ASC Superannuation Fund

Transcription

1 ASC Superannuation Fund Pension Division Annual Report for the year ended 30 June 2010 Important information: The issuer and Trustee of the ASC Superannuation Fund (ABN ; RSE Registration No: R ) is The Trust Company (Superannuation) Limited, ABN , AFSL No , RSE Licence No. L , Address: PO Box 361, Collins Street West VIC Ph: (03) Fax: (03) The Administrator of the ASC Superannuation Fund is KPMG Superannuation Services Pty Limited, ABN: , AFSL No: , Address: PO Box H67, Australia Square NSW Ph: (02) Fax: (02) This document should be read in conjunction with your annual Member Statement, which shows your benefit 0 entitlements in the ASC Superannuation Fund for the year ended 30 June 2010.

2 General disclaimer This Annual Report is issued by The Trust Company (Superannuation) Limited, ABN , AFSL No , RSE Licence No. L , as Trustee of the ASC Superannuation Fund ( the Fund ), Registrable Superannuation Entity ( RSE ) Registration No: R This Annual Report contains information relevant to a segment of the Fund in which pension members participate, referred to as the Pension Division of the Fund. Neither The Trust Company (Superannuation) Limited, nor any underlying fund manager nor other service provider to the Fund, guarantees the investment performance of any investment offered or the repayment of capital. Investment in the Fund is subject to investment risk including loss of income and capital invested. The information provided in this report is in accordance with the requirements of the Corporations Act (Cth) Any information is of a general nature only and has been prepared without taking into account your investment objectives, financial situation and needs. Before making any investment decisions in relation to the Pension Division, you should consider the current Pension Product Disclosure Statement ( Pension PDS ) for the Fund and obtain professional financial advice from a licensed or authorised financial adviser. The current Pension PDS is available from the Fund s website, or by contacting the Fund Administrator (contact details on the page 26). A separate PDS relating to other categories of membership in the Fund (other than the defined benefit category which is closed to new members) is also available. Whilst all reasonable care has been taken in the preparation of this report, the Trustee reserves its right to correct any errors or omissions. The terms of your membership in the Fund are set out in the Fund s Trust Deed. Should there be any inconsistency between this report and the Fund s Trust Deed, the terms of the Fund s Trust Deed will prevail. 1

3 Message from the Trustee The Trustee presents the Annual Report for the Pension Division of the ASC Superannuation Fund ("the Fund") for the year ended 30 June This Annual Report should be read in conjunction with your annual member statement (mailed directly to you), which shows your pension account entitlements in the Fund as at 30 June Please take the time to read this report and if you have any queries or require further information, contact the Fund (contact details on page 26) or visit the Fund s website. If you would like to receive a copy of this report (and all future annual reports) by mail, contact the Fund Administrator (contact details on page 26). Key points for 2009/2010 Pension Division Net earning rates one year to 30 June 2010 Aggressive option 10.64% Growth option 11.72% Cash option 3.14% Pension Division assets at 30 June 2010 $4,199,279 Net Fund assets at 30 June 2010 $88,523,078 Pension membership The Fund s pension membership changed during the year as follows: Key changes Total pension members at 1 July New pension members 5 Pension members who left 4 Total pension members at 30 June

4 Who runs the Fund? The Fund is set up as a trust and is governed by a legal document called a Trust Deed. The Trustee responsible for running the Fund in accordance with the Trust Deed is The Trust Company (Superannuation) Limited ("the Trustee") (ABN , AFSL No ; RSE Licence No. L ). Policy Committee A Policy Committee is a committee whose purpose is to facilitate communication between the members of the Fund and the Trustee. The Policy Committee performs functions such as reviewing the Fund s investments and member communications. A Policy Committee is required to consist of an equal number of employer and employee representatives. The representatives of the Policy Committee over the year to 30 June 2010 were: Policy Committee representatives at 30 June 2010 Malcolm O Brien Brian Archer Wendy Hoad Carel Boshoff Stephen Bitmead Randall Graham Chairman and Company appointed representative Company appointed representative Company appointed representative ASC South - Member elected representative (appointed October 2009) ASC North - Member elected representative ASC West - Member elected representative Subsequent to Randall Graham leaving ASC West in July 2010, an election was held in September 2010 and Jacob Waye-Harris was appointed as the new member-elected representative for the ASC West electorate. The Company-appointed Policy Committee representatives were appointed by ASC Pty Limited. The member-elected Policy Committee representatives were elected by members of the Fund via a ballot. For further information regarding the member representative election process, contact the Fund (contact details on page 26). 3

