WELCOME TO THE NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME YOUR SUPER GUIDE

Transcription

1 WELCOME TO THE NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME YOUR SUPER GUIDE 30 June 2014

2 CONTENTS 1. Advantages of Scheme membership 4 2. How your Scheme works 5 3. Your benefits 9 4. Investment choice Your investments Information you will receive from the Scheme Scheme management Scheme costs and expenses Taxation Enquiries Financial advice 19 HOW TO JOIN THE SCHEME 1. Carefully read this Super Guide and the Scheme s current investment statement. 2. Consider your choices: Which membership category are you eligible for? What percentage of your salary would you like to contribute? Which investment options do you want to choose for your super savings? 3. If you need further help you are strongly encouraged to talk to an authorised financial adviser. 4. Complete and return the application for membership form at the back of the Scheme s investment statement and hand it to HR or payroll. Refer to the information sheet included with this booklet for details of your HR or payroll representative. 5. HR or payroll will complete all the remaining details required for your membership to start. You will then receive a certificate of membership confirming your admission to the Scheme. ABOUT THIS SUPER GUIDE This Super Guide has been prepared to give you an overview of how your Scheme works and to assist you to select the membership and investment options that best suit your personal circumstances and requirements. The information provided is of a general nature only and is not intended to be financial advice. It does not take into account your personal objectives, financial situation or needs. Before making financial or investment decisions, it is recommended that you contact an authorised financial adviser. Please read the Important Information section of the investment statement. This Super Guide has been prepared as at 30 June 2014 and is current as at that date. Details may change from time to time. This Super Guide only applies to members who join the Scheme on or after 30 June Other benefit and contribution options may apply to members who joined the Scheme before that date. The Super Guide should be read in conjunction with the Scheme s investment statement. A copy of the Scheme s investment statement is included with this Super Guide. Copies are also available online on nzuss. superfacts.co.nz or universitiesnz.ac.nz. Important information can also be found in the Scheme s prospectus, which is also available from the above websites. You can also request copies of Scheme documents by calling 0800 UNISCHEME ( ). Every care has been taken in the preparation of this Super Guide. However, the Super Guide is a summary only and if there is an ambiguity or discrepancy between it and the Scheme s Trust Deed, the Trust Deed will be the final authority. Throughout this booklet, we, our or us means the Scheme s Trustees. 2 NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME

3 MESSAGE FROM THE CHAIR The New Zealand Universities Superannuation Scheme has gone from strength to strength since it was established in March It now has more than 7,500 members and assets invested on their behalf total over $550 million, making it one of the more significant employer-sponsored superannuation schemes in New Zealand. Choice and flexibility are important features of the Scheme. As a Scheme member you have a choice of investment options and contribution rates, as well as the flexibility to alter them to reflect changes in your personal circumstances and long-term retirement income goals. The Scheme is specifically designed to meet the needs of university staff. To ensure that members have a say in how it is run, two of the Scheme s five Trustees are elected by the members. The Scheme helps and encourages you to save for a more financially secure retirement. Please take the time to carefully read this Super Guide and the investment statement. Seek professional financial advice if you need it before filling out and returning your application form. Malcolm Johnson Chair of Trustees YOUR SUPER GUIDE 3

4 1. ADVANTAGES OF SCHEME MEMBERSHIP The New Zealand Universities Superannuation Scheme is specifically designed to provide retirement and other benefits to staff of approved universities and other organisations associated with the universities. SCHEME MEMBERSHIP OFFERS YOU: Choice and flexibility Choose your contribution rate and investment option(s) - Pick the contribution rate that suits you best. - Select one or a combination of the Scheme s four investment options. Alter your contribution rate and investment options as your personal circumstances change - Change the percentage of your salary you are contributing, at any time. - Switch your existing account balances and/or future contributions to a different investment option. Choose to receive KiwiSaver-style tax credits from the Crown - The Scheme has a section that provides you with member tax credits from the Crown in exchange for locking in contributions in the same way as KiwiSaver. Please refer to the answer to question 9 on page 8 for more information. Benefit from a range of features specifically designed to help you manage your super - Visit the Scheme website, nzuss.superfacts.co.nz, anytime, from anywhere to check out the latest returns, see an estimate of your benefits or change investment options. - Call our dedicated Scheme Helpline to speak to one of our consultants about your super. - Provide your address if you prefer to receive information electronically. Portability Transfer your super savings to another scheme - Your membership will continue if you transfer to another university (or other organisation) that participates in the Scheme. - If you leave to work for an overseas university or research facility, your retirement savings may be transferred to a superannuation scheme to which your new employer contributes. - If you leave to join another employer in New Zealand, your leaving service benefit can be transferred to your new employer s superannuation scheme. - You may transfer your locked in contributions and any earnings on them to another KiwiSaver scheme or complying superannuation fund at any time. Longer-term savings Stay with the Scheme even if you leave the university sector - You may be invited to leave your benefit in the Scheme when you leave your employer. 4 NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME

5 Please note: The Super Guide is only intended as a general introduction to the Scheme. Its contents are subject to change and, in addition, specific conditions may apply to the various contributions, benefits, investment options, fees and other matters discussed in the Super Guide. For current information and full details, please read the Scheme s current investment statement and prospectus. Read on to find out more HOW YOUR SCHEME WORKS This section explains: Your membership options Your contribution options Your Scheme accounts YOUR MEMBERSHIP OPTIONS The Scheme offers two membership categories: subsidised and unsubsidised membership. You can join as a subsidised member (that is, you are entitled to employer contributions) if: you are a permanent employee; and your employer is not already contributing (or required to contribute) to another superannuation scheme (including a KiwiSaver scheme) on your behalf. However, if you are already a member of a KiwiSaver scheme, your employer may also invite you to become a subsidised member. If you are not eligible or you do not wish to join as a subsidised member you can join as an unsubsidised member. If you are an unsubsidised member, your employer will not contribute on your behalf other than to make any compulsory employer contributions required by law. If you are under age 65, with our consent your employer may also invite you to become a CFA (Complying Fund Accumulation) member. CFA membership offers member tax credits of up to $ a year to members who qualify in exchange for stricter contribution and withdrawal requirements. When you join the Scheme, two accounts are set up in your name: a Member s No.1 Account which is for your contributions; and a Member s No.2 Account which is for any contributions your employer makes on your behalf. If you are also a CFA member, locked in contributions (and any member tax credits) will be paid into sub accounts referred to as your Locked In No.1 Account and Locked In No.2 Account. Your benefits from the Scheme are based on the balances in these accounts. YOUR SUPER GUIDE 5

6 YOUR CONTRIBUTION OPTIONS Contributions to the Scheme are expressed as a percentage of salary. For the purposes of the Scheme, salary is your remuneration from your employer, excluding overtime, bonuses, penal payments or other allowances. The table below shows the contributions you and your employer are required to make to the Scheme depending on your membership category. If you are also a CFA member, some of your and your employer s contributions will be paid to your locked in accounts, as shown in the table below. SUBSIDISED MEMBER UNSUBSIDISED MEMBER IF YOU ARE ALSO A CFA MEMBER* Member contributions (calculated on your beforetax salary but deducted from your after-tax salary) Any multiple of 0.5% of your salary with a minimum of 3%** Minimum may increase to 4% of your salary if your employer is not contributing at least 1% of your salary Any multiple of 0.5% of your salary with a minimum of 4% Minimum may decrease to 3% of your salary if you are also an unsubsidised CFA member and your employer is contributing at least 1% of salary 3% or 4% of salary (included as part of your member contribution) directed to your locked in account, with the balance (if any) paid to your standard account Employer contributions (before deduction of contribution tax) 1.35 times your contributions up to a maximum of 6.75% of your salary until you turn 65 (although an alternate rate can be agreed between you, your employer, and the trustees) Nil *Refer to the examples below to see how this works **You need to contribute 5% of your salary to gain the maximum employer subsidy Subsidised member matches member contributions (included as part of employer s standard contribution), with the balance paid to your standard account Unsubsidised member compulsory contributions of 3% of salary, if you qualify EXAMPLE: 1 John is a subsidised member who has accepted his employer s invitation to become a CFA member. He is contributing 5% of his salary. John can choose to have either 3% or 4% of his salary paid into his locked in account and the balance to his standard account. Of his employer s contribution of 6.75% of his salary, 3% or 4% of his salary (depending on the percentage of salary he chooses to lock in) will be paid to his locked in account and the balance will be paid to his standard account. EXAMPLE: 2 Laura is an unsubsidised member who has accepted her employer s invitation to become a CFA member. She is contributing 4% of her salary***. She can choose to have either 3% or the full 4% of her salary paid into a locked in account. If she chooses to direct contributions of 3% of her salary to her locked in account, the remaining 1% of her salary will be paid to her standard account. Provided her employer is not contributing to another superannuation scheme or a KiwiSaver scheme on her behalf, and since she is under age 65, her employer will make compulsory contributions of 3% of her salary to her locked in account. ***If Laura s employer is contributing at least 1% of her salary on her behalf, she may choose to reduce her contribution to 3% of her salary 6 NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME

7 ANSWERS TO SOME FREQUENTLY ASKED QUESTIONS ABOUT CONTRIBUTIONS Q1. CAN I CHANGE MY CONTRIBUTION RATE? A. Subject to the minimums shown in the previous table, currently you can change your contribution rate at any time. However, we do have discretion to limit changes to once a year as at the Scheme s review date (currently 31 December). Q2. CAN I PAY A LUMP SUM AMOUNT INTO THE SCHEME? A. Both active members and deferred members can apply to make a lump sum contribution to the Scheme. Acceptance of a lump sum contribution is at our discrection and subject to any conditions we impose. They are not matched by employer contributions. The current procedure for making a lump sum contribution is explained in the fact sheet available from nzuss.superfacts.co.nz or by calling 0800 UNISCHEME ( ). Q3. CAN I STOP CONTRIBUTING TO THE SCHEME? A. You may suspend your contributions by taking a contributions holiday. Contributions holidays must be for a period of between three months and five years, although successive contributions holidays can be taken. If you are not contributing to the Scheme, your employer s contributions will cease and you will become a non-contributing unsubsidised member. Q4. CAN I KEEP MY OVERALL CONTRIBUTION RATE THE SAME BUT STOP MAKING LOCKED IN CONTRIBUTIONS? A. If you are a subsidised CFA member, you can choose to take a contributions holiday from contributing to your locked in accounts and instead have all contributions paid on an unlocked basis. Q5. WHAT HAPPENS WHEN MY CONTRIBUTIONS HOLIDAY STOPS? A. Once your contributions holiday finishes you will become an unsubsidised member and will be required to start contributing a minimum of 4% of your salary, unless you elect to take another contributions holiday. If you wish to be readmitted as a subsidised member, you will need to provide a letter of agreement from your employer. If you are an unsubsidised member and stop contributing, you can start contributing again (as an unsubsidised member) at any time. Q6. MY EMPLOYER IS CONTRIBUTING TO A KIWISAVER SCHEME ON MY BEHALF, HOW WILL IT AFFECT ANY EMPLOYER CONTRIBUTIONS TO THE SCHEME? A. If your employer is contributing to a KiwiSaver scheme on your behalf, any employer contributions to the Scheme will usually be reduced dollar for dollar by your employer s contribution to your KiwiSaver scheme. For example, say a subsidised member was contributing 5% to the Scheme and 3% to a KiwiSaver scheme. Of the employer s contribution of 6.75% of salary, 3.75% of salary would be paid to the Scheme and 3% of salary would be paid to the KiwiSaver scheme. YOUR SUPER GUIDE 7

