Investment Statement. Dairy Industry Superannuation Scheme 10 June 2014

Transcription

1 Investment Statement Dairy Industry Superannuation Scheme 10 June 2014

2 2 IMPORTANT INFORMATION (The information in this section is required under the Securities Act 1978.) Investment decisions are very important. They often have long-term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself. Choosing an investment When deciding whether to invest, consider carefully the answers to the following questions that can be found on the pages noted below: Page What sort of investment is this? 3 Who is involved in providing it for me? 4 How much do I pay? 5 What are the charges? 9 What returns will I get? 12 What are my risks? 19 Can the investment be altered? 23 How do I cash in my investment? 25 Who do I contact with inquiries about my investment? 26 Is there anyone to whom I can complain if I have problems with the investment? 26 What other information can I obtain about this investment? 26 In addition to the information in this document, important information can be found in the current registered prospectus for the investment. You are entitled to a copy of that prospectus on request. The Financial Markets Authority regulates conduct in financial markets The Financial Markets Authority regulates conduct in New Zealand s financial markets. The Financial Markets Authority s main objective is to promote and facilitate the development of fair, efficient and transparent financial markets. For more information about investing, go to Financial advisers can help you make investment decisions Using a financial adviser cannot prevent you from losing money, but it should be able to help you make better investment decisions. Financial advisers are regulated by the Financial Markets Authority to varying levels, depending on the type of adviser and the nature of the services they provide. Some financial advisers are only allowed to provide advice on a limited range of products. When seeking or receiving financial advice, you should check the type of adviser you are dealing with; the services the adviser can provide you with; the products the adviser can advise you on. A financial adviser who provides you with personalised financial adviser services may be required to give you a disclosure statement covering these and other matters. You should ask your adviser about how he or she is paid and any conflicts of interest he or she may have. Financial advisers must have a complaints process in place and they, or the financial services provider they work for, must belong to a dispute resolution scheme if they provide services to retail clients. So if there is a dispute over an investment, you can ask someone independent to resolve it. Most financial advisers, or the financial services provider they work for, must also be registered on the financial service providers register. You can search for information about registered financial service providers at You can also complain to the Financial Markets Authority if you have concerns about the behaviour of a financial adviser. This is an investment statement for the purposes of the Securities Act It is dated 10 June 2014 and only applies to members who join or joined the Scheme on or after 10 June Other benefit and contribution options may apply to members who joined the Scheme before 10 June An easy to read booklet that explains the Scheme s contributions and benefits, and in particular the investment options available, is supplied in addition to this investment statement. Throughout this investment statement, we, our or us means the Scheme s Trustee, Dairy Industry Superannuation Scheme Trustee Limited.

3 Key Information about the Dairy Industry Superannuation Scheme The table below provides a snapshot of key information about the Dairy Industry Superannuation Scheme. Read this in conjunction with the detailed information set out elsewhere in this investment statement and in the member information booklet, and with the Scheme s registered prospectus. The Scheme The Dairy Industry Superannuation Scheme is a registered superannuation scheme, established under the Superannuation Schemes Act The Trustee of the Scheme is Dairy Industry Superannuation Scheme Trustee Limited. You may be eligible to join the Scheme if you are an employee of a dairy company, a co-operative dairy company in New Zealand or any subsidiary or associated company, or any other corporate body which may have been invited by the Trustee to participate in the Scheme. The Scheme offers a choice of four investment funds, known as the Cash, Conservative, Balanced and Growth funds, and combinations of adjacent funds, making seven investment options in total. Each fund has a different strategy and level of risk, so you can choose the option that best suits your circumstances and preferences. Please refer to page 13 for information about the investment options. To join you need to complete the Membership Application Form which accompanies this investment statement. When you complete the form you will need to choose a contribution rate and investment option. Completed forms should be sent to payroll/hr services. Benefits The Scheme is an employer-sponsored defined contribution superannuation scheme, which means that contributions made by you and by your employer on your behalf accumulate with any investment returns to help you save for your retirement. Your benefit is not paid until you stop work with your employer for any reason or at your request if you are still in service when you reach New Zealand Superannuation qualification age (which, as at the date of this investment statement, is age 65). Any amount in your Locked In Accounts is not payable until the later of the date you reach New Zealand Superannuation qualification age or when you complete five years membership of a KiwiSaver scheme or complying superannuation fund. Benefits, including insurance cover where applicable, are also payable if you die or become permanently incapacitated. You will also be entitled to a benefit if you resign and are not entitled to any other benefit from the Scheme. Please refer to pages for more information about benefits. Membership Your employer may invite you to become a member of the Scheme. You may either be: an employee member (that is, your employer contributes a percentage of your salary depending on your contributions), or an elective member (that is, you are a totally remunerated member who has applied to us and has been accepted as an elective member, and your employer has certified to us that you are an elective member, and has not withdrawn that certification). A totally remunerated member is a member whose salary includes a superannuation allowance. 1