5 Trustee indemnity insurance The Trustee has taken out trustee indemnity insurance to help protect the Trustee, its Directors and the Fund against certain liabilities. Service providers During the year to 30 June 2010, a number of appointed service providers assisted the Trustee in the management of the Fund (including the Pension Division), including: Service providers Administration, Asset and General Consulting Actuary KPMG Superannuation Services Pty Ltd (AFSL No: ) Alea Actuarial Consulting Auditor UHY Haines Norton (AFSL No ) Legal services Greenfields Lawyers AMP Capital Investors Underlying fund managers used over the 2009/2010 year* Walter Scott Investment Management BT Investment Management Maple-Brown Abbott Investment Management National Corporate Investment Services Limited (MLC) Platinum Asset Management Limited The Trust Company Limited (formerly known as Trust Company Limited) 1 UBS Global Asset Management * Note: the underlying fund managers utilised by the Trustee for investment by the Fund may be changed from time to time at the absolute discretion of the Trustee. They are shown in this report to provide historical information about the investments of the Fund during the year. You have no ability to choose the underlying fund managers utilised by the Trustee. 1 The Trust Company Limited is the Trustee s parent company. Any arrangements between the Trustee and The Trust Company Limited are conducted on an arms length and commercial basis. 4

6 Changes throughout the year There have been a number of changes throughout the 2009/2010 year, both from a legislative and Fund perspective that impact pension members. The following changes are of importance to pension members. For further general information about legislative changes, refer to the Legislative Update appearing at the end of this report. Extended pension drawdown relief The minimum drawdown relief for account based pensions which allows pensioners to reduce the minimum pension payment required by 50% has been extended for another 12 month period, continuing the relief during the 2010/11 financial year. This means for a person under the age of 65, only 2% of an account-based pension is required to be paid over the 2010/11 financial year. As an example, prior to the change, a member under the age of 65 was required to drawdown at least 4% of their 1 July pension balance in a financial year. With the drawdown relief provided, the member can elect to only drawdown 50% of this (i.e. 2% of their balance) during the 2010/11 year and still meet the legislative requirements. Members can still drawdown the full minimum pension amount (that otherwise applies except for this temporary drawdown relief) if they wish, however, they are not required to. This relaxation of the pension drawdown requirements is designed to assist pension members to reduce the amount of the capital they are taking from their pension, given the fall in the value of pension accounts due to the significant market downturn in recent years. Continued financial planning services The Trustee has continued to provide financial planning services to members of the Fund wishing to seek advice regarding their pension options within the Fund. KPMG Superannuation Services Pty Ltd (which is licensed to provide such advice) has been engaged to assist members in understanding the options available to them and the taxation benefits that may be gained from the use of Transition to Retirement Pensions for those members nearing retirement. Feel free to contact Hanna Howard at KPMG on (02) or via at hannahoward@kpmg.com.au more information. Please note that this service is provided by KPMG Superannuation Services Pty Ltd in its own right, not as agent or representative of the Trustee. The Trustee does not receive any fees or benefits specifically attributable to referring members to this service. The fees for this service are at the member s cost. 5

7 Investment objectives and strategies Pension members of the Fund have a choice of the following three investment options for the investment of their pension accounts within the Fund: 1. The Aggressive Option; 2. The Growth Option; and 3. The Cash Option. You can split the investment of your existing account balance in any proportion between the three investment options. You can also elect to direct your future contributions to any one of the three investment options. As such, you have the option of maintaining your account balance in your existing strategy, while being able to consider whether you would like to have your future contributions invested in the same option or an alternative strategy. Please note that if a member does not select their preferred investment option, the default investment option (the Growth option) applies. Full information on these investment options is contained within the current Pension PDS which is available by contacting the Fund (contact details on page 26) or via access to the Fund s website. You should consider the most up to date Pension PDS, Pension Annual Report and any significant event notices relating to the Pension Division, when choosing an investment option. The tables on the following pages contain information regarding the objectives and strategies of the Fund s investment options, as well as the investment performance of the Fund s pension options for the year to 30 June As pensions were only introduced into the Fund in July 2007, investment returns are only provided for the periods ending 30 June 2008, 30 June 2009 and 30 June For information in relation to the performance of any investments you may have had prior to establishing your pension account in the Fund, please refer to the Superannuation Division Annual Report, which is available on the Fund s website at Note: past performance is not a reliable indicator of future performance. The objectives of each option are not a promise or guarantee of any particular benefit or return. The objectives are used by the Trustee to measure the performance of the Fund s investments. Further information about investment performance is also provided with your Member Statement for the year to 30 June A superannuation fund s investment performance typically varies over time. Because superannuation is a long-term investment, longer term returns (such as 5 and 10 year figures) smooth out short-term results. Depending on the nature of each investment option (including its risk profile), an investment option may experience negative returns from time to time and it is generally not appropriate to assess the performance of an investment option by the return for a single year or other short term returns. 6

