IOOF Pursuit Select. Term Allocated Pension. Product Disclosure Statement

Transcription

1 IOOF Pursuit Select IOOF Pursuit Select Term Allocated Pension Product Disclosure Statement The IOOF Pursuit Select Term Allocated Pension is available to: new applicants electing to roll over from an existing Term Allocated Pension the Reversionary Beneficiary of a current IOOF Pursuit Select Term Allocated Pension member who will continue the pension on the death of that member. Dated: 1 December 2012 Issuer: IOOF Investment Management Limited ABN AFS Licence No as Trustee of the IOOF Portfolio Service Superannuation Fund ABN

2 This Product Disclosure Statement (PDS) has been prepared and issued by IOOF Investment Management Limited (IIML) ABN , AFS Licence No IIML is the Trustee of the IOOF Portfolio Service Superannuation Fund (Fund), ABN The IOOF Pursuit Select Term Allocated Pension is a pension product in the Fund. About the Trustee IIML is a part of the IOOF group comprising IOOF Holdings Limited ABN and its related bodies corporate (IOOF group). As Trustee, IIML is responsible for operating the Fund honestly and in the best interests of members. IIML is also responsible for holding the assets of the Fund on behalf of members and undertakes all of the administrative tasks through IOOF Services Co Pty Ltd ABN IIML has investment and service contracts with related parties within the IOOF group, including Perennial Investment Partners Limited (Perennial) ABN , AFS Licence No and IOOF Services Co Pty Ltd. IIML is solely responsible for the content of this PDS. This PDS was prepared by IIML based on its interpretation of the relevant legislation as at the date of issue. Rollovers to, and investments in, an IOOF Pursuit Select Term Allocated Pension do not represent assets or liabilities of IIML (other than as trustee of the Fund) or any other company or business within the IOOF group. The terms our, we, us and Trustee in this PDS refer to IIML. Neither IIML, nor any other related or associated company, the fund managers providing the managed investments, service providers or the related bodies corporate of the parties mentioned, guarantee the repayment of capital or the performance or any rate of return of the investment options chosen in an IOOF Pursuit Select Term Allocated Pension. Investments made into the investment options in an IOOF Pursuit Select Term Allocated Pension are subject to investment risks and other risks. This could involve delays in the repayment of principal and loss of income or principal invested. IIML operates the IOOF Pursuit Select Term Allocated Pension on the terms and conditions outlined in this PDS and in accordance with the Fund s Trust Deed. We may change any of the terms and conditions set out in the PDS at any time where permitted to do so under the Trust Deed and superannuation (super) law. IIML is the Responsible Entity of the Perennial Trusts, the IOOF MultiMix Trusts, the IOOF Multi Series Balanced Trust and the IOOF Cash Management Trust (collectively referred to as the Trusts), and we receive fees under the Constitutions of the Trusts. These are some of the investment options offered in the IOOF Pursuit Select Term Allocated Pension (as listed in the IOOF Pursuit Select investment guide (PSE.11)). An IOOF Pursuit Select Term Allocated Pension is only available to persons receiving this PDS (electronically or otherwise) within Australia. We may refuse an application to join the Fund without providing reasons for the refusal. You become a member of the Fund when we accept your completed application and record you as a member. About the relationship between Perennial and IIML Perennial, another company within the IOOF group, has been appointed by us to manage the investment assets of the Perennial Trusts. Perennial is paid arm s length asset management fees by us (as the Responsible Entity) for the management of the Perennial Trusts. Investment options offered IIML makes no recommendation regarding the investment options set out in PSE.11. As Trustee, IIML regularly monitors the investment options available to members in the IOOF Pursuit Select Term Allocated Pension and provides no assurance that any investment option currently available will continue to be available in the future. We have the right to suspend or cease investments in a specific investment option and if necessary, can redeem and transfer your investments to your Cash Account in circumstances where the investment option is no longer available and no alternative instructions are provided. We will notify you of any such change where possible before the change occurs. The fund managers have not authorised or caused the issue of this PDS but have consented to the inclusion of statements which relate to their particular managed investment. In order to choose an investment option for your investment strategy, you should review the information in PSE.11. Before selecting an investment option, your financial adviser should give you the product disclosure statement for that managed investment or the product guide for the term deposit. These documents provide you with important information to consider and evaluate prior to investing. Product disclosure statements for each managed investment and product guides for each term deposit are also available on our website ( Please note, product disclosure statements and product guides are not available for Direct Share Choice investment options. General advice warning The information contained in this PDS is of a general nature only and does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of this information having regard to your objectives, financial situation and needs and you may want to seek advice from a financial adviser before making a decision about an IOOF Pursuit Select Term Allocated Pension. Updated information Naturally, the information referred to in this PDS may change from time to time. We will inform you of any significant changes that could affect you or other significant events that may affect the information in this PDS. Any updated information that is not materially adverse may be obtained by: checking our website ( ing us at clientservices@ioof.com.au calling us on A paper copy of the updated information will be provided free of charge on request.