4 2 Participating Employers As at 10 June 2014: Alto Packaging Limited Canpac International Limited DMV Fonterra Excipients (NZ) Limited Fonterra Co-operative Group Limited Fonterra Limited (formerly called NZMP Limited) Fonterra Research Centre Limited Goodman Fielder New Zealand Limited RD1 Limited South Auckland Independent Testing Society Limited (Trading as MilkTestNZ) The Tatua Co-operative Dairy Company Limited Westland Co-operative Dairy Company Limited Fees The costs of operating the Scheme such as accounting, legal and administration expenses are met from the Scheme s Reserve Fund before any investment returns are allocated to members accounts. For details see pages 10 and 11. The investment management fees, which are deducted from the Scheme s investment income and paid to the investment managers, are set out on pages The Trustee is reimbursed for actual expenses and overheads incurred in its trusteeship of the Scheme but is not entitled to any remuneration for acting as trustee of the Scheme. As at the date of this investment statement, there are seven directors of the Trustee company. The directors of the Trustee are also members of the Advisory Committee. Members of the Advisory Committee are reimbursed for costs, expenses and overheads incurred in attending to the affairs of the Scheme and to the remuneration set out on page 11. The administration manager is entitled to the fees specified on pages 10 and 11. For full details regarding the Scheme s fees, please refer to pages Risks Like all investments, investing in the Scheme carries risks. These include the risk that you could receive less than your contributions to the Scheme on leaving your employer or that you may not receive the benefits described elsewhere in this investment statement. The principal risks applying to the Scheme that could affect your returns are investment risk, counterparty risk, liquidity risk, currency risk, regulatory and tax risk, and contribution risk. No person guarantees the payment of any money from the Scheme. For further details of the principal risks applying to the Scheme please refer to pages

5 What sort of investment is this? Defined contribution superannuation scheme The Dairy Industry Superannuation Scheme ( the Scheme ) is an employer-based defined contribution superannuation scheme specifically designed for employees of co-operative dairy companies or corporate bodies invited by us to participate in the Scheme. It is also a complying superannuation fund. This means employees can elect to lock in contributions and qualify for member tax credits. More restrictive contribution, benefit and transfer options apply to locked in contributions. The Scheme s participating employers ( the employers ) have agreed to be bound by the terms and provisions of the Scheme s trust deed. Refer to the Directory at the back of this investment statement for a list of the current employers. As well as helping employees to save for their retirement, the Scheme also provides benefits if an employee dies or becomes permanently incapacitated, including insurance (where applicable). Benefits are also provided to an employee who leaves service prior to retirement. As the Scheme is a defined contribution scheme, members benefits are based on the contributions paid into the Scheme by them and their employer, and investment returns on those accumulated contributions. Your employer may have applied for exempt employer status under the KiwiSaver Act If your employer is an exempt employer you are not automatically enrolled into a KiwiSaver scheme on beginning employment with your employer. The Scheme provides you with four investment funds to choose from, known as the Cash, Conservative, Balanced, and Growth funds, and seven investment options in total (please refer to pages 13 and 14). Each of these funds has a different strategy and level of risk, so you can choose the portfolio that you feel best suits your circumstances and preferences. The Scheme s administration manager and investment managers are entitled to be paid fees from the Scheme, as set out on pages We are reimbursed for actual expenses and overheads incurred in our trusteeship of the Scheme but are not entitled to any remuneration for acting as trustee of the Scheme (please refer to page 11). As at the date of this investment statement, our directors are also members of the Advisory Committee. Members of the Advisory Committee are reimbursed for costs, expenses, and overheads incurred in attending to the affairs of the Scheme and to the remuneration set out on page 11. Membership Your employer may invite you to become a member of the Scheme. You may either be: an employee member (that is, your employer contributes a percentage of your salary depending on your contributions), or an elective member (that is, you are a totally remunerated member who has applied to us and has been accepted as an elective member, and your employer has certified to us that you are an elective member, and has not withdrawn that certification). A totally remunerated member is a member whose salary includes a superannuation allowance. As at the date of this investment statement, if you are paid on a total remuneration basis when you join the Scheme, or start to be paid on that basis at some point after joining, current practice is for you to become an elective member, consistent with your remuneration agreement. This means that you will not be entitled to employer contributions, and different contribution options will apply to you. Please refer to the answer to How much do I pay? for more information. Your contribution rate will affect all of your benefits under the Scheme, including the insured portion of any permanent incapacity or death benefit. It will also affect the level of employer subsidy you receive, unless you are an elective member. 3