8 Aggressive option Investment objectives Returns (net fees) exceeding: CPI by 4.5% p.a. over rolling 5-year periods The median return of the Morningstar Peer Group Wholesale Investment Trust Multisector Aggressive Index over rolling 5-year periods. Asset allocation Benchmark allocation Actual allocation - 30 June 2010 Actual allocation - 30 June 2009 Aust shares 55.0% Int'l shares 45.0% Aust shares 51.6% Int'l shares 41.7% Property 0.7% Cash 6.0% Aust shares 33.8% Int'l shares 29.1% Property 0.7% Cash 36.4% Investment strategy allocation of assets to underlying fund managers Underlying fund manager returns* year ending 30 June Underlying fund managers Benchmark allocation Actual allocation 30 June 2010 AMP Capital Investors Australian Equity Fund 27.5% 26.6% BT Wholesale Core Australian Share Fund 27.5% 26.6% Walter Scott Global Equity Fund 22.5% 22.2% Platinum Asset International Fund 22.5% 23.4% Trust Common Call Fund 0.0% 1.2% Underlying fund managers AMP Capital Investors Australian Equity Fund 13.5% -18.5% -10.0% BT Wholesale Core Australian Share Fund 11.0% -16.7% -10.4% Walter Scott Global Equity Fund 5.1% -2.6% -13.3% Platinum Asset International Fund 11.9% 18.2% -16.1% Net earnings rates % % % The Pension Division Aggressive option was only introduced into the Fund on 1 July As such, historical return information is not available prior to this date. *The underlying fund manager returns shown above are net of investment fees. The net earning rates, however, are net of all applicable investment manager and Fund fees. Tax does not apply to the investment earnings of Pension Division assets. Past performance is not a reliable indicator of future performance. The fund managers utilised by the Fund may be changed at the discretion of the Trustee. You have no ability to choose the underlying fund managers. 7

9 Returns (net fees) exceeding: CPI by at least 3.0% p.a. over rolling 5-year periods Growth option Investment objectives The median return of the Morningstar Peer Group Wholesale Investment Trust Multisector Growth Index over rolling 5-year periods. Asset allocation Benchmark allocation Actual allocation - 30 June 2010 Actual allocation - 30 June 2009 Australian shares 36.0% Overseas shares 24.5% Listed property 8.0% Alternative assets 2.5% Aust and overseas bond 26.5% Cash 2.5% Australian shares 37.7% Overseas shares 26.9% Listed property 5.0% Aust and overseas bonds 24.8% Cash 5.6% Australian shares 39.5% Overseas shares 27.5% Listed property 5.8% Aust and overseas bond 22.2% Cash 5.0% Investment strategy allocation of assets to underlying fund managers Underlying fund managers Benchmark allocation Actual allocation 30 June 2010 MLC NCIT Moderate Fund 50.0% 49.0% MBA Diversified Investment Trust 50.0% 48.9% Trust Common Call Fund 0.0% 2.1% Underlying fund manager returns* year ending 30 June Underlying fund managers MLC NCIT Moderate Fund 12.4% -14.7% -9.1% MBA Diversified Investment Trust 10.1% -8.0% -10.3% Net earning rates % % -9.71% The Pension Division Growth option was only introduced into the Fund on 1 July As such, historical return information is not available prior to this date. * The underlying fund manager returns shown above are net of investment fees. The net earning rates, however, are net of all applicable investment manager and Fund fees. Tax does not apply to the investment earnings of Pension Division assets. Past performance is not a reliable indicator of future performance. The fund managers utilised by the Fund may be changed at the discretion of the Trustee. You have no ability to choose the underlying fund managers. 8

10 Cash option Investment objectives Returns (net of tax and fees) exceeding: CPI by at least 1.0% p.a. over rolling 5-year periods The median return of the Morningstar Peer Group Wholesale Investment Trust Australia Cash Index over rolling 5-year periods. Asset allocation Benchmark allocation Actual allocation - 30 June 2010 Actual allocation - 30 June 2009 Cash 100.0% Cash 100.0% Cash 100.0% Investment strategy allocation of assets to underlying Underlying fund managers Benchmark allocation Actual allocation 30 June 2010 UBS Cash Fund 100.0% 99.2% fund managers Trust Common Call Fund 0.0% 0.8% Underlying fund manager returns* year ending 30 June Underlying fund managers UBS Cash Fund** 3.6% 5.3% N/a Net earning rates % 4.66% 4.67% The Pension Division Cash option was only introduced into the Fund on 1 July As such, historical return information is not available prior to this date. *The underlying fund manager returns shown above are net of investment fees. The net earning rates, however, are net of all applicable investment manager and Fund fees. Tax does not apply to the investment earnings of Pension division assets. Past performance is not a reliable indicator of future performance. The fund managers utilised by the Fund may be changed at the discretion of the Trustee. You have no ability to choose the underlying fund managers. ** The investments held within the Macquarie Diversified Treasury AA Fund were redeemed in July 2008 and invested in the UBS Cash Fund. 9