3 IOOF Pursuit Select Term Allocated Pension What is inside? An introduction to IOOF Pursuit Select Term Allocated Pension Investing in an IOOF Pursuit Select Term Allocated Pension 2 Snapshot of IOOF Pursuit Select Term Allocated Pension 3 How does an IOOF Pursuit Select Term Allocated Pension work? Your initial rollover 5 Dependants paying benefits if you die 5 Making investment choices 6 Managing your pension account Using Portfolio Online 8 Your Investment Instructions 8 Types of Investment Instructions 8 Changing your investment options (switching) 10 Your Cash Account 10 Pension options explained Selecting your annual pension payments 12 Selecting your term 13 How is your annual pension calculated? 13 How are pension payments calculated for Reversionary Beneficiaries? 14 Minimum and maximum payment requirements 14 Frequency of pension payments 15 Receiving a pension on the death of a Member 15 Can a lump sum withdrawal be made? 15 What will this cost? Fees and other costs 16 Additional explanation of fees and costs 18 What are the risks? 21 Tax and social security information 21 General information Cooling-off period 23 Your instructions and communications 23 Keeping track of your investments 24 Electronic communications 25 Transferring assets into your Pursuit Select account 25 Transferring from another Pursuit or IOOF Portfolio Service term allocated pension 25 Financial Adviser Authority 26 What if you have a complaint? 26 Your privacy 27 Anti Money Laundering (AML) and Counter Terrorism Financing (CTF) legislation 27 How to apply Application procedure 28 How to find your way around this PDS This PDS is important because it will help you decide whether an IOOF Pursuit Select Term Allocated Pension will meet your needs. You can use it to compare the IOOF Pursuit Select Term Allocated Pension with any other pension product you may be considering. This PDS describes the key features, risks and purpose of the IOOF Pursuit Select Term Allocated Pension. It also contains some information we are required to include by law. You will see that the PDS refers to a number of guides these contain statements and information that we are required by law to disclose to you. The contents of the guides are classified by a unique identifier and a description of what is covered. You can then use this description to decide whether to read the information. By law the statements and information in these guides are taken to be included in the PDS. This PDS and the guides can be downloaded from our website ( or contact us and we will send you a paper copy at no charge. Key words There may be words in this PDS and the guides you may not be familiar with. To help you understand these terms, we have defined them in the Key words explained section in the IOOF Pursuit general reference guide (PFS.12). 1

4 An introduction to IOOF Pursuit Select Term Allocated Pension Arranging the investment of your super is important. If managed correctly, it could ensure financial security and peace of mind when it comes time for you to retire. Choosing a quality investment partner is a key step towards achieving your financial goals in retirement. An IOOF Pursuit Select (Pursuit Select) Term Allocated Pension can help you control and manage your super savings and aims to provide a tax-effective pension in retirement. In this introduction, you will find important information about Pursuit Select, including a snapshot of the key features and benefits available to help you meet your retirement needs. Investing in an IOOF Pursuit Select Term Allocated Pension You can select an investment strategy using one convenient administration facility. This product provides access to: a well-researched range of Australian and international fund managers the majority of listed investments in the S&P/ASX 300 Index plus other listed investments approved by the Trustee from time to time flexible Investment Instruction options secure online access to your account a straight-forward cost structure consolidated reporting. This makes it very simple for you to manage your retirement goals. About IOOF Pursuit Select Term Allocated Pension The Pursuit Select Term Allocated Pension is only open to rollovers from other complying income streams such as a previous term allocated pension. Pension payments will cease when your pension account balance is exhausted, so this pension may not provide you with an income for the rest of your life. Your account balance depends on withdrawals (where permitted) and the amount of pension payments, as well as investment earnings which may rise or fall. If you are aged 60 or more, your pension payments will be tax-free. If you are below age 60, your pension payments will be taxed (until you reach age 60), but you will be eligible to receive a 15 per cent tax offset on the taxable component and no tax is payable on any tax-free component. Who is the IOOF group? The IOOF group has demonstrated expertise in the administration and management of investments, superannuation savings and retirement income solutions. The IOOF group has more than 160 years experience in financial services. It is important to know that one of the biggest investments in your life, your retirement income, is being managed by a trusted Australian company. The value of the investment options you select forms part of your pension account. You do not directly invest into (or hold an interest in) any investment option. This means investing in Pursuit Select is not the same as personally investing in term deposits, managed investments or listed investments. 2

