Insurance details update 1 July 2016

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1 18 July 2016 Dear Member Insurance details update 1 July 2016 Following the issuing of your More comprehensive insurance cover notice dated 6 May 2016, there were some minor changes to some terms and conditions applicable to our insurance arrangements, effective 1 July This includes conditions relating to residing overseas for longer than five years and travelling in a country subject to a do not travel warning listed on the Department of Foreign Affairs & Trade website. For a summary of the final terms and conditions, read the Insurance in your super booklet available at mercysuper.com.au or by contacting us. Yours sincerely, Mercy Super

2 6 May 2016! Member notice dated 6 May 2016 At Mercy Super, we believe we have a responsibility to not only help you prepare financially for retirement, but also to help support you and your family financially in the event you can no longer work, whether due to disability or death. That s why we recently reviewed our insurance arrangements to ensure we continue to provide comprehensive, flexible insurance cover for our members. As a result of this review, from 1 July 2016 we are implementing new comprehensive standard insurance cover arrangements that will offer members better financial protection when they need it most. This notice provides you with an overview of these changes and should be read in conjunction with the following More comprehensive insurance cover documents: Booklet 2 Additional information Booklet 3 Insurance cover premium rates 1 July 2016 Important note We wish to take this opportunity to also advise you of a change to the threshold amount for reporting lost member and inactive accounts to the Australian Taxation Office. From 31 December 2015, the threshold at which lost and inactive accounts are required to be transferred to the ATO as unclaimed super money increased from $2,000 to $4,000. From 31 December 2016, the threshold will further increase to $6,000. New standard cover package From 1 July 2016 most of our members who currently have insurance cover will be provided with a new comprehensive standard cover package which is summarised in the table below. This cover is designed to protect members should they die (Death cover) or become disabled and can t work. Disability benefits include a monthly Protection benefit and a lump sum Total & Permanent Disablement (TPD) benefit as shown below. The new standard cover package will provide members with either salary-based or unit-based cover. Salary-based cover depends on whether salary details for full-time and part-time employees are provided to Mercy Super by your employer. Death cover* Disability cover Protection Total & Permanent Disablement Provides a lump sum benefit to your beneficiaries should you die before age 65 Provides a monthly benefit for a period of time should you be unable to work due to sickness or injury before age 65 with a benefit period of up to 5 years and a waiting period of 60 days Provides a lump sum benefit to you should you become permanently disabled before age 65, either due to injury or illness Salary-based Up to 11 times your salary** (depending on your age) 95% of your pre-disability salary made up of an income replacement benefit of 85% of salary plus a super contribution of 10% of salary Up to 7 times your salary plus plus up to $60,000 (depending on your age) Unit-based Set benefit amount ranging from $50,000 to $475,000 (depending on your age) Set benefit amount of up to $3,750 per month (made up of a $3,355 per month income replacement benefit and a $395 per month super contribution) depending on your age Set benefit amount ranging from $20,000 to $300,000 (depending on your age) *Terminal Illness cover is also provided as part of the cover arrangements. The Terminal Illness cover amount is equal to the lesser of your Death and TPD cover amount. **Members aged between 15 and 24 are provided with a fixed Death cover benefit of $50,000. If you have cover, detailed information about what the changes mean for you, including a personalised insurance statement, will be provided to you in the coming weeks. This document is issued by Mercy Super Pty Ltd (ABN , AFSL ), Trustee of Mercy Super (ABN ) MySuper Unique Iden fier: SPIN: MES0002AU USI:

3 Key features of the new standard cover package Cover provided to support members with an integrated package of Death and Disability benefits A higher level of Death cover for most members Disability benefits include integrated TPD and Protection benefits: Significant improvement to standard Protection cover with a 5 year benefit period and 60 day waiting period. Cover provides up to 95% of pre-disability salary made up of an income replacement benefit of 85% of salary plus a super contribution of 10% of salary paid to your Mercy Super account. Currently, standard Protection cover has a 2 year benefit period and 30 day waiting period and is capped at 85% of pre-disability salary Supporting TPD lump sum benefit which, for most members, is a multiple of salary with a top-up amount of up to $60,000 to assist with making changes to your lifestyle Protection cover provided automatically to many members who do not currently have this cover (subject to eligibility) Insurance cover provided to age 65 (currently to age 70). Members provided with the new standard cover package from 1 July 2016 will have the option to elect to retain their current insurance cover. Members with certain insurance arrangements will retain their current cover, but most will have the option of moving to the new standard cover package. Other important changes The changes to our insurance arrangements also mean that from 1 July 2016: Our insurer will be changing. Our new arrangements will be provided through insurance policies issued by Hannover Life Re Australasia Ltd (ABN ) which has been appointed as Mercy Super s insurer, replacing the current insurer MLC Ltd (ABN ) Insurance premiums will change, partly due to the uplift in insurance benefits for most members, but also due to increasing insurance claims pressure in the market Some new insurance terms and conditions. Insurance cover from 1 July 2016 From 1 July 2016, the new insurance benefits provided to you will depend on the insurance cover arrangements you have in place immediately before the change. You will either be provided with: 1. New comprehensive standard cover package (most members) Generally applies to members whose current cover is close to the current standard and/or provides benefits that are lower than the new standard cover package Provides Protection cover for many members for the first time You will have the option to switch back to your existing (pre-1 July 2016) cover arrangements. OR 2. Continuation of existing cover arrangements (retained cover) Generally applies to members whose current cover has been tailored and/or have specific insurance arrangements that are not provided under the new standard cover package Most members retaining their existing cover arrangements will have the option to switch to the new comprehensive standard cover package. Members who don t have insurance cover are not affected by this change. 2

4 More comprehensive insurance cover Salary-based standard cover package If you receive the salary-based standard cover package from 1 July 2016, the amount of Death and Disability cover you ll receive is summarised below. Death cover Standard Death cover 15 to 24 $50, to x salary 29 to x salary 36 to x salary 43 to 45 9 x salary 46 to 48 8 x salary 49 to 50 7 x salary 51 to 53 6 x salary 54 5 x salary 55 to 56 4 x salary 57 3 x salary 58 to 59 2 x salary 60 to 64 1 x salary Disability Protection cover Protection cover is a monthly benefit of up to 95% of salary which is made up of an income replacement benefit of 85% of salary, plus a super contribution of 10% of salary paid to your Mercy Super account. For standard Protection cover, the benefit period is five years with a waiting period of 60 days. Disability Total & Permanent Disablement (TPD) cover Example Salary-based standard cover from 1 July 2016 Sarah is aged 34 and her annual salary is $80,000 p.a. Sarah has salary-based standard cover (which will change with her age and any changes to her annual salary advised by her employer) under the new arrangements to apply from 1 July 2016: Cover type Death Protec on Amount of cover $880,000 (11 x salary) $6,333 per month made up of: replacement benefit of $5,666 (85% of salary), and Super contribution of $667 (10% of salary) TPD $300,000 (3 x salary + $60,000) What salary is used to calculate the salary-based cover? Salary is your annual base salary as advised to Mercy Super by your employer, and is the amount from which your insurance premiums are calculated and paid. If your total employment income is higher than the salary provided by your employer, you can apply to have an additional fixed salary amount added to your employeradvised salary to make up your total salary for insurance benefit and premium calculation purposes. Any increase in cover from any update to the fixed salary details provided by you will be subject to assessment and acceptance by Mercy Super s insurer. Standard TPD cover 15 to 25 7 x salary plus $60, x salary plus $60, x salary plus $60, to 29 4 x salary plus $60, to 35 3 x salary plus $60, to 47 2 x salary plus $60, to 54 1 x salary plus $60, to 59 1 x salary plus $40, to 64 $20,000 3