11 Switching investment options Pension members of the Fund can switch investment options on a daily basis. Investment option switches are not effective until processed by the Fund Administrator. The unit price applied to an account balance investment switch will be the unit price(s) effective the day that the Fund Administrator receives your investment switch request (note, investment switch requests received after 2pm are marked as being received on the next business day). Contact the Fund Administrator to request an Investment Choice Form or for further information (contact details on page 26). No switching fee is charged, but a buy/sell spread may be incurred. Contact the Fund for further information (contact details on page 26) or visit the Fund s website. Allocation of earnings to members The Fund is a unit-linked fund. What this means is that amounts credited to your account buy investment units in the investment strategy(ies) that you have nominated. The number of units that you buy depends on the last declared Allocation (Buy) Unit Price available on the day that the amount is credited to your account. Units are sold when deductions are made from your account to pay fees, costs, pension payments and partial withdrawals (commutations) where permissible, or when you close your account. Units are also sold when switching between investment options. Units are sold based on the Redemption (Sell) Unit Price applicable on the date the withdrawal is processed. The value of the amount paid to you, or the number of units sold, will depend upon the Redemption Unit Price on the day. The difference between the Allocation and Redemption price of a unit is called the Buy/Sell spread and will vary from one investment option to the other. Unit prices are updated on a daily basis, which means that the performance of your pension account will keep up-to-date with the actual investment performance of your chosen investment strategy. When calculating the unit price of the underlying investment pool, movements in cash flow, and any fees or costs related to the Fund (and which are not deducted directly from pension member s accounts) including estimates or provisions for fees and costs payable (but not yet paid), are fully taken into account. If the underlying investments are performing well, then the unit price and hence, the value of your account, will go up. If the underlying investments are not performing well, then the unit price will go down, as will the value of your account. The Trustee has adopted a policy of fully allocating all of the Fund s earnings to pension members accounts (after the deduction of relevant fees and costs including estimates or provisions for fees, costs and taxes payable, but not yet paid). As such, it does not hold any investment fluctuation reserves. 10

12 The net earning rate for each investment option is based on the movement in each of the investment option unit prices, i.e. the combined return of the underlying fund managers less expenses which are deducted from the assets of the Fund and is equal to the net investment return. Over the three years to 30 June 2010, the compound average net earning rates for the Fund s investment options are as follows: Compound 3 year investment return Aggressive option Growth option Cash option -5.81% p.a % p.a. 4.15% p.a. Past performance is not a reliable indicator of future performance. If you close your pension account within a few years of opening it you may get back less than the pension purchase price as a consequence of the level of investment returns earned by the Fund and the deduction of fees and costs. The Trustee does not guarantee that you will earn any specific rate of return on your investment or that your investment will gain or retain its value. Investment returns over the year to 30 June 2010 General market overview The 2009/10 financial year was the first year that the majority of superannuation funds declared positive returns following the negative and tumultuous investment markets experienced during the Global Financial Crisis ( GFC ). Whilst this financial year provided overall positive investment returns, significant volatility continued to be experienced in investment markets over the short-term. The 2009/10 financial year began with strong returns over the first quarter to 30 September 2009, building confidence of a sharemarket recovery. The second and third quarter s showed increased volatility, with monthly performance alternating between positive and negative returns on a regular basis. Sharemarket sentiment again turned negative over the fourth quarter, with a retracement of a large amount of the gains experienced during the first three quarters being apparent. 11

13 Over the long-term, international shares and listed property were again the only growth asset classes that provided a negative investment return over the five year period to 30 June 2010, whereas income asset classes continued to achieve positive returns. The global economy has experienced substantially improved sentiment and conditions over the 12 months to 30 June 2010 following the collapse of the global banking and financial sectors in the 2007/08 and 2008/09 financial years. In terms of asset sector performance, listed property was the best performing asset class for the year to 30 June 2010, providing a return of 19.2% over the 12-months to 30 June This was a welcome return to positive double-digit figures, especially given listed property was the worst performer for the previous 12-months to 30 June 2009 where a -42.3% return was experienced. Double-digit positive returns were also experienced in the Australian sharemarket, which returned 13.9%, whilst overseas sharemarkets also achieved positive returns although these were single digit, with the broad international equity index returning 6.9% (exclusive of currency movements). Australian fixed interest experienced another year of strong results, returning 7.9% for the 2009/10 financial year, whilst international bonds and cash provided single-digit returns over the 12 months to 30 June 2010 of 2.6% and 3.9% respectively. It is important to note that the sector returns outlined above provide an indication of the performance of each asset class only and do not include deductions for tax or fees. Accordingly, a direct comparison of the Fund s performance against these sector returns is not possible. Rather, any comparison of the Fund s investment performance should be considered over the long term against an appropriate benchmark (see below). Investment option performance In terms of the returns achieved by the Fund s Pension Division investment options, the Fund experienced much better performance results for the year ended 30 June 2010, providing overall strong returns to members of the Fund. The Aggressive Option, which invests heavily in Australian shares and international shares provided a return to members of 10.64% for year ending 30 June The Growth Option provided members with a return of 11.72% for the year ending 30 June 2010, whilst the Cash Option provided members with a return of 3.14% for year ending 30 June It is important for members to gauge the performance of their superannuation fund on a longterm basis. Whilst the pension options have only been offered to members of the Fund for 3- years, members should take into account the combined returns achieved on both their superannuation and pension accounts over the longer-term 5-year period. The asset mix of the Fund s investment options reflects the Trustee s view of the appropriate mix of investment options to be offered to members, taking into account the demographic profile of the Fund membership. However, this does not mean that the Trustee has taken into account any member s individual circumstances. Note: Past performance is not a reliable indicator of future performance. 12