5 IOOF Pursuit Select Term Allocated Pension Snapshot of IOOF Pursuit Select Term Allocated Pension The following table provides a snapshot of the key features and benefits.. Investing Investment options Cash Account Flexible income distribution options Options Estate planning options Social security treatment Managing your pension Pension payment options Portfolio Online Fee Aggregation Easy Choice offers a range of IOOF multi-manager trusts. Premier Investor Choice complements our existing Easy Choice investment selection by providing a suite of screened managers who offer high-conviction, quality investments with significantly lower management fees. Investor Choice offers a large range of sector or asset class specific managed investments and term deposits. Direct Share Choice offers access to the majority of listed investments in the S&P/ASX 300 Index plus other listed investments approved by the Trustee from time to time. The Cash Account records all transactions and aims to generate a competitive investment return on that part of your pension account that is required to be held in cash. Options for income distributions from your investment option(s) are: re-invest the distribution back into the same investment option nominate specific investment option(s) for all distributions retain distributions in your Cash Account. Choose from the following estate planning options: Reversionary Beneficiary Binding Death Benefit Nomination Non-Binding Death Benefit Nomination. Only 50% of your account balance is counted as an assessable asset under the Centrelink assets test if you are commencing this term allocated pension either: from the full commutation and rollover of another term allocated pension that commenced before 20 September 2007; or as the Reversionary Beneficiary of an existing Pursuit Select Term Allocated Pension member. The annual pension payment less the exempt amount is counted as income under the Centrelink income test. The exempt amount is calculated as the purchase price divided by the term of the pension. You can choose to receive your pension payments: twice-monthly monthly quarterly half-yearly annually. We withhold any PAYG tax liability on gross pension payments, as required by law. View your account details online, normally 24 hours a day, seven days a week with secure access to your account over the internet. You can link multiple Pursuit Select accounts (conditions apply), including those of family members, which may reduce the Administration Fee payable. Page

6 Minimum amounts Page Initial rollover $20,000 per pension account. 5 Investment options and switching instruction 1 Managed investments $200 per managed investment. Term deposits $5,000 per term deposit. Direct Share Choice a minimum parcel of $2,000 is required per listed investment trade. 10 Cash Account Your initial rollover requires a minimum allocation to the Cash Account of 3%. 11 Pension payments Annual pension payments are fixed. You can however select an annual pension of between 90% 2 and 110% of the fixed amount. 12 Lump sum withdrawals 3 (one-off) The lesser of $2,000 or your pension account balance. 15 Fees Entry or exit fees Nil Administration Fee Account balance Administration Fee 17 $0 - $100, % pa Next $400,000 Above $500,000 Minimum Administration Fee is $30 per month ($360 pa). Maximum Administration Fee is $3,150 pa. 0.55% pa Nil Listed Security Administration Fee $5 per month. This fee only applies if you choose to invest in the Direct Share Choice. 17 Investment management cost Charged separately by the fund manager of each managed investment. 17 Switching fees 4 Performance-based fees Member advice fees Managed investments and term deposits nil. Listed investments brokerage charges apply. We do not charge any performance-based fees for Pursuit Select. A fund manager may charge a performance-based fee for a particular managed investment. You and a financial adviser selected by you have the flexibility to nominate an amount (if any), within limits that are set by us. If you do not have a financial adviser, these fees are not charged Investment limits apply to the proportion of your portfolio which can be held in restricted investments, annuity funds, term deposits and listed investments. For further information regarding these limits, see the Investment limits section in the IOOF Pursuit Select investment guide (PSE.11). 2 The Commonwealth Government has reduced the minimum pension drawdown requirement to 67.5 per cent for the 2012/13 financial year. 3 Commonwealth Government regulations impose restrictions on when you can make lump sum (cash) withdrawals from a term allocated pension. 4 When you move money in or out of Pursuit Select or when you switch between managed investments, you may incur a buy/sell spread which is included in the unit price of the managed investment you choose. Refer to Transaction costs - managed investments on page 19 and the product disclosure statement for the particular managed investment for details.