6 4 Locked In Accounts The Scheme is a complying superannuation fund which means that it also operates Locked In Accounts. You may elect to hold Locked In Accounts which have more restrictive contribution, benefit, and transfer options. If you have elected to have Locked In Accounts you may be entitled to Government member tax credit contributions. However, you will not be able to withdraw the amount in your Locked In Accounts until the later of the date on which you reach New Zealand Superannuation qualification age (which, as at the date of this investment statement, is 65) or when you complete five years membership of a complying superannuation fund and/or a KiwiSaver scheme. You may withdraw the amount in your Locked In Accounts at this time, but you will not be obliged to unless you are no longer eligible to be a member. If you leave the Scheme but are not yet eligible to withdraw the amounts in your Locked In Accounts, these must be transferred to another complying superannuation fund or KiwiSaver scheme. Who is involved in providing it for me? The name of the Scheme is the Dairy Industry Superannuation Scheme. Trustee The Trustee of the Scheme is: Dairy Industry Superannuation Scheme Trustee Limited C/- Mercer (N.Z.) Limited Level 8 PwC Tower The Terrace PO Box 2897 Wellington 6140 At the date of this investment statement, the directors of the Trustee are: Mark Albert Apiata-Wade of Horotiu; Bruce John Kerr of Wellington; Debra Maree Marshall of Auckland; Timothy Patrick McGuinness of Wellington; David William Charles Scott of Hamilton; Andrew Keith Williams of Hamilton; and Patrice Diane Wynen of Morrinsville. The shares in Dairy Industry Superannuation Scheme Trustee Limited are held by the employers. We are advised by an Advisory Committee whose members are appointed by us. As at the date of this investment statement, the directors of the Trustee are also the members of the Advisory Committee. Promoters As at the date of this investment statement, Fonterra Co-operative Group Limited ( Fonterra ) is a promoter of the Scheme. Its address is 9 Princes Street, Private Bag , Auckland. Fonterra s directors are also promoters of the Scheme. As at the date of this investment statement, Fonterra s directors are: Malcolm Guy Bailey Simon Claude Israel David Nigel MacLeod Ralph James Norris Nicola Mary Shadbolt Jim William van der Poel John Speer Wilson Administration manager The Scheme s administration manager is: Mercer (N.Z.) Limited Level 8 PwC Tower The Terrace PO Box 2897 Wellington 6140 Phone: or (04) Fax: (04) Ian James Farrelly David Alexander Jackson John Anthony Monaghan Ian Douglas Read Reindert Michael Spaans John Anthony Waller Mercer (N.Z.) Limited also acts as an investment consultant, the registrar for the Scheme, and as the Scheme Secretary. The directors of the Trustee and Fonterra, and the addresses of the Trustee, Fonterra, and the administration manager may change from time to time. For current details, please contact the Scheme s administration manager s Customer Service Team on

7 Additional information Actuarial reviews As the Scheme was formerly a pension scheme, it is subject to actuarial reviews as required by law. Scheme operation The Scheme is a defined contribution scheme. This means that your contributions, and your employer s contributions, accumulate together with any investment returns to fund the Scheme s benefits to you. The Scheme is registered under the Superannuation Schemes Act 1989, and has been operating since November As at the date of this investment statement it is governed by a consolidated trust deed dated 10 June Responsible investment Responsible investment, including environmental, social, and governance considerations, is not taken into account in the investment policies and procedures of the Scheme as at the date of this investment statement. How much do I pay? Your contributions How much you pay (contribute) depends on whether you are: an employee member or an elective member. See page 3 for an explanation of employee and elective membership. Employee member If you are an employee member, you can choose to contribute 2%, 3%, 4%, 5% or 6% of your before-tax salary. Before-tax salary includes all additional payments such as bonuses, overtime, and holiday pay, but excludes any retiring allowance or similar payment paid when you leave your employer. You may vary your contributions by completing and returning a Change, suspend or cease contributions form (D12A) at least one month before you wish the change to take effect. Current practice is that you may vary your contribution rate at any time but we may restrict this to once a year as at 1 April. Elective member If you are an elective member, your contribution to the Scheme is the percentage or amount of salary agreed with your employer. Your salary is the amount notified to us or the administration manager as being your total remuneration for the purposes of the Scheme. If you do not notify any percentage or amount, you will be required to contribute 3% of your salary. Your contribution rate can be varied once each Scheme year (or more frequently with our agreement) by completing and returning a Change, suspend or cease contributions form (D12B) at least one month before you wish the change to take effect. Current practice is that you may change your contribution rate at any time but this may be restricted to a date determined by your employer and advised to us or (if no date is determined) on the Scheme s balance date or such other date as we permit. If your employer withdraws certification that you are an elective member, you will cease to be an elective member from the date we receive notification that your employer has withdrawn its certification. Upon you ceasing to be an elective member, you must elect to contribute 2%, 3%, 4%, 5%, or 6% of your salary. If no election is made then you will contribute 3% of your salary. 5