14 Asset consultant The Trustee utilises an external asset consultant to provide advice regarding the investments of the Fund and the structure of the three investment options offered to Fund members. The Asset Consultant to the Fund over the 2009/10 financial year was KPMG Superannuation Services Pty Limited (ABN: ; AFSL No: ). The investments of the Fund are continuously monitored via quarterly investment reports, which are reviewed by the Trustee and Policy Committee. These reports and the Fund s investments are discussed at quarterly Policy Committee meetings. Underlying fund managers may be appointed and removed by the Trustee upon the recommendation of the Asset Consultant. Any decision to appoint/remove a manager is based upon an assessment of the fund manager s style and performance, as well as its fit with the other managers utilised by the Fund. The Fund s Policy Committee provides input to any decision to appoint/remove fund managers. Derivatives The Trustee does not directly invest any of the assets of the Fund in derivative securities such as options, futures or swaps. The underlying fund managers utilised by the Fund may utilise derivatives to manage the risk and liquidity of their portfolios. They do not, as a general rule, invest in derivatives for speculative purposes. Other fund information Death benefits and nomination of beneficiaries Your Member Statement shows your current nominated beneficiaries whom you would prefer to receive your superannuation benefits upon your death. It is important that this information is up to date. You can make two types of beneficiary nominations within the Fund in relation to lump sum death benefits, being Non-Binding and Binding. Further details regarding the nature and requirements for each type of beneficiary nomination are provided on the Nomination of Beneficiaries Form and in the current PDS, both of which are available on the website ( or from the Fund Administrator (contact details on page 26). Please consider each type of nomination and, where appropriate, seek qualified estate planning, financial or taxation advice, prior to choosing the one which is right for you. 13

15 Non-Binding nominations Whilst full consideration is given to your wishes in relation to a Non-Binding nomination, it is important to understand that this type of nomination is not binding on the Trustee. In this regard, your nomination may help the Trustee to determine the payment details, however the Trustee has absolute discretion as to whom a death benefit is paid, subject to the relevant legislative requirements, which require a dependent to be paid where one exists. Binding nominations A Binding nomination requires the Trustee to pay your benefit to the person you have nominated, so long as that person is your dependent or your legal personal representative (see the PDS for further details). A Binding nomination will need to be re-confirmed every three years for it to remain valid. You can amend or revoke your Binding nomination at any time. It is important to note that the Trustee cannot override a valid Binding nomination. Reversionary nominations You can, also make a reversionary nomination to suitable beneficiaries. In this instance, a reversionary beneficiary will continue to receive your pension in the event of your death (subject to special rules in superannuation legislation relating to payment of a pension to a child as a reversionary beneficiary). Different taxation rules apply, and certain conditions must be met for a reversionary nomination to be valid. You can make a change to your nominated beneficiaries at any time, by contacting the Fund (contact details on page 26). Please note, that changing your reversionary beneficiary may have social security and/or tax implications so we recommend you obtain qualified financial advice. 14

16 Preservation Transition to Retirement Pensions If you have established a Transition to Retirement Pension within the Fund, the preserved component of your benefit must remain within the Australian superannuation system, generally until your permanent retirement from the workforce after you reach your preservation age. Your preservation age is determined in accordance with the following: Date of birth Preservation age Before 1 July July June July June July June July June After 30 June From 1 July 1999, all superannuation contributions (including member contributions) and earnings are preserved. Any component of your benefit that was unrestricted non-preserved at 1 July 1999 will continue to be unrestricted non-preserved and can be taken in cash at any time. Any restricted non-preserved amount will remain restricted non-preserved until such time as you cease employment with ASC Pty Limited or ASC Shipbuilding Pty Limited or satisfy one of the conditions of release, as outlined below. Your ability to claim preserved benefits other than at retirement (as described above) is restricted, however, the law does allow for the release of benefits where you are an Australian citizen, New Zealand citizen or permanent resident* and otherwise satisfy a condition of release, including as follows: When you reach age 60 and cease an employment arrangement; When you reach age 65; When you die; When you suffer a terminal illness condition as defined in superannuation legislation (this condition of release is subject to the provisions of the Trust Deed); When you have ceased gainful employment with the Company and your account balance is less than $200; 15