7 IOOF Pursuit Select Term Allocated Pension How does an IOOF Pursuit Select Term Allocated Pension work? Commencing a Pursuit Select Term Allocated Pension is easy. You can start your pension as long as you are rolling over your benefits from: another term allocated pension another type of complying income stream such as a guaranteed lifetime or term annuity. A Reversionary Beneficiary of a Pursuit Select Term Allocated Pension member can also continue the pension on the death of that member. Your initial rollover The minimum initial rollover amount required to establish a Pursuit Select Term Allocated Pension is $20,000 per pension account. We can facilitate the rollover on your behalf, if you complete the Request to transfer a superannuation benefit - Form C (Transfer form) located in the IOOF Pursuit Select Term Allocated Pension Forms Booklet (Forms booklet). If you are transferring your benefit from another Pursuit or IOOF Portfolio Service term allocated pension account, please complete the Application for Term Allocated Pension - Form A (Application form) and a new Investment Instructions - Form B (Investment Instructions form). You can transfer your current investment options directly into your new pension account if those options are available in Pursuit Select. You may also request that your existing investment options be aligned (or re-weighted) to your new Investment Instructions by requesting this on your Investment Instructions form. How can an initial rollover be made into the pension account? For new members, your initial rollover is credited first to your Cash Account. This rollover (less any nominated Member Advice Fee Upfront 5 ) will be invested in accordance with your Investment Instructions. Information on how your Cash Account balance is invested is contained on page 10. Dependants paying benefits if you die If you die while you are a Pursuit Select Term Allocated Pension account holder, super law requires us to pay your Death Benefit (the remaining balance of your pension account) to one or more of your dependants and/or your estate. To provide greater certainty as to who will receive your benefit in the event of your death, there are three estate planning options (only one option can be selected): Reversionary Beneficiary Binding Death Benefit Nomination (Binding Nomination) Non-Binding Death Benefit Nomination (Non-Binding Nomination). 5 For more information regarding the member advice fees available, refer to page 19 of this PDS. 6 This option is not available to you if you have received the pension as a Reversionary Beneficiary. You can, however, make a Binding Nomination or Non-Binding Nomination. The most appropriate nomination will depend on your personal circumstances. Any person you nominate must be a dependant as defined by super law. Dependants include your spouse, de facto spouse, same-sex partner and children. If you choose to make a Binding Nomination or Non-Binding Nomination, you can nominate one or more people and allocate your benefit between them in any proportion. A short description of how each form of nomination works follows: Reversionary Beneficiary 6 If you nominate a Reversionary Beneficiary, in the event of your death, we must continue to pay the remaining balance of your pension account (if any) to your nominated Reversionary Beneficiary. The pension will automatically continue to be paid until the account balance is exhausted or for the remaining term, whichever occurs first. If the term of your pension is based on your spouse s age, the pension must revert to your spouse on death and cannot be commuted until after the death of your spouse. On the other hand, if the term of your pension is based on your age, your Reversionary Beneficiary may choose to take a lump sum rather than continue to receive the pension payments upon your death. The nomination of a Reversionary Beneficiary must be made before your pension commences and the nomination cannot be changed once your pension has commenced. If the nominated Reversionary Beneficiary can no longer receive a Death Benefit (for example if your nominee dies before you), you cannot nominate a new Reversionary Beneficiary. However, you can make a Binding Nomination or Non-Binding Nomination in favour of another dependant(s). Not all dependants can be nominated as a Reversionary Beneficiary. See the Death benefit nominations section in the IOOF Pursuit general reference guide (PFS.12) for further details. Binding Nominations If you have a valid Binding Nomination in effect at the date of your death, we must pay your benefit to the dependant(s) and/ or Legal Personal Representative that you have nominated in the proportions that you have set out in your nomination. A valid Binding Nomination remains in effect for three years from the date it was first signed, last amended or confirmed. 5

8 Non-Binding Nominations Your nomination is not binding on us but rest assured we will take it into account when we determine to whom to pay your benefit. You can amend your Non-Binding Nomination at any time by sending us a new Non-Binding Nomination. No nomination If you do not nominate a Reversionary Beneficiary or make a Binding Nomination or Non-Binding Nomination, we must pay your Death Benefit to your Legal Personal Representative, unless your estate is insolvent. As there may be taxation and other implications to consider, we recommend that you seek professional advice before making your nomination. Important note When we receive evidence of your death, we have discretion to sell your managed investments and put your money into your Cash Account until the Death Benefit is paid. We would normally exercise this discretion unless advised otherwise. See the Death benefit nominations section in PFS.12 for further information about dependant nominations and the available payment options. Making investment choices Your investment strategy Pursuit Select provides access to over 200 managed investments, term deposits, the majority of listed investments in the S&P/ASX 300 Index plus other listed investments approved by the Trustee from time to time. With so many investment options you can construct a portfolio to help achieve your retirement goals. Your investment strategy should be a reflection of your attitude to investing, the level of risk you are comfortable accepting and your investment timeframe. What investment options can you choose? You may choose from a range of investment options within the following sections: Section Easy Choice Premier Investor Choice Overview of objectives Offers you access to a spread of different asset classes designed to meet particular investment objectives. IOOF s range of diversified and single-sector multi-manager trusts simplify the investment selection process by blending some of the best available managers to suit your investment objectives. Premier Investor Choice complements our existing Easy Choice investment selection by providing a suite of screened managers who offer high-conviction, quality investments with significantly lower management fees. Investor Choice Direct Share Choice This is where you and your financial adviser can tailor the investments to suit your investment strategy. Investor Choice allows you to select from a wide range of managed investments and term deposits. Direct Share Choice provides you with access to the majority of listed investments in the S&P/ASX 300 Index plus other listed investments approved by the Trustee from time to time. The IOOF Pursuit Select investment guide (PSE.11) provides more information about the range of investment strategies and options. 6