5 Unit-based standard cover package If you receive the unit-based standard cover package from 1 July 2016, you will be provided with two units of Death, TPD and Protection cover. The amount of cover provided by these two units varies depending on your age and is summarised below. Death and Disability cover amounts Death Protection (p.a.) TPD 15 $50,000 $- $60, $50,000 $2,000 $72, $50,000 $11,000 $143, $50,000 $20,000 $207, $50,000 $28,000 $263, $50,000 $30,000 $277, $50,000 $31,000 $288, $50,000 $32,000 $297, $50,000 $33,000 $300, $50,000 $35,000 $300, $377,000 $36,000 $300, $388,000 $37,000 $283, $398,000 $38,000 $264, $408,000 $39,000 $245, $417,000 $40,000 $227, $426,000 $40,000 $222, $434,000 $41,000 $217, $441,000 $42,000 $212, $447,000 $42,000 $207, $453,000 $43,000 $202, $458,000 $44,000 $197, $463,000 $44,000 $192, $466,000 $44,000 $187, $470,000 $45,000 $182, $472,000 $45,000 $177,000 Death Protection (p.a.) TPD 40 $474,000 $45,000 $172, $475,000 $45,000 $167, $475,000 $45,000 $162, $428,000 $45,000 $157, $427,000 $45,000 $152, $425,000 $45,000 $147, $376,000 $45,000 $143, $374,000 $44,000 $138, $371,000 $44,000 $133, $322,000 $44,000 $128, $318,000 $43,000 $123, $269,000 $43,000 $118, $266,000 $42,000 $113, $261,000 $41,000 $108, $214,000 $41,000 $103, $168,000 $40,000 $70, $164,000 $39,000 $70, $120,000 $38,000 $70, $78,000 $37,000 $70, $76,000 $36,000 $70, $37,000 $35,000 $20, $36,000 $34,000 $20, $34,000 $33,000 $20, $33,000 $31,000 $20, $31,000 $30,000 $20,000 For standard unit-based Protection cover, the benefit period is five years with a waiting period of 60 days. Protection cover is a monthly benefit made up of an income replacement benefit (equal to 85%/95% x the total benefit amount) and a super contribution (equal to 10%/95% x the total benefit amount) that is paid to your Mercy Super account. The total amount of cover provided is subject to a maximum of 95% of your actual annual income at the time of disablement. Example Unit-based cover standard cover from 1 July 2016 David is aged 41 and has the unit-based standard cover option. David s cover (based on the default two units of cover which will change with his age) under the new arrangements to apply from 1 July 2016 is: Cover type Death $475,000 Protec on TPD $167,000 Amount of cover $3,750 per month made up of: replacement benefit of $3,355 (85%/95% x total cover amount), and Super contribution of $395 (10%/95% x total cover amount) 4

6 More comprehensive insurance cover Adjusting your standard cover package You can adjust the cover provided through your standard cover package to suit your needs, as follows: Standard Death and TPD cover If you have salary-based standard cover, you can elect to move to unit-based cover (this will also change your standard Protection cover to the unit-based cover amount). Any increase in cover as a result of this choice will be subject to assessment and approval by Mercy Super s insurer. If you have unit-based standard cover, you can reduce your Death and TPD cover from two units to one unit (this change will also apply to your Protection cover). You can cancel your standard Death and TPD cover. Standard Protection cover If you have salary-based standard cover, you can reduce your income replacement benefit amount from 85% to 50% of salary. If you do so, you will still be covered for the 10% super contribution to your Mercy Super account, providing a total cover amount of 60% of salary. If you have unit-based standard cover, you can reduce your cover level from two units to one unit (this change will also apply to your Death and TPD cover amounts). You can cancel your standard Protection cover. If you elect to reduce your cover, any future application to increase cover will be subject to assessment and approval by Mercy Super s insurer. Retaining existing cover arrangements (retained cover) Members provided with the new standard cover package from 1 July 2016 will have the option to retain their existing insurance arrangements. For example, if you don t want the new comprehensive standard cover package you can elect to retain your current unitised cover. Your level of Death and TPD cover will continue to be provided in units with each unit providing a specific amount of cover depending on your age based on the current arrangements as follows: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Note: Members may have mul ple units of cover. Current default cover provides 4 units of Death cover and 4 or 6 units of TPD cover. Some members with certain other insurance arrangements will also retain their existing cover. This includes: Members who currently have any fixed Death and TPD cover the fixed cover amount will be retained as additional Voluntary Death or Death and TPD cover but you will have the option of moving all cover to the new standard cover package Members who currently have higher levels of Disability cover (including Protection and TPD cover) Members who currently have cover arrangements that are no longer open after 1 July This includes members who have cover past age 64 and those with Protection cover with a benefit period up to age 70 Members who only have one type of cover Members who have conditions applying to their current cover. Information about any retained cover options that may be available to you will be provided in the personalised information to be sent to you in the coming weeks. Flexible cover options As well as the option to adjust your standard cover or any retained cover arrangements, Mercy Super gives you the flexibility to voluntarily vary your insurance cover to suit your needs, including options to: Apply to increase your Death or Death and TPD cover by adding fixed cover of any amount to standard cover (subject to a maximum of $3 million for TPD cover) additional Voluntary Death or Death and TPD cover Vary your Protection cover with the following Voluntary Protection cover options: choosing from a range of benefit periods including 2 year, 5 year (standard default) and to age 65 choosing from a range of waiting periods including 30 day, 60 day (standard default) and 90 day Cancel your cover. Certain occupations are excluded from Voluntary cover. Premiums are based on your age, gender and occupational category. Refer to Booklet 3 - Insurance cover premium rates 1 July 2016 for more details. 5