17 If in the Trustee's opinion you are "permanently incapacitated" in accordance with superannuation legislation); If the Trustee approves the early release of preserved benefits on the grounds of severe financial hardship. Should you wish to apply for a benefit on these grounds, the application form is available by contacting the Fund (contact details on page 26); The Trustee may release preserved benefits if the Australian Prudential Regulation Authority ( APRA ) determines they should be released on pre-defined specified grounds ( compassionate grounds ), such as to cover palliative care or funeral costs; and Where the law otherwise permits (for example, to satisfy an ATO Release Authority issued by the ATO for the release of monies from your superannuation benefits to meet any personal tax liability associated with excess concessional or non-concessional contributions). * Different rules apply to temporary residents. Some (but not all) of the conditions of release outlined above apply to temporary residents (e.g. death, permanent incapacity). The Trustee may release preserved benefits as a Departing Australia Superannuation Payment ( DASP ) to a former temporary resident whose visa has expired and has departed the country. More details are available by contacting the Fund (contact details on page 26). Standard Account-Based Pensions Where you have commenced a standard account-based pension (i.e. a non-transition to Retirement Pension), you must have met a condition of release. Hence, your entire benefit within your pension is unrestricted non-preserved and can be commuted and taken as a cash lump sum at any time (however different tax treatment applies to lump sum benefits). 16

18 Proof of identity As a result of separate Government reforms designed to counteract money laundering and terrorism financing you may be required to provide proof of identity or meet other requirements as determined by the Trustee from time to time prior to being able to access your benefits in cash (lump sump or pension payments) (called customer identification and verification requirements). These requirements may also be applied by the Trustee from time to time in relation to the administration of your superannuation benefits as required or considered appropriate under the Government s legislation. You will be notified of any requirements when applicable. If you do not comply with these requirements there may be consequences for you, for example, a delay in the payment of your pension payments or lump sum benefits. As a result of these reforms the Trustee has become the subject of another regulatory body (called AUSTRAC) which has responsibility for the government s legislation. The Trustee is required to provide yearly compliance reports to AUSTRAC and notify AUSTRAC of suspicious transactions. This may involve the provision of personal information about you to AUSTRAC. Taxation of benefits This is a summary of the taxation law in relation to pension benefits. The effect of tax rules will depend on your personal circumstances. For this reason, we recommend you obtain advice from a licensed or authorised financial adviser that takes into account your own situation. If you are age 60 or over: Tax is not payable on pension benefits paid from a taxed source to a member aged 60 or more (whether paid as a lump sum or pension). If you are under the age of 60: Tax is still payable on pension benefits paid to members aged under the age of 60. Pension payments from a taxed source consist of two components: 1. A tax-free component made up of: any concessionally taxed or tax-free components (pre 1 July 1983 component, Undeducted contributions, CGT exempt component, Post June 1994 invalidity component and concessional component) as at 30 June 2007 (called the crystallised segment ), plus non-concessional contributions made from 1 July 2007 (called the contributions segment ). The tax-free component of your pension payment you receive is not taxed. 17

19 2. A taxable component made up of the total pension benefit, less any tax-free component. If you are between your preservation age (refer to the table on Page 15) and age 60, the taxable component of your pension payment will be included in your assessable income and taxed at your marginal tax rate, less a tax rebate of 15%. If you are below your preservation age (refer to the table on Page 15), the taxable component of your pension payment will be included in your assessable income and taxed at your marginal tax rate, however, no tax rebate will generally apply. The following table summarises the taxation arrangements in relation to pension payments: Age 60 or more Age / status Between preservation age and age 60 Pension payments Tax free. The pension payment amount does not have to be included in income tax return. The Tax-free component is paid tax-free. The pension payment amount must be included in your income tax return and is taxed at your marginal tax rate less a tax rebate of 15%. Less than preservation age The Tax-free component is paid tax-free. The pension payment amount must be included in your income tax return and is taxed at your marginal tax rate. The 15% tax rebate does not generally apply. Partial or full commutations (withdrawals) are taxed (differently) as lump sum superannuation benefits. Refer to the current Pension PDS for further information. Taxation in relation to death benefits Death benefits paid to a dependant are able to be paid as a lump sum or pension. Death benefits paid to a non-dependant may be paid as a lump sum only. For this purpose, a dependant does not include a child aged 18 or more (unless financially dependant or an interdependent). However, recent Government reforms mean that a qualifying same sex partner or their child may be a dependant for taxation purposes (refer to the Legislative Update later in this report). 18

20 Where a death benefit is paid to a dependant as a lump sum (regardless of age) or as a pension where the deceased and / or recipient is over age 60, the benefit will be paid tax-free. Where a pension is paid where the deceased is less than 60 and the recipient is also less than 60, the taxable component of the pension (if paid from a taxed source) will be taxed at the marginal rate, plus the Medicare Levy, with a 15% tax offset. Where a death benefit is paid to a non-dependant, it must be paid as a lump sum benefit and the taxable component is generally taxable at 15%, plus the Medicare Levy. Where a death benefit is received by the legal personal representative of a deceased estate, tax is determined according to who is intended to benefit from the estate. Enquiries and complaints procedure The Trustee is required by law to have an internal dispute resolution process. Under the Superannuation Industry (Supervision) Act 1993 ( SIS ) the Trustee must take all reasonable steps to ensure that there are arrangements in place under which: Members or their beneficiaries have the right to enquire into, or complain about, the operation or management of the Fund; and Those enquiries or complaints will be properly considered and dealt with within 90 days. It is important to distinguish between enquiries and complaints. Enquiries are requests for information about the Fund or your benefits. Complaints are expressions of dissatisfaction. Enquiries If you have an enquiry regarding the Fund, you should contact the Fund (contact details on page 26). Enquiries can be made by , phone or in writing. If you do not receive a satisfactory response within 28 days, you should immediately contact the Trustee (see page 26 for contact details). Complaints Complaints should generally be made in writing to the Trustee, which has a dispute resolution committee to ensure that all complaints are answered within 90 days. Complaints to the Trustee should be directed to the Complaints Officer (contact details on page 26). Superannuation Complaints Tribunal If you are not satisfied with the Trustee s handling of your complaint or their decision, or the Trustee does not respond within 90 days, you may contact the Superannuation Complaints Tribunal. The Tribunal is an independent body set up by the Federal Government to assist members or beneficiaries to resolve certain types of complaints with fund trustees. 19