8 6 All members In some cases, the trust deed permits an assumed salary to be determined for the purposes of the Scheme, either by us or your employer. This could result in your contributions being a higher percentage of the salary you actually earned. Your contributions are deducted automatically by your employer each pay day until the earlier of: the date you leave your employer; or the date you advise your employer you wish to stop contributing or, if you hold Locked In Accounts, take a contributions holiday (which will take effect from the following pay day or the beginning of any subsequent pay period you choose) (see page 8). Choose your contribution rate carefully, because it affects all your benefits, including the insured portion of your benefits for death and permanent incapacity. Employer contributions If you are an employee member, your employer contributes 1.5 times your contributions, up to a maximum employer contribution of 9% of your salary (before deduction of employer superannuation contribution tax ( ESCT )). If you are an elective member, your employer contributes the percentage or amount of your salary agreed with you and notified in the Application Form, or Change, suspend or cease contributions form (D12B). If you do not notify us of a percentage or amount, your employer will contribute 4.5% of your salary. Once in each financial year (or more often if we permit) you and your employer may agree to vary the percentage or amount of your salary that your employer contributes to the Scheme to such a percentage or amount as you and your employer agree. If you are unable to agree on the percentage or amount, your employer will contribute 1.5 times your contributions, up to the maximum employer contribution of 9% of your salary (before deduction of ESCT) until you and your employer advise us that agreement has been reached. Current practice is that you may vary the percentage or amount of your salary that your employer contributes by completing and returning a Change, suspend or cease contributions form (D12B) at least one month before you wish the change to take effect, but this may be restricted to a date determined by your employer and advised to us or (if no date is determined) on the Scheme s balance date or such other date as your employer with our consent permits. As you are joining the Scheme after 1 April 2008, any employer s contributions to the Scheme on your behalf will be reduced by the amount your employer contributes to any KiwiSaver scheme or complying superannuation fund (other than this Scheme) on your behalf. Employers are not required to make further compulsory contributions to KiwiSaver on behalf of members who joined the Scheme prior to 1 April As at the date of this investment statement, ESCT is deducted from your employer s contribution. Please see page 18 for the current ESCT rates. Voluntary contributions You can also make voluntary contributions to the Scheme. Voluntary contributions must be either made through your employer s payroll, or outside payroll to your Locked In Accounts (in limited circumstances see page 8). However, your employer will not subsidise these voluntary contributions, nor will they be included in the calculation of your insured benefits. If you wish to make voluntary contributions please complete and return a Change, suspend or cease contributions form D12A (employee members) or D12B (elective members). Your employer may also make voluntary contributions on your behalf. Contributions while on leave of absence If your employer agrees to you taking leave of absence from work for any reason, you must apply to the Scheme Secretary for leave of absence from the Scheme. Leave of absence from the Scheme must initially be for at least three months, but not longer than 18 months, although we can extend this period. To continue your death and permanent incapacity insurance cover while you are on leave of absence and to have the period of leave of absence included in the calculation of your benefits, you need to keep contributing at least 3% of your salary. Any contributions during leave of absence must: not exceed (in terms of amount or frequency) your contributions immediately prior to your commencing leave of absence. be collected by your employer or the Scheme s administration manager. You may be allowed to delay paying contributions until you return to work, but could be charged interest on the amount due. If you elect to contribute while you are on leave of absence from the Scheme, or have not applied for a leave of absence from the Scheme but are on leave of absence from your employer, and then stop contributing for three consecutive months or more, your membership may be terminated and the following rules will apply: your benefit will not be paid until you leave your employer and only your resignation benefit will then be payable;

9 any period of leave of absence from the Scheme during which you do not contribute will not be included when your resignation benefit is calculated; and any insurance cover for death and permanent incapacity will stop. Stopping contributions (other than to Locked In Accounts) You may stop contributing to the Scheme at any time by completing the appropriate section(s) of a Change, suspend or cease contributions form D12A (employee members) or D12B (elective members). If you do, your contributions will cease to be deducted from your pay with effect from the next pay period or from the date you stipulate on your form, and: your employer s contributions will stop on the same date; your benefit will not be paid until you stop working for your employer and only your resignation benefit will be payable; and any insurance cover for death and permanent incapacity will stop. You can restart your contributions at any time. However, your insured benefits may be varied and you may be required to provide additional information. Refer to the Insured benefits section on pages 15 to 17 to see whether you will need to complete a medical questionnaire and/or undergo a medical before any insurance cover can restart. Your insurance cover may also be subject to further terms and conditions. For further information regarding your insurance cover contact the Scheme Secretary. If you wish to restart your contributions, please complete the Change, suspend or cease contributions form D12A (employee members) and D12B (elective members). Transfers from other schemes We can agree to accept contributions outside payroll to your Locked In Accounts (see page 8) or transfers from other schemes in any form, including cash and assets. Any contributions other than cash are accepted into the Scheme (if at all) at the market value we determine. Identity verification We may be required to verify your identity in certain circumstances, including if you make contributions or transfers from overseas sources, or make contributions and a withdrawal while on leave of absence. Scheme accounts When you join the Scheme, two accounts are opened in your name: a Member s Account and an Employer s No 1 Account. Your contributions will be credited to your Member s Account and your employer s contributions, less tax, will be credited to your Employer s No 1 Account. These two accounts also hold any voluntary contributions and any transfers from a previous scheme not required to be locked-in. If you elect to make locked in contributions (see page 8), your Member s Account and Employer s No 1 Account will have the following sub-accounts: a Member s Locked In Account (as part of your Member s Account) which will hold: your locked-in contributions (including any voluntary contributions you have instructed to be allocated to the Locked In Account); amounts transferred from another scheme required to be locked in; and any member tax credits, an Employer s Locked In Account (as part of your Employer s No 1 Account) which will hold: your employer s locked-in contributions; and any amounts transferred from another scheme required to be locked in (which are not held in your Member s Locked In Account). The following diagram shows how this works. Locked in member contributions (including any locked in voluntary contributions) Member contributions (including any voluntary contributions) Member s Account Member s locked in Account Member tax credits Amounts transferred in (not required to be locked in) Amounts transferred in (required to be locked in) Employer contributions (less tax) Employer s No 1 Account Employer s locked in Account Locked in employer contributions (less tax) 7