8 Q7. IF I AM ON LEAVE OF ABSENCE DO I NEED TO CONTRIBUTE? A. You are not required to continue contributing while you are on leave of absence, but you may elect to do so. Likewise, your employer is not required to contribute while you are on leave of absence, but may elect to do so. To apply for leave of absence, complete the relevant sections of the Change of member details form. Q8. CAN I TRANSFER MY BENEFIT FROM ANOTHER SUPERANNUATION SCHEME INTO THE SCHEME? A. With our approval you may transfer a benefit from another superannuation scheme into the Scheme. The amount transferred will ordinarily be allocated to your Member s No.1 and Member s No.2 Accounts respectively, taking into account any conditions imposed by the trustees of the scheme from which you are transferring. Any amounts transferred into the Scheme from locked in accounts in another complying superannuation fund will be credited to your locked in accounts as we determine or as required by law. Q9. WHAT ARE MEMBER TAX CREDITS? A. Member tax credits are contributions from the Crown and only apply if you are making locked in contributions and meet certain qualifying requirements (see the answer to How much do I pay? in the investment statement for details). The current rate of member tax credits is 50c for every dollar you contribute, up to a maximum member tax credit of $ a year (or approximately $10 a week). This maximum is credited across every complying superannuation fund and KiwiSaver scheme you belong to. If you are a member of a KiwiSaver scheme or another complying superannuation fund, member tax credits will be allocated in accordance with the legislation. Q10. WHAT DOES MY EMPLOYER CONTRIBUTE IF I AM A CFA MEMBER? A. If you are a subsidised CFA member, your employer s locked in contributions will match your locked in contributions. Any compulsory employer contributions are included in your employer s contribution. If you are an unsubsidised CFA member, provided you meet the qualifying criteria, your employer will make locked in contributions of 3% of your salary. This maximum applies even if you are contributing 4% of your salary. To change your contribution rate, make a lump sum contribution, take a contributions holiday or apply for leave of absence, please complete the appropriate section of a Change member details form available online from nzuss.superfacts.co.nz or by calling Your completed form should be returned to payroll at least one month prior to the date you wish the change to take effect. 8 NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME

9 3. YOUR BENEFITS This section explains: The benefits payable from the Scheme Your benefit payment options SCHEME BENEFITS The benefits described below exclude any balances in your locked in accounts. Payment of your locked in account balances is explained on page 11. Retirement or redundancy If you retire: on or after age 60; or with the consent of your employer on or after age 50 and prior to age 60; or at any age as a result of ill health (as determined by the Trustees) or you are made redundant, the benefit payable will be: YOUR MEMBER S NO.1 ACCOUNT YOUR MEMBER S NO. 2 ACCOUNT (if you are or have been a subsidised member) Leaving service If you leave service (except to join another employer that participates in the Scheme) and you are not entitled to any other benefit, a leaving service benefit is paid. Your leaving service benefit is the balance in your Member s No.1 Account and Member s No.2 Account (if you have one). Death If you die in service or while you are a deferred member (refer to page 10), the benefit payable is a lump sum equal to the balances in your Member s No.1 Account and your Member s No.2 Account. YOUR SUPER GUIDE 9

10 BENEFIT PAYMENT OPTIONS Your benefit will normally be paid as a lump sum. However, you can choose to: Transfer to an overseas superannuation scheme If you leave service to work for an overseas university or research facility (in each case as defined in the Trust Deed) you can request that your account balances (excluding the balances in your locked in accounts) be transferred to another superannuation scheme to which your new employer contributes. The consent of the trustees of that scheme would be required before the transfer could take place. Transfer to another New Zealand superannuation scheme or a KiwiSaver scheme Your benefit can be transferred to another superannuation scheme or to a KiwiSaver scheme. Conditions apply. If you are considering this option, please refer to the answer to the question What returns will I get? in the Scheme s investment statement. Call 0800 UNISCHEME ( ) if you require further information. Payment of the death benefit Your death benefit is paid to your personal representatives, who are the executors of your will, or the administrators of your estate if you do not have a will. It is important that you make a will and keep it up-to-date if your personal circumstances change. Dying without a will can place unnecessary financial and emotional strain on your family and delay payment of your benefit. Deferred membership If you retire, leave service, are made redundant or meet the criteria for withdrawing the balances in your locked in accounts (see page 11), you are not necessarily obliged to withdraw your benefit. Instead, with our consent and the consent of your employer you can leave all or part of your benefit in the Scheme and become a deferred member. If you are not sure whether deferred membership is right for you, you should speak to an authorised financial adviser. At the date of this guide, the following rules apply to deferred membership: you need to leave at least $10,000 in the Scheme* no further contributions from you or your employer are required (although with our consent you may make voluntary contributions) interest will continue to be allocated at the rate applicable to the investment option you have chosen you can make one withdrawal a quarter (this may change) after you have made a withdrawal your balance must be at least $5,000*. *Unless you are a CFA member and haven t completed five years of CFA/KiwiSaver scheme membership or you are permanently emigrating and withdraw the balance in your locked in accounts. For full details of deferred membership, including the current minimum balances, withdrawals and fees, refer to the answer to What returns will I get? in the current investment statement. IMPORTANT: your completed termination form indicating your intention to become a deferred member must be returned within five days of leaving service. 10 NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME

11 PAYMENT OF YOUR LOCKED IN ACCOUNT BALANCES (CFA MEMBERS ONLY) Generally, the balances in your locked in accounts are not payable until the date you would ordinarily qualify for New Zealand Superannuation (currently age 65), provided you have first completed five years membership of a KiwiSaver scheme and/or complying superannuation fund. Under certain special circumstances you can access your locked in accounts earlier: Permanent emigration One year after you permanently emigrate from New Zealand you may be allowed to withdraw your locked in account balances. However, any member tax credits will revert to Inland Revenue. If you are emigrating to Australia, and wish to transfer your locked in account balances to an Australian complying superannuation fund, under current legislation you need to transfer your locked in account balances (including any member tax credits) from the Scheme to a KiwiSaver scheme before emigrating. Court order You may be able to make an earlier withdrawal if your locked in account balances are subject to a Court order, for example, an order under the Property (Relationships) Act. Serious illness You may be permitted to withdraw your locked in account balances (including any member tax credits) if, in our opinion, you are suffering from an injury, illness or disability that means you are totally and permanently unable to engage in work for which you are suited by reason of experience, education or training, or any combination of those things, or which poses a serious and imminent risk of death. Death If you die, the balances in your locked in accounts will be paid to your personal representatives (that is, the executors of your will or the administrators of your estate if you do not have a will). Transfer to another complying superannuation fund or to a KiwiSaver scheme At your request we will, at any time, transfer part or all of the balance of your locked in accounts to another New Zealand complying superannuation fund or a KiwiSaver scheme. YOUR SUPER GUIDE 11

12 4. INVESTMENT CHOICE This section includes information about: choosing your investment option(s) determining your risk/return profile CHOOSING YOUR INVESTMENT OPTION(S) Before making a decision about your investment choice, read the following section. Its aim is to give you a basic understanding of the Scheme s investment options and how your decision can affect the amount you receive from the Scheme. If you re looking for more information, go to the Investments page of nzuss.superfacts.co.nz. We also recommend that you contact an authorised financial adviser. The Scheme s investments Member and employer contributions to the Scheme are pooled and invested in a range of different asset classes such as New Zealand and overseas shares, property and fixed interest (bonds and shortterm cash investments). The advantage of investing in a variety of assets is that solid returns from one asset class may compensate for a disappointing performance by another. The various asset classes are also expected to perform in different ways. Growth investments (shares and property) are likely to do better over the longer term (five years or more), but be more volatile over shorter periods. Income investments (fixed interest securities and cash) are expected to provide lower returns over time, but be less volatile from year to year. The Scheme s four investment options spread their investments across the different asset classes in varying proportions. The table on page 14 shows the range of growth and income assets held by each investment option. DETERMINING YOUR RISK/RETURN PROFILE There is no right option that suits everyone. The best option for you depends on factors such as your financial objectives for your retirement, your investment timeframe and the attitude you (and your partner) have towards investment risk. Your expectations Everyone has different ideas and expectations for their retirement. You may feel that you missed out on travelling when you were younger, so you are looking forward to some overseas travel. Or you may plan to spend your time quietly at home enjoying your garden and grandchildren, in which case you won t have the same financial requirements. How much you need Whatever your objectives, you need to work out how much you think you ll need to live on while retired and then calculate the lump sum amount you require to generate that level of income. The Commission for Financial Literacy and Retirement Income s website sorted.org.nz includes useful information about saving for your retirement. If you are unsure, we suggest you contact an authorised financial adviser. Your employer cannot give you financial advice. 12 NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME

13 When you re likely to need your super This is one of the critical issues to consider when you decide which of the four options (or combination of options) to invest in. The level of investment risk you are comfortable with How you feel about investment risk will affect the option(s) you choose. Risk is the possibility that your investments will not provide the returns you expected. There is no return without risk and all investments carry a degree of risk. Both growth and income assets carry different types of risk. Growth assets tend to be more volatile, so your super is likely to fluctuate in value in the short term. Over the longer term, returns from income assets may be so low that your savings do not keep up with inflation. How you feel about these types of risk will determine the option(s) you select. You also need to take into account how you will feel about receiving a paper loss. History shows that investment markets tend to recover and if you change your investment option when returns are low, you may miss out on the upside when markets recover. The diagram below compares the anticipated long-term return and level of risk for each investment option, where risk is the expected fluctuation in returns and the likelihood of negative returns over shorter periods. HIGH Growth Balanced Returns Conservative Cash LOW Risk HIGH For more information about the risks of investing in the Scheme, please refer to the answer to the question What are my risks? in the Scheme s investment statement. YOUR SUPER GUIDE 13

14 5. YOUR INVESTMENTS This section explains: The Scheme s investment options The asset classes the Scheme invests in You can choose to invest your contributions in one or a combination of two or more of the four investment options whatever suits you best. This table summarises each option as at 30 June The information in this table is subject to change. GROWTH BALANCED CONSERVATIVE CASH Investment returns Has the potential to provide the highest returns of the four options over the long term, but is likely to have the greatest volatility in returns. In the long term has the potential to produce greater returns than the Conservative and Cash options. Medium to longerterm returns are likely to be lower than Growth or Balanced, but higher than the Cash option. The most cautious investment option available in the Scheme. It is intended for shorter-term savings as it is not expected to achieve significant growth over the long term. To achieve a return close to the 90 day bank bill rate, adjusted for tax. Long-term investment objective To achieve an investment return of at least 3% p.a. after tax, fees and inflation at least two-thirds of the time, over the longer term. Returns are likely to be more volatile from year to year than the Balanced, Conservative or Cash options. If you are considering the Growth option, you should be aware of the higher risks involved. To achieve an investment return of at least 2.5% p.a. after tax, fees and inflation at least two-thirds of the time, over the longer term. Returns are likely to be more volatile from year to year than the Conservative or Cash options. If you are considering the Balanced option, you should be aware that there will be fluctuations in returns from year to year. To achieve an investment return of at least 2% p.a. after tax, fees and inflation at least two-thirds of the time, over the longer term. Designed to produce less volatile returns, although it is expected to achieve an occasional negative return. Risk profile Designed to minimise volatility in returns. Over the longer term there is a risk that returns may not keep pace with inflation. Money is invested Mostly in growth assets (shares and property) with only a small percentage in income assets (fixed interest and cash). In a balanced option, but with a slight emphasis on growth assets, typically has around 55% invested in shares and property and significant investment in fixed interest securities and cash. With an emphasis on income assets with approximately 70% in fixed interest securities and cash and the remainder in shares and property. Fully invested in cash. 14 NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME

15 GROWTH BALANCED CONSERVATIVE CASH Indicative (or benchmark) asset mix* 15% 10% 5% (0%) 5% 19% (17.5%) 36% 46% (52.5%) 9% 5% (12.5%) (7.5%) 13% 7% 30% 18% (22.5%) 5% 32% (0%) 5% (37.5%) 40% (0%) Trans-Tasman Shares International Shares Trans-Tasman Property Global Property International Fixed Interest NZ Cash Growth Income 80% 20% 55% 45% 30% 70% 100% *actual percentages may vary from time to time Following the appointment of Russell Investments as the scheme s investment consultant and investment manager from 30 June 2014 minor changes will be made to the benchmark asset allocations. The proposed new benchmarks are shown in brackets. Here is a brief explanation of the main asset classes in which the Scheme invests. Shares (also referred to as equities or stocks) Shares are generally viewed as being either trans-tasman or overseas shares. As trans-tasman companies only make up little more than 2% of the world s shares, investing in overseas companies opens up more investment growth opportunities. Share performance usually depends on how well a company does, as well as local and global economic factors. Returns on overseas shares are also affected by the value of overseas currencies relative to the New Zealand dollar. Share portfolios may be active or passive. An active manager seeks to add value by actively seeking shares that it believes will provide a superior return. A passive manager invests in accordance with a pre-determined index (for example, the NZX 50), buying and selling shares to ensure that the asset weightings are the same. Global property There are many types of property investments that a superannuation scheme can invest in, including office buildings or shopping centres. This can be done directly, or indirectly through buying units in a trust (or shares in a company) that invests in a variety of properties. Fixed interest These investments include government bonds, bank bills and company debentures. Basically, you re investing in something that offers a fixed return for an agreed period of time. These investments can also be bought and sold before the fixed period of time is up. If general interest rates go lower, then your investment is worth more. Similarly, if interest rates rise, your fixed interest investment is worth less. Cash This means cash-type investments made for very short terms, usually less than 12 months. YOUR SUPER GUIDE 15

16 OTHER ISSUES YOU MAY WANT TO THINK ABOUT: Do you have any other investments as well as your super? Are they mainly growth or income investments? You may want to take this into account when choosing your investment option(s). How much longer will you be earning an income and putting money into your super? Are you planning on cashing in all or part of your super when you retire for things other than ongoing income? For help in planning your finances, either now or in retirement, you should contact an authorised financial adviser. FREQUENTLY ASKED QUESTIONS ABOUT INVESTMENT OPTIONS Q1. CAN I INVEST SOME OF MY SUPER IN MORE THAN ONE OF THE OPTIONS? A. Yes, the Scheme allows you to choose one or a combination of two or more options. You also have the flexibility to select one option (or combination of options) for your account balances and a different option (or combination of options) for your future contributions. Q2. WHAT SHOULD I DO IF I WANT TO CHANGE MY INVESTMENT OPTIONS? A. You can change your investment options online on nzuss.superfacts.co.nz or by completing the member investment choice selection form. The form is available from the Documents and forms page of the website or by calling 0800 UNISCHEME ( ). Your change will take effect from the first day of the month following the date your online switch or completed form is received by the Scheme s administration manager. Q3. HOW OFTEN CAN I CHANGE INVESTMENT OPTIONS? A. You can currently change your investment strategy as often as once a month, but remember that superannuation is a long-term investment and is best suited to a consistent approach. Q4. IS THERE A FEE FOR CHANGING MY INVESTMENT OPTIONS? A. Currently, the first change to your investment option(s) each year is free, but there is a $50 fee for any subsequent change. Q5. IS THERE ANYONE I CAN TALK TO ABOUT CHOOSING MY INVESTMENT OPTIONS? A. If you have additional questions after you have read this Super Guide, you are encouraged to talk to an authorised financial adviser. You may also find the Scheme website nzuss.superfacts.co.nz and the Commission for Financial Literacy and Retirement Income s website, sorted.org.nz helpful. Q6. HOW IS INTEREST ALLOCATED TO MY ACCOUNTS? A. We determine the annual interest rate taking into account the returns achieved and any expenses. The interest rate is declared as at 31 December each year. If you receive a benefit during the year, an interim rate of interest can be applied. Q7. HOW CAN I SEE WHAT INTEREST RATE IS ALLOCATED TO MY ACCOUNTS? A. You can check out the interim interest rates online on nzuss.superfacts.co.nz or by calling 0800 UNISCHEME ( ). 16 NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME

17 Q8. WHO CAN I CONTACT IF I HAVE A QUESTION ABOUT HOW INVESTMENT CHOICE WORKS? A. If you have any questions about how investment choice works, please call 0800 UNISCHEME ( ). For advice about which investment option to choose, contact an authorised financial adviser. Your employer cannot give you financial advice. 6. INFORMATION YOU WILL RECEIVE FROM THE SCHEME AS A MEMBER YOU WILL RECEIVE: This Super Guide. A copy of the Scheme s investment statement (included with this Guide). A welcome letter when you join, advising your member number. Then a second letter with your PIN so that you can sign on to the Scheme website nzuss.superfacts.co.nz. Scheme newsletters. An annual report for the year ended 31 December each year, which tells you how the Scheme s investment options have performed during the year. It also contains information about any changes made to the Scheme. A personal benefit statement showing the value of your super benefits and the contributions made to your accounts as at 31 December each year. You ll receive this statement together with the annual report in the following April or May. Benefit statements for the two previous calendar years are available on nzuss.superfacts.co.nz. 7. SCHEME MANAGEMENT The Scheme is managed by its trustees. The Scheme s Trust Deed requires there to be five Trustees. Two Trustees are appointed by the Universities and two are elected by Scheme members. The fifth Trustee, who is the independent chair, is appointed by the other four Trustees. The Trustees (including the Chair) are appointed or elected for a three-year term. Trustees are eligible for re-appointment or re-election at the end of their term of office. The Trustees are responsible for: Monitoring your rights and interests as a member. Operating the Scheme in line with the Trust Deed and superannuation law. Ensuring benefit payments are correct and made on time. Investing the Scheme s assets prudently, according to the Scheme s investment objectives. The Trustees use professional advisers such as investment managers, administration managers and auditors to help run the Scheme. The names of these advisers and the Trustees are listed in the latest annual report. YOUR SUPER GUIDE 17

18 8. SCHEME COSTS AND EXPENSES Most of the Scheme expenses are deducted from the investment earnings before the yearly interest rates are declared. Any remaining expenses are deducted from the Scheme s Reserve Fund before interest is allocated to your account(s). On occasion, the employers may also agree to pay the expenses in addition to their contributions. If the Reserve Fund is insufficient to meet the expenses, they will be paid first from your Member s No.2 Account or, if that is insufficient, from your Member s No.1 Account. Any fee for changing your investment option more than once in any calendar year will be deducted from your Member s No.1 Account. If you are a deferred member, your share of the fees and any withdrawal fees (payable on the second and subsequent withdrawals in any 12-month period) will be deducted from your accounts. For more information about the fees payable, refer to the latest investment statement and the annual report. 9. TAXATION At the date this Super Guide was prepared (30 June 2014) the following taxation treatment applied generally to the Scheme: Member contributions are not taxed because they are calculated on your before-tax salary, but deducted from your after-tax income. Employer contributions are subject to contribution tax at a rate depending on your income and employer contributions (including tax deducted) in the previous tax year. The current rates of contribution tax are: INCOME RANGE* RATE $0 $16, % $16,801 $57, % $57,601 $84, % $84,001 and over 33.0% * Income is your gross salary and wages plus employer superannuation contributions, before deduction of contribution tax, in the previous year or an estimate if you have worked for less than a year. The Scheme s taxable income is taxed at 28%. Specific tax rules may apply to some investments, e.g. international shares and off-shore funds. Benefits are not subject to tax. Under current taxation legislation, you do not need to declare any payment from the Scheme if you are completing a tax return, as tax has already been paid by the Scheme. The tax treatment of the Scheme may change in the future. 18 NEW ZEALAND UNIVERSITIES SUPERANNUATION SCHEME

19 10. ENQUIRIES Initial enquiries should be addressed to: The administration manager New Zealand Universities Superannuation Scheme Mercer (N.Z.) Limited Level 8, PwC Tower The Terrace PO Box 1849, Wellington 6140 Telephone: (04) or 0800 UNISCHEME ( ) Facsimile: (04) You can also send enquiries to: The secretary New Zealand Universities Superannuation Scheme C/- Aon New Zealand PO Box 2764, Wellington 6140 Telephone: (04) or 0800 UNISCHEME ( ) Facsimile: (04) You can also send enquiries to the Secretary to the Trustees at the following address: 11. FINANCIAL ADVICE HR or payroll at your university may give you information about the administration of the Scheme, but cannot give you any financial advice. If you are looking for financial advice about, for example, which investment option to choose, you should contact an authorised financial adviser. There are many individuals and companies offering financial planning services and financial advice. YOUR SUPER GUIDE 19

20