21 The Tribunal may be able to assist you to resolve your complaint, but only if you are not satisfied with the response received from the Trustee s handling of your complaint. If the Tribunal accepts your complaint, it may attempt to resolve the matter through conciliation, which involves assisting you and the Trustee to come to a mutual agreement. If conciliation is unsuccessful, the complaint is referred to the Tribunal for a determination which is binding. You should be aware, however, that a party may appeal a decision of the Tribunal to the Federal Court. If you wish to find out whether the Tribunal can handle your complaint and the type of information you would need to provide, phone the following number for the cost of a local call anywhere in Australia: Contact details Superannuation Complaints Tribunal Locked Bag 3060 GPO Melbourne VIC Information upon request The following information is available by contacting the Fund (contact details on page 26): Superannuation Division Product Disclosure Statement ("PDS"); Pension Division PDS; Recent Member newsletters; Policy Committee guide; The Fund s Trust Deed and Rules; The Fund s Risk Management Plan; The latest audited accounts; All member forms, e.g. the Change of Beneficiaries Nomination Form; Information about your benefit entitlements; and Any other information that may help you understand particular investments of the Fund or the management, financial condition and performance of the Fund. 20

22 Member access via the Fund s website Member online access to the Fund s website is available to all ASC Fund members. You can access your account details online through the Fund s website at Logging on to the website To log on to the website, you will need to provide your member number in the Fund and your log-in PIN number. Members of the Fund will need to request their initial PIN number by sending an to the following address: AU-FMNATASC@kpmg.com.au Your should contain the subject line "PIN request" and provide your name, date of birth and member number in the Fund in the body of the . Your PIN will then be ed to you along with instructions regarding how to log on to the website. Individual member account details You can view the following details regarding your account online: Your membership details such as your name, date of birth, date you joined the Fund etc.; Up to date account balance and benefit estimates; The transaction history of your account; Your nominated beneficiaries; Your insurance details; and Details regarding your chosen investment option. You can also update / provide certain details regarding your account such as: Your address details; Your nominated beneficiaries; and Your Tax File Number ( TFN ). You can also access general information about the Fund on the website, such as investment updates and forms. Since the 2008/2009 financial year and for all future years, the Fund s website will be the main source of the Fund s Annual Reports. Annual Reports will only be provided to you in hardcopy (free of charge) if you specifically request these from the Fund Administrator. The website is provided by the Fund Administrator, KPMG Superannuation Services Pty Limited (AFSL No ). With the exception of the Fund documentation issued by the Trustee which can be accessed via the website (such as the PDS and Annual Reports), the Trustee is not responsible for the information provided on the website. More information in relation to the website, including how to access the website, can be obtained from the Fund Administrator (contact details on page 26). 21

23 Legislative update Government co-contribution The Government has passed legislation which mean that a temporary reduction (announced in the 2009 Federal Budget) in the co-contribution matching rate for qualifying low and middle income earners from $1.50 to $1.00 for each $1.00 contributed, up to a maximum cocontribution of $1,000, has been made permanent. This temporary reduction was to apply to non-concessional contributions made during the , and financial years but will now apply indefinitely (unless further changes to the law are made). Also, the Government has removed indexation in line with AWOTE for the upper and lower income thresholds for the co-contribution, for the and financial years. Unclaimed Monies The Government has made changes to the Superannuation (Unclaimed Money and Lost Members) Act 1999 which mean that from 31 October 2010, if you: become lost and your account balance is less than $200; or the Trustee is satisfied, after your lost account has been inactive for 5 years, that it will never be able to identify you, your benefit may be required to be transferred to the ATO, your account may be required to be transferred to the ATO. For more information go to Benefits of temporary residents Last year, the Government has made changes to the treatment of temporary residents superannuation. These changes can affect how and from whom, a temporary resident may claim their superannuation benefits after they have permanently departed Australia. Under Part 3A of the Superannuation (Unclaimed Money and Lost Members) Act 1999, the Trustee is required to transfer the superannuation benefits of a former temporary resident to the ATO (as unclaimed money) after six months has elapsed since the temporary resident has left Australia and their visa has expired or is cancelled. The Trustee must pay these unclaimed monies to the ATO whenever it receives a notice from the ATO requiring amounts (classified by the ATO as unclaimed temporary residents super benefits) to be paid to the ATO. If this happens, a former temporary resident can claim their super benefits directly from the ATO (subject to applicable tax rates). 22