9 IOOF Pursuit Select Term Allocated Pension Choose what is right for you The investment options available vary in: level of risk investment objectives (goals) strategies (ways of achieving those goals) types of assets in which investments are made. This allows you to invest in a range of investment options which may be diversified across different asset classes, fund managers and investment styles. You can normally switch between different managed investments at any time and you can also select diversified managed investments managed by a range of leading Australian and international fund managers. We carefully research leading Australian and international fund managers before selecting managed investments to be part of the investment menu. We also monitor and review the fund managers and managed investments on an ongoing basis and may add or remove managed investments from time to time. The list of Easy Choice, Premier Investor Choice and Investor Choice investment options is set out in PSE.11. The list may change from time to time. You can obtain the most current list of investment options from our website ( or request a copy free of charge by calling our client services team on Direct Share Choice You have the option to invest in various listed investments through your Pursuit Select Term Allocated Pension account. Direct Share Choice provides you with access to the majority of listed investments in the S&P/ASX 300 Index plus other listed investments approved by the Trustee from time to time. The current list of Direct Share Choice investment options is available on our website ( This list may change from time to time. See the Investing in listed investments available in Direct Share Choice section in PSE.11 for more information on how you can invest in listed investments through a Pursuit Select Term Allocated Pension. Term deposits Terms and conditions relating to investing in a term deposit is detailed in the Investing in a term deposit section in PSE.11. Important note The maximum percentages which can be allocated to each of the restricted investments, annuity funds, term deposits and listed investments are detailed in the Investment limits section in PSE.11. Important note More information about each of the available managed investments is detailed in the product disclosure statement issued by the fund manager for the particular managed investment and the product guide for the particular term deposit. Product disclosure statements include information about performance, asset allocation, costs and the risks associated with investing in a particular managed investment and must be read and considered before selecting a managed investment. Before investing, your financial adviser should provide you with a copy of the product disclosure statement for the managed investment(s) and the product guide for any term deposit(s) you have selected. Alternatively, you can obtain a copy free of charge by downloading it directly from our website ( or requesting it from our client services team on It is recommended that you consult a financial adviser prior to selecting the investment options that you would like to invest in. Please note that listed investments do not have product disclosure statements. 7

10 Managing your pension account This section provides you with instructions about how to select and maintain your Investment Instructions and manage the operation of your Cash Account. Using Portfolio Online Portfolio Online is a valuable tool to help manage your investment. This user friendly website gives you access to a range of current and historical transaction and performance details about your pension account, including the following. Portfolio summary view the total value of your account. Account transactions view all your transactions including your initial rollover amount, pension payments, withdrawals and income distributions. Account information view information about your Investment Instructions and other account features. Statements view current and historical Annual Statements online. Reports view your portfolio history, Cash Account statement, asset allocation and performance reports. Electronic communications view the Trustee s communications to members which you elect to receive electronically. Listed investments if you have chosen to invest in various listed investments available under Direct Share Choice, you, or your financial adviser if you have one, must submit orders to buy or sell listed investments and other instructions using Portfolio Online. You must maintain your Portfolio Online registration for so long as you hold any listed investments under the Direct Share Choice. How to register for Portfolio Online You can register for Portfolio Online once you have received your client number. Simply apply online at and we will send you an allowing you to create your own password. Your Investment Instructions Your Investment Instructions outline how you would like your initial rollover (less any Member Advice Fee Upfront 7 ) to be invested. You can instruct us to invest your initial rollover in two different ways: Primary Instruction Specific Instruction. You provide your Investment Instructions in the Investment Instructions form contained in the Forms booklet. Types of Investment Instructions 1. Primary Instruction This is your main Investment Instruction and is used for your initial rollover unless alternative instructions are provided to us. A Primary Instruction will include the following information: the managed investment(s) you wish to invest in the percentage of your initial rollover you want to invest in each managed investment the required allocation to your Cash Account (which must be at least three per cent). Term deposits and Direct Share Choice investment options cannot form part of your Primary Instruction. To confirm your allocation to each managed investment you can view your current Primary Instruction via Portfolio Online or you can call our client services team on Specific Instruction This is a one-off instruction for an initial rollover made by cheque only. When provided, this one-off Specific Instruction will override the use of the Primary Instruction for the rollover. Please note that the total percentage allocated to each managed investment and/or term deposit and your allocation to the Cash Account (of at least three per cent), must add up to 100 per cent for the two types of Investment Instructions. Investment Instructions are not used to invest in listed investments, except to the extent that you must use one or more of these instructions or switch funds from other investment options to increase the available funds in your Cash Account balance above the Minimum Cash account requirement (detailed under Your Cash Account on page 10) to make funds available for this purpose. 8 7 For more information regarding the member advice fees available, refer to page 19 of this PDS.

