Card Seniors Concession Allowance Pension Loans Scheme Income assessment for residential aged care fees

32 32 AGE PENSION AGE Currently you must be aged 65 or over to be eligible to apply for the age pension. From 1 July 2017, the minimum pension for both men and women will progressively increase. By 1 July 2023, the minimum age will have increased to 67. HOW TO FIND OUT MORE We recommend you seek financial advice with regards to social security elegibility and how it may affect your BUSSQ pension. To find out more about how you can access Centrelink benefits, visit the Centrelink website at or phone Centrelink on Proposals are in place to further increase the pension age to 70 see the table below for current ages and the proposed ages. The Age Pension is subject to income and asset tests. You will receive the lower of the Pension Entitlements that result from the application of the two tests. The tests will also take into account if you are single or married and if you own your own home. DAVID SOUTHWOOD BUSSQ's EXECUTIVE OFFICER FINANCIAL PLANNING TERM ALLOCATED PENSION PRODUCT DISCLOSURE STATEMENT

33 33 OTHER INFORMATION FAMILY LAW Under Family Law legislation, if your marriage or defacto relationship breaks down, your BUSSQ pension account can be subject to splitting between you and your spouse or defacto. The law is not retrospective, which means if you finalised your property settlement prior to 28 December 2002, your pension account cannot be split. Family Law affects your pension in two key areas: Request for information You, your spouse or your fiancé entering into a pre-nuptial agreement are able to request certain information about your pension account. Splitting super The parties are able to split your pension account through an agreement or Court Order. Superannuation agreement You can enter into a superannuation agreement with your spouse or de facto (opposite sex or same sex). This can be made before during or after a marriage or defacto relationship. A superannuation agreement is binding upon the Trustees as long as it complies with legislation at that time. MAKE SURE WE CAN FIND YOU TOO! If you have changed your address, or if you are about to, don t forget to let us know. This way, you will be sure to continue to receive your important pension statements and other valuable information. You can obtain a copy of the Trust Deed by contacting BUSSQ on 1800 MY BUSSQ ( ). TAX FILE NUMBER (TFN) BUSSQ is authorised to ask for your Tax File Number under the Superannuation Industry (Supervision) Act 1993 (SIS). Advising BUSSQ of your Tax File Number is voluntary and it is not an offence if you choose not to provide it. BUSSQ is required by law to take the necessary steps to properly safeguard your TFN. BUSSQ's intention is to use your TFN only for approved legislative superannuation purposes. Approved legislative purposes include: To assist in searching for and amalgamating superannuation benefits in the Fund. To advise the Tax Office for taxation purposes. To advise the Tax Office for the purpose of the Lost Member Register in the event of you becoming lost. To allow your TFN to be passed on to another regulated fund or Retirement Savings Account, if your benefit is transferred or rolled over, unless BUSSQ receives written notification stating otherwise. To advise the relevant State authority if we are paying unclaimed money. NOTE: These lawful purposes may change as a result of future legislation. What happens if you choose not to provide your Tax File Number to BUSSQ? If you choose not to provide your TFN to BUSSQ, payments made to you will be subject to PAYG tax at the highest marginal rate, plus the Medicare levy (currently 46.5%). This may be recovered after lodgement of your tax return. TRUST DEED This PDS contains a summary of the rules of BUSSQ. It is not a substitute for the Trust Deed. The Trust Deed is a legal document that sets out the rights and obligations of members, employers and the Trustee. You will be advised of any significant changes to the Trust Deed.