24 The Trustee has decided that it will not provide former temporary resident members whose benefits have been paid to the ATO with notices or exit statements at the time or after their benefits are transferred to the ATO. The Trustee has taken this approach relying on relief granted by the Australian Securities and Investments Commission (ASIC) from certain reporting obligations in the law which normally apply when fund membership ceases. This relief recognises that trustees will generally not be aware which members are former temporary residents (until advised by the ATO) and that they may have difficulty communicating to an overseas address or finding correct contact details for the member. For more information go to Benefit tax threshold For lump sum benefit payments from the Fund, the tax free threshold of any taxable component has increased from $150,000 to $160,000 for the 2010/11 financial year. This threshold is subject to change from year to year. Up to date information is available from Government Proposals The Federal Government handed down its third Federal Budget on 11 May Also, in response to the Government s review of Australia s Future Tax System ( the Henry Review ), the Government has announced measures aimed at improving adequacy of, and equity in, superannuation. These announcements, if implemented, may impact some members of the Fund. The key aspects of the Budget and Henry Review relating to superannuation are summarised below. Concessional contributions cap for over 50s The Government proposes to extend indefinitely the $50,000 concessional contributions cap for people aged 50 or more, beyond the previous expiry date (announced in the 2009 Federal Budget) of 30 June 2012, subject to the person having less than $500,000 in superannuation entitlements. Currently, for people aged 50 or more with superannuation entitlements of $500,000 or more, the concessional contributions cap of $25,000 (or the indexed figure if greater) would apply from 1 July At the date of this report, this change has not been passed as law. 23

25 Increase in the Superannuation Guarantee ( SG ) rate The Government has proposed an increase in the SG rate from 9% to 12% which will be phased in from 1 July 2013 to 1 July The increase would be implemented as follows: Financial Year SG Rate (%) 1 July June July June July June July June July June July June July June This change is not yet law. Increasing the SG age The Government proposed that it would raise the SG age limit from 70 to 75 from 1 July Currently, individuals who are 70 or more, are only entitled to compulsory contributions from their employer if it is a requirement under a workplace award or arrangement. This change is not yet law. Matching concessional contributions for low income earners The Government proposed that, from 1 July 2012, it would match concessional contributions up to a maximum of $500 for those earning $37,000 or less over the financial year in which the concessional contributions were paid. This measure is intended to reduce the effective rate of tax on those concessional contributions to 0%. This change is not yet law. Note: The laws relating to superannuation change from time to time. This may affect information shown in the Pension Division s PDS. Information about these changes, if not materially adverse, may be made available on the Fund website or in hardcopy free of charge upon request. 24

26 Summary of financial performance A summary of the audited accounts for the Fund (including all membership categories) for the year ending 30 June 2010 is shown below. The full audited accounts and auditor s report are available for inspection by contacting the Fund Administrator (contact details on page 26). Statement of Change in Net Assets $ Net assets at 1 July ,926,743 Statement of Net Assets Assets $ Plus Interest 62,189 Trust distributions 640,766 Movements in value of investments 7,215,993 (Direct investment rebate/(expense) 7,147 Employer contributions 12,900,469 Employee contributions ordinary 20,818 Rollovers from other funds 2,109,189 Proceeds from life ins. policies 118,625 Sundry Income 120 Total income 23,075,316 Less Benefit payments 5,245,979 Pension payments 247,357 Administration fees 242,818 Actuarial fees 2,972 Accountancy fees 13,750 Auditors remuneration 23,243 Legal costs 4,005 Filing fees 12,170 Consulting fees 252,431 Insurance premiums 698,826 Bank charges 105 Trustee Fees 280 Registrations 769 Subscriptions 8,321 Income tax expense 1,725,955 Total Expenditure 8,478,981 Equals NET ASSETS AT 30 JUNE ,523,078 Cash 2,104,895 MLC Growth Fund 26,819,839 Maple Brown Abbott PST 27,557,657 Platinum International Fund 6,119,752 AMP Capital Equity Fund 6,506,025 MLC Moderate Trust 1,477,042 BT Wholesale Core Aust Share Fund 6,484,282 UBS Unit Trust 4,683,640 MBA Diversified Investment Trust 1,526,242 Walter Scott Global Equity Fund 5,362,629 Trust distribution receivable 134,025 Prepayments 1,941 GST receivable 6,030 Contributions receivable 472,752 Deferred tax assets 307,598 Total Assets 89,564,349 Less Benefits payable 460,938 Accruals 66,521 Current tax liabilities 442,951 Deferred tax liabilities 70,861 Total Liabilities 1,041,271 Equals NET ASSETS AT 30 JUNE ,523,078 25