11 IOOF Pursuit Select Term Allocated Pension Distribution Instruction This instruction may be used to re-invest your income distributions paid from your investment options. This instruction will only be used when you nominate Distribution Instruction for your reinvestment method on the Investment Instructions form. Re-investing income distributions Income distributions may be paid from your investment option(s). You determine how this income is to be re-invested. Any income distributions that you receive from your investment option(s) are automatically credited to your Cash Account. This income can then be re-invested using one of the following three methods (only one method can be selected). 1. Re-invest (default option) 8 This method allows you to automatically re-invest 100 per cent of the income distribution back into the same managed investment that made the income distribution. The re-investment will normally be completed within five business days following receipt of your income distribution into your Cash Account. Where we have suspended or stopped investments in a managed investment or where a managed investment is redeemed in full (except where a managed investment is no longer held due to the requirement to top up your Cash Account) income distributions received from that managed investment will be retained in the Cash Account. Re-investment of income distributions will involve the purchase of new units in one or more managed investments. Please note that you may not have the most recent product disclosure statement for the managed investment at the time these re-investments are made. 2. Distribution Instruction 8 This method allows you to invest your income distributions and interest generated by your Cash Account in accordance with your Distribution Instruction. This means income distributions can be re-invested in one or more managed investment(s). 3. Retain in your Cash Account This method allows you to leave all income distributions in your Cash Account 9 to accumulate. Income distributions will remain in your Cash Account until we receive an Investment Instruction from you. Changing your Investment Instructions To update your Primary Instruction and/or Distribution Instruction, please complete the Investment Instructions form which is available from our website ( and send it to us. Where we have suspended or stopped investments in a managed investment or where a managed investment is redeemed in full (except where a managed investment is no longer held due to the requirement to top up your Cash Account), that managed investment will be removed from any Investment Instruction and Distribution Instruction and the instructions will be re-weighted. We will do this automatically and you will not be advised of the change. For example Meilin submits a request to fully redeem her holding in Investment C. As a result, Meilin s Primary Instruction is automatically updated to remove Investment C and to re-weight the remaining investments. Managed investment Existing holding Withdrawal request Primary Instruction before Primary Instruction after Cash Account 3% 3% 3% Investment A 17% 17% 22% Investment B 60% 60% 75% Investment C 20% 100% 20% Where the suspension or stopping of investments in a managed investment results in all managed investments being removed from your Distribution Instruction, your re-investment method will revert to the default option of Re-invest as detailed above. You can provide your Distribution Instruction by completing the Investment Instructions form located in the Forms booklet. Distribution income will remain in the Cash Account until the 20th day of the relevant month (or nearest business day). This reinvestment will normally be completed within five business days after this date. Important note When you select Distribution Instruction as the reinvestment method but you do not provide a Distribution Instruction, income distributions will be invested in accordance with your Primary Instruction. 8 Any re-investment of income distributions will involve the purchase of new units in one or more managed investments. Please note that you may not have the most recent product disclosure statement for the managed investment at the time these re-investments are made. 9 This may not reflect your retirement savings goals. 9