10 8 Locked In contributions If you decide to make locked in contributions, you must contribute 3% of your salary to your Member s Locked In Account. Contributions of more than 3% of salary will be paid to your Member s Account. Salary for the purposes of Locked In Accounts is defined in accordance with the complying fund rules set out in the Income Tax Act 2007, as amended from time to time ( complying fund rules ). Employer contributions are, as at the date of this investment statement, set at 3% of salary (different rules may apply if you elected to hold a Locked In Account before 1 April 2009). Any employer contributions in excess of 3% of your salary will be paid to your Employer s No 1 Account. As you are joining the Scheme after 1 April 2008, any employer s contributions to the Scheme on your behalf will be reduced by the amount your employer contributes on your behalf to any KiwiSaver scheme or complying superannuation fund (other than this Scheme). For members who joined prior to 1 April 2008, the relevant employers do not need to make further compulsory contributions to a KiwiSaver scheme in addition to contributions made to the Scheme. Voluntary contributions You may make voluntary lump sum contributions to your Member s Locked In Account. However, you can only make lump sum contributions to the extent necessary for you to maximise the amount of your member tax credits each year (see Member tax credits in the next column). Complete section 3 of the Change, suspend or cease contributions form (D12A for employee members and D12B for elective members) to make voluntary lump sum contributions to your Locked In Account. Contributions holiday for members with Locked In Accounts You may only suspend your contributions to your Locked In Accounts by taking a contributions holiday. Any contributions holiday must be for a minimum of three months and no longer than five years (although contributions holidays may be taken successively). To take a contributions holiday complete section 4 of the Change, suspend or cease contributions form D12A (employee members) and D12B (elective members) and return it to payroll/hr services. While you are on a contributions holiday: any employer contributions to your Locked In Account will also be suspended (other than those required to be paid to you by law); and depending on your total contributions to the Scheme, you may no longer qualify for any insured death or permanent incapacity benefits. Locked-in contributions during a leave of absence If you take a leave of absence and decide not to contribute to the Scheme, you need to request a contributions holiday. We cannot terminate a member s ability to contribute to or receive benefits from a Locked In Account. Member tax credits If you have a Locked In Account you may qualify for member tax credits equal to 50 cents for every dollar you contribute up to a maximum tax credit (as at the date of this investment statement) of $ per year (or approximately $10 a week). As at the date of this investment statement, to qualify for member tax credits under the Income Tax Act 2007 you must: be aged 18 or over and less than the age you would ordinarily qualify for New Zealand Superannuation which, as at the date of this investment statement, is age 65, (or, if you first became a member of KiwiSaver or started making locked in contributions to the Scheme or another complying superannuation fund after age 60, have completed five years membership of a KiwiSaver scheme or complying superannuation fund); make locked in member contributions; and have your principal place of residence in New Zealand. Any tax credits will be paid to your Locked In Account each year and allocated to the same investment option and in the same proportions as your contributions and account balances (unless the Income Tax Act 2007 requires otherwise).

11 If you have Locked In Accounts and you are also a member of a KiwiSaver scheme or another complying superannuation fund, member tax credits will be allocated to your KiwiSaver scheme or complying superannuation fund in accordance with legislation. Payment of member tax credits is set down by law (rather than the trust deed) so the rules relating to member tax credits would be affected by any changes to that legislation. Payment of contributions Your contributions (which are deducted from your salary) and your employer s contributions are paid to the Scheme s administration manager as our agent. To make a voluntary lump sum contribution, include a cheque made out to the Dairy Industry Superannuation Scheme with your completed Change, suspend or cease contributions form. Refer to page 4 for the administration manager s address for payment. What are the charges? The following charges are payable by the Scheme: Investment management charges The investment charges payable to the Scheme s investment managers are deducted from the Scheme s investment income. The charges, which are subject to GST, may be altered by the investment manager subject to an agreed period of notice or with our agreement. The current investment management fees are as follows: AMP Capital Investors (New Zealand) Limited Fees Global Listed Property 0.75% pa International Shares Core Fund Emerging Markets Fund 0.53% pa* 0.85% pa* International Fixed Interest (Short Duration) 0.43% pa NZ Fixed Interest 0.20% pa Cash 0.10% pa *Some underlying fund managers employed by AMP Capital Investors (New Zealand) Limited are paid performance fees. The amount of performance fees debited will be reflected in the unit prices of the underlying funds concerned, which will impact the return to an investment option that invests in that underlying fund. ANZ New Zealand Investments Limited Trans-Tasman Shares New Zealand Fixed Interest Cash Fees 0.65% pa 0.18% pa 0.09% pa Fee reduction based on total funds under management First $5m 0% Next $10m 15% Next $10m 25% Balance over $25m 35% Harbour Asset Management Limited Trans-Tasman Shares First $10m Next $10m to $20m Next $20m to $40m Next $40m to $100m Balance thereafter Fees 0.55% pa 0.45% pa 0.38% pa 0.35% pa 0.32% pa An additional fee of approximately 0.061% pa is payable for administration services provided by the trustee of the Harbour Australasian Equity Fund. This fee may vary, depending on the total fund size and actual expenses incurred within that fund. 9