7 New premium rates from 1 July 2016 Insurance premiums will change as a result of the new insurance arrangements, effective 1 July For details of the new rates to apply to all Mercy Super s insurance cover arrangements from 1 July 2016, refer to Booklet 3 - Insurance cover premium rates effective 1 July 2016 which is available from mercysuper.com.au or by contacting us.! Preparing for change The best thing you can do to prepare for any changes to the insurance arrangements as they apply to you is to get an understanding of any insurance arrangements you currently have. We suggest you take the time to collect details on cover you may have outside your Mercy Super account, underlying cover within other super funds and any direct cover you may have. You will then be in a much better position to assess the impact of any changes to ensure your total cover arrangements suit your needs. Changes to terms and conditions There are a number of changes to the terms and conditions that will apply to Mercy Super s insurance arrangements from 1 July These include: If you have Death and TPD cover and you suffer an illness and two medical practitioners (at least one being a specialist in an area related to the illness) certify that this illness is highly likely to result in your death within a period of 24 months, you will be paid a terminal illness benefit equal to the lesser of your Death cover and TPD cover benefit. Currently, the period for likely death is 12 months and the terminal illness benefit is the lesser of your Death cover or $3 million. Changes to the definition of Total and Permanent Disablement as well as Total Disability for Protection benefit periods greater than two years. Refer to Booklet 2 - Additional information for more details. Changes to the criteria to transfer any Death or Death and TPD cover from another super fund. The option to increase your Death and TPD cover by up to two additional units on the occurrence of specific life events, without the need to provide medical evidence, will no longer be available as the new standard cover package is designed to reflect changing member needs. You will still be able to apply to increase your standard Death or Death and TPD cover at any time and your application will then be subject to specific assessment and approval by Mercy Super s insurer. Other changes to the terms and conditions of the insurance arrangements also apply. For information on insurance cover terms and conditions that apply from 1 July 2016, refer to Booklet 2 Additional information which is available from mercysuper.com.au or by contacting us. You should also check the terms and conditions of your cover when you receive your personalised information.? What do I need to do? The changes to Mercy Super s insurance arrangements will mean different things for different people. In the coming weeks, we ll provide you with personalised information about the changes to your insurance cover that will apply from 1 July 2016, including an insurance statement showing your current cover, new cover and your insurance premiums. When you receive your personalised information about the changes to your insurance cover, you should make sure it s the right cover for your needs. If it s not, Mercy Super offers a range of options you can use to adjust your cover. Before making any decisions about your insurance cover you should consider your financial situation carefully. For information about Mercy Super s new insurance benefits, read the following More comprehensive insurance cover documents: Booklet 2 Additional information Booklet 3 Insurance cover premium rates 1 July 2016 These documents are available at mercysuper.com.au or by contacting us. If you need help determining the right insurance cover for your needs, our in-house financial advisers can help answer any questions or help set up the right insurance strategy for you. Just give us a call. Contact us IN PERSON Kelly Building, Ground Floor, Mater Health Services, Raymond Terrace, South Brisbane QLD MAIL PO Box 8334, Woolloongabba QLD 4102 PHONE or FAX informa on@mercysuper.com.au WEB mercysuper.com.au Issued by Mercy Super Pty Ltd ABN AFSL Trustee of Mercy Super ABN The informa on provided is of a general nature only and does not take into account your individual financial situa on, objec ves or needs. Accordingly, before ac ng on the informa on, it is important that you consider the appropriate Product Disclosure Statement, available from mercysuper.com.au or by contac ng us, having regard to your own par cular situa on. 6 INSNTC0516