12 Changing your investment options (switching) Pursuit Select gives you the ability to change your selected investment options. The decision is yours. Easy Choice, Premier Investor Choice and Investor Choice Changing your managed investment selection generally requires you to redeem units from one or more of your existing managed investments and purchase units in one or more managed investments selected by you. This process is often referred to as a switching instruction. We currently do not charge a separate fee for switching between managed investments in your account. A switching instruction can be made by completing the Investment Instructions form which is available from our website ( Unless you are redeeming the full balance held in a managed investment: the minimum amount that must be redeemed from a managed investment is $200 the minimum amount that must be retained in a managed investment is $200. If you select a new managed investment you must invest a minimum of $200. Switching between managed investments generally involves redeeming units in one or more of your managed investments. This means you must complete a redemption transaction before you can purchase units in a new managed investment. The proceeds of any redemption transaction are first deposited into your Cash Account before units are purchased in the new investment option(s). Direct Share Choice An order to buy or sell a listed investment involves an online switch from or to your Cash Account to or from the listed investment involved. For further details please see the Investing in listed investments available in Direct Share Choice section in the IOOF Pursuit investment guide (PSE.11). Brokerage applies to any listed investment trades (buy or sell). See Transaction costs listed investments on page 19 for more information. Your Cash Account Why do you have a Cash Account? Your Cash Account is used to process all cash transactions that occur within your pension account. For example, all money paid into your account and any earnings from your investment options go through your Cash Account and all fees, pension payments and taxes are paid out of this account. Competitive investment returns from your Cash Account The Cash Account provides you with exposure to a mix of Australian short-term money market securities and cash. Interest generated by these investments (less bank fees and charges) is calculated daily and credited monthly to your Cash Account. The Cash Account provides competitive returns when compared to cash funds. Any income distributed by your chosen investment options is deposited into your Cash Account. From there it can then be re-invested using one of the three methods available. See Re-investing income distributions on page 9. The product disclosure statement for a managed investment may be updated or replaced by the fund manager from time to time. This means that you may not always have the most recent copy of the applicable product disclosure statement for a new managed investment before making your switch request. We provide electronic versions of product disclosure statements for the available managed investments via Portfolio Online. You can also obtain a copy free of charge by contacting a financial adviser or by calling our client services team on Important note A buy/sell spread may be incurred when switching between managed investments. See Transaction costs managed investments on page 19 and the product disclosure statement for the particular managed investment for details. 10

13 IOOF Pursuit Select Term Allocated Pension Minimum allocation to your Cash Account You are required to maintain a minimum of three per cent of your pension account balance in your Cash Account. This amount is used for funding fees and expenses, pension payments and taxes (where applicable). You can nominate a higher percentage as your minimum Cash Account balance if you wish to fund these expenses as they fall due. If we determine that the balance in your Cash Account is likely to fall below zero within the next seven days, we will top up your Cash Account to three per cent of your account balance (or any higher percentage you have nominated) by redeeming the necessary amount from your investment options. In making our determination we will take into consideration any fees, pension payments and taxes expected to be deducted from your Cash Account during this period. We recommend that you talk to a financial adviser about the minimum Cash Account requirement. Top up your Cash Account If we are required to top up your Cash Account, the amount required to top up your Cash Account will be funded using one of the following three options. You can select the option that is right for you. 1. Investment option with the highest balance (default option) Redeems funds from the managed investment with the highest balance. This is the default option which applies if you do not nominate a top up cash option on the Investment Instructions form or where all the managed investment(s) provided under your pecking order have been redeemed in full. 2. Pecking order option Redeems funds from your managed investments according to a prioritised list. You choose which managed investments are to be used and the (pecking) order in which the funds are to be redeemed, one at a time. 3. Pro-rata option Redeems funds across all managed investments according to the proportion invested in each managed investment. The top up cash options give you the control and flexibility to determine the most appropriate way for you to manage your Cash Account. Annuity funds, term deposits, listed investments and restricted investments are excluded from the top up process. 11

14 Pension options explained A Pursuit Select Term Allocated Pension is designed to provide you with pension payments each year for a fixed term. If you are rolling over into the Pursuit Select Term Allocated Pension, you must determine the number of years over which you would like your term allocated pension to be paid. How to select the term of your pension is explained below. If you have received this Pursuit Select Term Allocated Pension as the Reversionary Beneficiary of a deceased member, the pension will continue for the remainder of the term of the original pension. Selecting your annual pension payments The term selected must be within certain ranges set by the Commonwealth Government. These ranges are based on: your life expectancy your spouse s life expectancy. Important note You can only use your spouse s life expectancy if you nominate your spouse (legal or de facto) as your Reversionary Beneficiary and he/she has a longer life expectancy than yourself. You can choose the term between: your life expectancy on the commencement of your pension (rounded to the nearest whole number 10 ) the number of years from your last birthday until you reach age 100. If you nominate your spouse (legal or de facto) as your Reversionary Beneficiary and he/she has a longer life expectancy than yourself, you can alternatively choose a term between: your spouse s life expectancy on the commencement of your pension (rounded up to the nearest whole year 10 ) the number of years from your spouse s last birthday until he/ she reaches age 100. To nominate your spouse as a Reversionary Beneficiary, you must indicate this on the Application form before your pension commences. Once you have nominated a Reversionary Beneficiary, the nomination cannot be changed. Helpful hint A Pursuit Select Term Allocated Pension has restrictions affecting your ability to change your mind or commute your pension and withdraw it as a lump sum. Please consult a financial adviser about the terms and specific product options available before investing in a Pursuit Select Term Allocated Pension or contact our client services team on The available terms for a term allocated pension (based on your age and gender at the commencement of the term allocated pension) are set out in the following table: Age Range of available pension terms (in years) Male Female Using life expectancy factors from the Australian Life Tables.