12 10 Implemented Investment Solutions Limited International Fixed Interest Fees 0.43% pa An additional fee capped at 0.10% pa (plus GST) is payable to meet the in-fund costs of the Russell Investments Global Fixed Interest Fund. Mercer Investments (New Zealand) Limited Listed Infrastructure Natural Resources Fees 0.85% pa 1.05% pa Mercer Investments (New Zealand) Limited has the discretion to impose additional fees and any investment manager performance fees will be made via adjustments to the relevant unit price. A buy/sell spread is also charged by Mercer Investments (New Zealand) Limited. Professional adviser charges and fees Charges and fees are payable to professional advisers, which, as at the date of this investment statement, include the Scheme s actuary, auditors, investment consultants and solicitors. The Scheme s professional advisers are listed in the Directory on page 28. Professional fees are generally charged on a time cost basis and can usually be altered by the providers giving notice to us or by mutual agreement. Administration management charges Charges and fees are payable to the Scheme s administration manager. The administration charges are based on a monthly fee, which varies depending on factors such as changes to the Scheme s membership (for example, members joining or being paid a benefit). We pay the administration fees from the assets of the Scheme. Each year, with effect from 1 January, the administration manager adjusts the fees to reflect the annual movement in the National Average Wage Earnings Index. Any increase in these fees is limited by the increase in the average ordinary time wage. The charges may be altered by mutual agreement between us and the administration manager. There is no limit to the amount that may be agreed. Alterations could include modifying the fee basis, charges for work outside the scope of our agreement or to allow the administration manager to recover the costs of reasonable disbursements incurred in administering the Scheme.

13 The administration manager s current fees are: First 3,500 Members Next 1,500 Members Next 1,500 Members Subsequent Members Pensioners New Entrant Fee Benefit Payment Fee Member Investment Switch Fee Secretarial Expenses Complying Fund Administration Fees $4.91 per member per month $3.04 per member per month $1.81 per member per month $1.20 per member per month $1.81 per pensioner per month $36.47 per new member $72.99 per payment First Switch per year free, then $58.37 per switch $66, (including GST) pa $1, per month Trustee expenses We are reimbursed only for actual expenses and overheads incurred in our trusteeship of the Scheme. These may include indemnity insurance cover for our directors and members of the Advisory Committee. We are not entitled to any remuneration for acting as trustee. The Scheme Secretary can tell you the amount of any charges at any time. Payment of charges GST does not apply to the administration manager s fees, unless specifically disclosed. Insurance premiums Insurance premiums are payable to the Scheme s insurer (as shown in the Directory). The insurance premiums may be changed by the insurer giving at least one month s notice or by mutual agreement between us and the insurer. The trust deed allows any premium increases applicable to a member returning from leave of absence or recommencing contributions to be deducted from the member s Member s Account. If a member is not covered under the insurer s standard terms, and if the insurer requires an additional premium, the member s Employer s No 1 Account may be debited. If the balance of these accounts is insufficient, payment can be made as agreed between the member, us, and the insurer. However, it is not current practice to require payment by the member. Other expenses Members of the Advisory Committee are reimbursed from the Scheme for their travel and accommodation expenses while attending Advisory Committee meetings and when working on other Scheme business. At the date of this investment statement, the Chairman of the Advisory Committee is entitled to remuneration of $48,000 (plus GST at 15%) per annum. Independent members of the Advisory Committee are each entitled to remuneration of $27,000 per annum. The other Committee members are each entitled to remuneration of $13,200 per annum. The remuneration of the Advisory Committee Chairman and its members may be altered by us. Investment charges are deducted from investment income. All other charges (apart from any fee for making a second investment switch in any Scheme year, which would be deducted from your Member s Account) will normally be met from the Scheme s Reserve Fund and will affect the rate of interest allocated to your accounts and therefore the returns to you. If there are insufficient funds in the Reserve Fund to meet the expenses, these can be deducted from Members Accounts and Employers No 1 Accounts in proportion to the account balances at the end of the Scheme year (which, as at the date of this investment statement, is 31 March). 11

14 12 What returns will I get? Your return from the Scheme is the benefit paid when you leave work for any reason, including death or permanent incapacity. No benefit is payable if you immediately start work with another participating employer (see the list of participating employers in the Directory on page 28). Factors affecting your benefit The benefit you receive from the Scheme will depend on: your contributions to the Scheme and your employer s contributions on your behalf; the type of benefit ultimately paid to you; the credited interest rates allocated to your accounts each year; the performance of the Scheme s investment options (after tax and expenses); the tax payable on investment income or out of any benefit paid to you (although, as at the date of this investment statement, tax is not payable on benefits); the length of your Scheme membership (resignation benefit only); your member contributions (up to a maximum of 6% of your salary) and your salary in the 12 months prior to the date your benefit becomes payable (for death and permanent incapacity benefits only); the insurer s acceptance of your cover and any claim in respect of a death or permanent incapacity benefit; the investment option you choose (if you are given the option); any fees or expenses charged against your accounts or the Reserve Fund; whether you qualify for member tax credit contributions; and any adjustments to benefits resulting from an actuarial review. Investment returns The Scheme s investment returns are likely to vary each year. They are affected by changes in interest rates and exchange rates, political events, and other local and global economic factors. Because of this, and because in some years there may be negative earnings, neither we, nor any other party, guarantee the performance of or returns from the Scheme. Interest rates At the end of each Scheme year (31 March), we declare the credited interest rates to be applied to members accounts (including Member s Accounts, Employer s No 1 Accounts, and any Locked In Accounts) based on the performance of each investment option less any tax and expenses. Different interest rates may be allocated to the accounts of members at our discretion, as well as individual members (being members who have ceased to be employees but have chosen to leave their benefits in the Scheme see page 17). The performance of the investment option nominated by you, or if you have not elected one, the investment performance of the default option (currently the Balanced fund) will be taken into account in determining interest rates.

15 If you become eligible for a benefit during the year, interest will be allocated to your accounts at an interim rate based on investment returns to that date. You will not be entitled to interest at the final credited interest rate for the year unless we determine otherwise. Your benefit is not paid until you stop work with an employer for any reason, at your request when you reach New Zealand Superannuation qualification age (which, as at the date of this investment statement is age 65) or in the case of any Locked In Accounts, until the later of the date you reach qualification age for New Zealand Superannuation or when you complete five years membership of a KiwiSaver scheme or complying superannuation fund. As a result, the dates on which payments are made and/or the frequency of the returns are unknown at the date of this investment statement. Your benefit will also be affected by the interest rates applied each year to your accounts, and any amounts debited. As a result, no amount of returns quantifiable as at the date of this investment statement and enforceable by you is promised. Investment choice The Scheme currently offers member investment choice. This means you have a choice of seven different investment options for the investment of future contributions and existing account balances. At the date of this investment statement, the following terms and conditions apply to member investment choice: the investment option you choose applies to both your account balances and future contributions. you may amend your investment election twice each Scheme year (1 April to 31 March) at any time either online or by completing and returning an Investment alteration request form (D5). Any change will take effect from the first of the month following the date your online request or completed form is submitted. The first change in any Scheme year is free but a fee (see page 11) is charged if you make a second change. if you do not choose an investment option, we will automatically invest your contributions in the default option which is currently the Balanced fund. The default fund or funds may change from time to time. you do not own any particular asset or any particular investment fund. The return from each investment option will vary depending on market conditions and where the assets are invested. Returns can be negative which means your account balances will be reduced to reflect the negative return. Investment funds At the date of this investment statement you have a choice of four investment funds and three combinations of adjacent funds, providing seven investment options in total. Investments are spread over differing percentages of growth assets (trans-tasman shares, international shares, global listed property, listed infrastructure and natural resources), and income assets (New Zealand and international fixed interest, New Zealand bank deposits and New Zealand short-term securities issued by government, bank or prime issuers). The options are: Cash fund The Cash fund, which offers 100% exposure to income assets (New Zealand bank deposits and New Zealand short-term securities issued by government, bank or prime issuers). Conservative fund The Conservative fund invests 25% in growth assets and 75% in income assets. It provides the opportunity for better returns than those from New Zealand bank term deposits over a medium to long-term period. Balanced fund The Balanced fund invests 58% in growth assets and 42% in income assets. It provides the opportunity to gain exposure to a diversified, medium-risk portfolio of investments. Growth fund The Growth portfolio invests 77% in growth assets and 23% in income assets. It provides the opportunity to gain exposure to a diversified, medium/high risk portfolio of investments. Split funds You can also elect a 50/50 split among adjacent funds, that is: 50% Cash and 50% Conservative; 50% Conservative and 50% Balanced; or 50% Balanced and 50% Growth. 13