15 IOOF Pursuit Select Term Allocated Pension Selecting your term Example As at 1 July 2012, Darren is aged 65 and his wife Elisha is aged 60. Darren has an existing term allocated pension with XYZ Superannuation Fund. However, he is unhappy with his current pension and decides to rollover to a new Pursuit Select Service Term Allocated Pension. Darren can select one of the following terms for his Pursuit Select Term Allocated Pension: If Darren wants to acquire a term allocated pension that becomes payable to Elisha on his death (so that Elisha becomes his Reversionary Beneficiary), he can select a term for his pension between: 19 and 35 years (based on the term for a 65 year old male, see previous table) 26 and 40 years (based on the longest term for a 60 year old female, see previous table). If Darren does not want to nominate Elisha as his Reversionary Beneficiary or would like the pension to become payable to a dependant other than Elisha, he can only choose a term based on his life expectancy (between 19 and 35 years). Important note If you have selected a Reversionary Beneficiary option and a term based on your spouse s life expectancy, in the event of your death, the pension must be paid to your spouse for the remaining term of the pension. Your spouse cannot convert the pension to a lump sum after your death. How is your annual pension calculated? Super law specifies the rules for calculating your annual pension payment. The annual pension payments for the first year are calculated by dividing your account balance on commencement of the pension by the Pension Payment Factor (PPF) that relates to the term you have selected. For pensions commencing after 1 July in a financial year, pension payments for the first year will be reduced in proportion to the number of days between the date your pension account was established and the following 1 July. The annual pension payments for subsequent years are calculated by dividing your account balance on 1 July each year by the PPF that relates to the remaining term of your pension. The remaining term must be a whole number and must be rounded: down if your pension commenced in the first half of a financial year (between 1 July and 31 December) up if it commenced in the second half of the financial year (between 1 January and 30 June). Pension payment amounts will be rounded to the nearest $10. When you apply for your Pursuit Select Term Allocated Pension, we will verify the actual term you select to ensure that it is available to you. The actual term you select will impact on the amount of pension you receive each year, the income tax treatment of your annual pension and the calculation of your Centrelink/Department of Veterans Affairs entitlements (if applicable). 13

16 The following table shows the payment factors for members according to the product s remaining term at purchase, or on 1 July each year. Terms (years) Payment factor Terms (years) Payment factor 70 or more or less 1.00 Example Monique is age 66 and invests $200,000 in a Pursuit Select Term Allocated Pension to commence on 1 September She selects a term of 23 years. The annual pension in year one is calculated by dividing the purchase price by the PPF. The PPF applicable for a term of 23 years is Therefore her annual fixed pension payment in year one is $200,000/15.62 = $12,800 (rounded to the nearest $10). As she is commencing her pension part way through the financial year, the first year s pension is pro-rated. Her pension payment for 2012/13 is therefore $12,800 x 0.83 = $10,624. On 1 July 2013, Monique s account balance was $197,000, after allowing for her pension payments, account fees and growth in the value of her investments 11. The remaining term is years. However, this is rounded down to 22 years so that the 2013/14 pension payment is determined by dividing the account balance on 1 July 2013 by the PPF applicable to a term of 22 years (15.17). Therefore her new fixed pension payment for 2013/14 is $197,000/15.17 = $12,990 (rounded to the nearest $10). How are pension payments calculated for Reversionary Beneficiaries? On transfer of the pension to a Reversionary Beneficiary, the deceased member s pension payments continue for the remainder of the financial year. On 1 July the pension payments will be recalculated as described previously in the How is your annual pension calculated? section above. Minimum and maximum payment requirements The payment options available include: 90 per cent of the fixed pension payment (the minimum pension) 12 the fixed pension payment 110 per cent of the fixed pension payment (the maximum pension). The Commonwealth Government has reduced the minimum pension by 25 per cent for the 2012/13 financial years. That means a reduced minimum of 67.5 per cent applies for 2012/13. No reduction will apply for 2013/14. If you have nominated the fixed pension payment option, you can also choose to index your fixed pension by CPI or a fixed percentage (up to a maximum of five per cent per annum). Indexation is subject to the minimum and maximum limits above. If the annual pension payment is outside these ranges, the pension payment will default to the closest limit. If you do not nominate a payment option on your Application form, you will receive the fixed pension payment. You can vary your pension payments on an annual basis based on the limits above. Source: Superannuation Industry (Supervision) Regulations Depending on your investment selection, nominated level of pension payments and the amount of any lump sum withdrawals, your pension account balance may rise or fall. This example is for illustrative purposes only and does not in any way indicate an expected level of performance. 12 If you select the minimum pension for the 2012/13 financial year, you will receive the reduced minimum pension rate for the remainder of the financial year.