16 14 Please note that the investment strategy and asset allocations of these investment options, as well as the investment funds available and the ability to nominate more than one investment fund, may change at any time. Please refer to the Scheme booklet for more information about the investment funds. Benefits payable from the Scheme The benefits you receive will depend on whether or not you have elected to hold a Locked In Account. The benefits described below exclude any amounts in your Locked In Accounts. Please see page 15 to see how and when any Locked In Account balances are payable. Retirement benefit If you retire on or after age 55, the benefit payable will be the total amounts in your Member s Account and Employer s No 1 Account. Resignation benefit If you leave your employer (other than to join another employer that participates in the Scheme - see the Directory on page 28 for a list of the participating employers) and do not qualify for any other benefit from the Scheme, you will be paid a resignation benefit. The resignation benefit is equal to the total amount held in your Member s Account and, depending on the length of your Scheme membership, a percentage of the balance in your Employer s No 1 Account. Generally, 20% of your Employer s No 1 Account balance is payable for each completed year of Scheme membership, up to a maximum of 100% after five or more years of Scheme membership. However, there are times when this may vary: membership may be backdated to recognise previous membership of another superannuation scheme. if at any time during your membership you have been an elective member, you will receive 100% of that part of your Employer s No 1 Account built up as a result of that period of membership. if you are made redundant you will be entitled to the full balance of both your Member s Account and your Employer s No 1 Account, no matter how many years of Scheme membership you have completed. we do have discretion to pay up to 100% of your Employer s No 1 Account. If you transfer to another employer who participates in the Scheme your membership or benefits will not be affected. Payment options on retirement or resignation Your retirement or resignation benefit can be withdrawn as a cash lump sum or, with our consent and the consent of the trustee of the other scheme you wish to join, transferred to another superannuation scheme. Instead of withdrawing your benefit, you can also elect to leave all or part of it in the Scheme and become an individual member (see page 17 for more details). If you become an individual member, no further contributions will be payable by you or your employer but interest will continue to be allocated to your benefit at the rate we declare. The ability to stay in the Scheme and become an individual member is at our discretion. This may change in the future. You can also use all or part of your retirement benefit to purchase an annuity (or pension). Contact the Scheme Secretary before you retire for further information. Insured benefits If you die or become permanently incapacitated while you are contributing to the Scheme, you may be eligible for an insured benefit. Please refer to pages 15 to 17 to see the rules for the Scheme s insured benefits. Withdrawals and transfers IN-SERVICE WITHDRAWAL When you reach New Zealand Superannuation qualification age (which, as at the date of this investment statement, is 65), you can choose to withdraw all or part of the balance of your Member s Account and Employer s No 1 Account even though you are still in employment. The following conditions apply to in-service withdrawals: you may make a maximum of three requests in each year ending 31 March (we do have absolute discretion to allow more in the case of severe hardship) the minimum amount you may withdraw is $2,500, unless you are withdrawing the total balance of your accounts if you request an amount that would result in the total of your account balances being less than $5,000, you will be paid the total balances of your accounts. Other than in the circumstances described above, you are not entitled to receive a benefit before you leave your employer.

17 SMALL BALANCES If you have not contributed to the Scheme for three years and the total balance of all your accounts is less than $2,500 with your consent, you may be paid the balance in your accounts (less any amount in your Locked In Accounts) as follows: the total amount in your Member s Account the balance in your Employer s No 1 Account as if you had resigned on the date payment is made (refer to Resignation benefit on page 14). TRANSFER OF BENEFITS With our consent and the consent of the trustee of the other scheme you wish to join, you may transfer your benefits to another superannuation scheme, subject to any terms and conditions agreed between you, us, and the other trustee. You may also transfer your benefit from another employer-sponsored superannuation scheme into the Scheme. Special rules apply if you were previously a member of a complying superannuation fund, as transfers from these schemes may have to be placed in a Locked In Account. You cannot transfer savings from a KiwiSaver scheme into the Scheme. The way your transferred benefit is treated will depend on the conditions imposed by the trustees of your previous scheme and agreed with us. Benefits payable from Locked In Accounts The benefits from your Locked In Accounts are only payable: on your death or the later of * The scheme you are transferring into - the date you reach New Zealand Superannuation qualification age (which, as at the date of this investment statement, is age 65) or - complete five years membership of a KiwiSaver scheme or complying superannuation fund. The benefit payable will be the total balance of your Locked In Accounts, even if you are still employed by an employer. (See the Directory on page 28 for a list of employers.) If you have Locked In Accounts and cease to be eligible for membership, any balance in your Locked In Accounts not yet payable to you (because you do not yet meet the above requirements) must be transferred to another complying superannuation fund or KiwiSaver scheme. If you do not make a nomination, your account balance will be transferred to a KiwiSaver scheme in accordance with legislation. Transfers from Locked in Accounts while a Scheme member You may transfer part or all of the amount in your Locked In Accounts at any time if: the transferee scheme* is a KiwiSaver scheme, the trustee of that scheme consents to the transfer, and the requirements of the KiwiSaver Act 2006 are met; or the transferee scheme* is a complying superannuation fund and the trustee of that scheme consents to the transfer and confirms to us that the amount transferred will be subject to the complying fund rules. Any transfer will be subject to any terms and conditions agreed between you, us, and the trustee of the other scheme. Insured benefits The Scheme offers insurance cover for death and permanent incapacity. Under the terms of the current policy, if you join the Scheme within six months of starting work with your employer (and you are at work doing your normal duties on the day you join), you will generally be automatically accepted for cover without having to provide health evidence. If your cover exceeds a set limit ($800,000 as at the date of this investment statement) or you join after the six-month period, you will be required to complete a personal statement and/or undergo a medical examination and the insurer may decline or restrict your cover. If you are aged 60 or more, all insured benefits reduce on a daily basis by a total of 20% for each year, reaching zero at age 65. If you restart your contributions: after not contributing for 18 months or less (provided you held cover before you stopped contributing) your insurance cover will automatically recommence but for the first 12 months any benefit will be limited to the amount that would have been payable at the 31 March immediately before you stopped contributing. after not contributing for more than 18 months (or if you were not covered before you stopped contributing) before your insurance cover can restart you will be required to complete a personal statement and/or undergo a medical examination and the insurer may decline or restrict your cover. Payment of your insured benefit is subject to the insurer accepting your cover and your claim and any restrictions imposed by the insurer. 15