AUSfund Annual Report

Transcription

1 AUSfund Annual Report For the year ended 30 June 2017 Issued 31 October 2017

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3 Contents Consolidate your super 3 Your super account 4 AUSfund: Still the market leader for ERFs 5 Investment in AUSfund 6 Strategic Asset Allocation at 30 June AUSfund s past performance 7 AUSfund s investment managers 8 AUSfund s financials 9 Reserves 10 Major service providers 10 Let us know about your dependants 10 AUSfund s privacy policy 10 We take your feedback seriously 10 Issued by Industry Funds Investments Limited (IFI) - ABN AFSL as the Trustee of AUSfund, Australia s Unclaimed Super Fund (the Fund) - ABN IFI is a division of Industry Fund Services (IFS). IFS is a wholly owned subsidiary of Industry Super Holdings Pty Ltd - ABN , which in turn is owned by a number of major super funds, some of which use AUSfund as their Eligible Rollover Fund (ERF). IFI has provided all information it reasonably believes a product holder would need for the purpose of understanding the management, financial condition and the investment performance of the Fund. You should assess your own situation and/or obtain independent financial advice and obtain a copy of the latest Product Disclosure Statement (PDS) before making any investment decisions based on information provided in this report. Please visit our website ausfund.com.au or call us on for a free copy. 2

4 AUSfund Australia s Unclaimed Super Fund Consolidate your super AUSfund works hard to look after your unclaimed super. However, you could benefit if you rolled your AUSfund account into your active super account. Consolidating your super into one account can: reduce fees increase your retirement savings help you keep track of your super, and lessen your paperwork. Claiming your super is easy It s easy to roll over your AUSfund benefit to your active super account. You may even be eligible to claim it directly and have it paid to your Australian bank account. The forms you need and instructions for verifying your identity are available for download on our website. You can also call us on or if calling from outside Australia and request the forms be mailed to you. Fill out the form and send it back and we ll do the rest. AUSfund does not charge an exit fee, but administration fees apply. For current fees please refer to the AUSfund PDS. Consolidating super online So long as your super funds have your correct Tax File Number (TFN), the Australian Tax Office (ATO) s mygov service gives you an easy way to see details of your super accounts held by most super funds in Australia. You can also use mygov to consolidate your accounts and claim any super that may have already been sent to the ATO as lost super. Visit my.gov.au to setup your mygov account and link it to the ATO s online services. If you need help with finding and consolidating your super, you can talk to your main super fund. Many funds now offer a SuperMatch service that searches the ATO s database for you, and automatically claims any lost super held at the ATO. Once you ve found your other accounts, your fund can help you to transfer these into your main account. Check your fund s website or call them to ask how they can help. How we reunite members with their unclaimed super Consolidating super on members behalf As Australia s Unclaimed Super Fund, we regularly receive transfers of members who have become lost or inactive in other super funds and may not know they have been transferred. We understand that many of our members don t realise they have super with us, or may find it hard to consolidate their accounts. That s why we run a Cross Fund Matching service to find active accounts belonging to AUSfund members in partner super funds and reunite members with their unclaimed super. If we find a matching account in a member s name in one of our participating funds, and that account has received contributions or rollovers in the prior year, we will automatically transfer their AUSfund balance to that account. If we find eligible matching accounts in more than one partner fund, we consider certain indicators of the member s engagement with their funds to choose which of their accounts is most appropriate to receive the transfer. Recent changes to the regulation of ERFs allow us to proactively transfer AUSfund-held super to active accounts without notifying or obtaining the consent of our members in advance, but we recognise that some members, particularly those with larger balances, are more inclined to have a say in what happens with their money. We write to members with AUSfund-held balances of $6,000 or more prior to transferring their accounts. Members of any balance who wish to keep their super with AUSfund can instruct us to exclude them from Cross Fund Matching. However, we may still be required by law to transfer their account to the ATO if their account becomes lost in future. AUSfund s Cross Fund Matching program successfully reunited more than 830,000 members with over $320 million of unclaimed super between 2001 and Over the past 18 months, we have been updating and testing our process to suit the current legislative environment. The program has now relaunched, and eligible matched accounts will be transferred to participating super funds in early Locating addresses for lost members Many AUSfund members are lost because we or their previous fund do not have a current address for them. AUSfund uses the services of agents to help search for new addresses and contact details for members. New contact information may be obtained from Australia Post if a member has consented to sharing their forwarding information when they changed their mailing address, and the Australian Tax Office (ATO) also provides super funds with new member details obtained when members lodge their tax returns. AUSfund can only update a member s address if the member has provided consent to the fund or through the Australia Post service. If we are able to locate a new address but do not have member consent, we will endeavour to contact members to request their confirmation and approval. Accounts with unmatched addresses or new addresses that cannot be confirmed remain lost and may be subject to the compulsory ATO transfer rules. 3

5 Annual Report Making it easier for members to manage their accounts AUSfund is making it simpler for members to find and manage their AUSfund accounts. In late 2016, AUSfund and the ATO made changes to ensure AUSfund accounts were visible to searches carried out through the ATO s online services. Members can now find and claim their AUSfund-held super through third-party programs such as mygov and SuperMatch, without needing to visit AUSfund s website directly. Nearly 70% of the 46,700 AUSfund accounts that were transferred out to other funds in 2016/17 were facilitated via these online services. AUSfund has also improved the ability for members to manage their AUSfund accounts over the web. Launched in September 2017, Member Online replaces a suite of individual web tools that relied on members passing an identity check based on a limited number of Australian-issued ID sources before they could finalise and lodge their transaction requests. With Member Online, members can view their current account balance and transaction history, update their contact details and beneficiary nominations, sign up for online statements and keep track of their communications within the security of their own personal login. Member Online makes it easier for more AUSfund members to keep their details up to date, especially if they re currently living overseas. Your super account Annual low administration fee applies to all member accounts All members, regardless of their account balance, are charged an annual Administration fee. The fee is applied to your account on 30 June each year and when you exit the Fund. If, after the fee is levied, your account balance is less than 5 cents, it will be closed. AUSfund changed its administration fees during the year to make fees more equitable for members with low balances. From 1 January 2017, the administration fee levied on member accounts reduced from $14 to $ From 1 July 2017, the fee has reduced to $ From 1 January 2017, the Trustee also introduced a 25 basis point investment management fee to cover the costs of maintaining the Fund s investment management strategy, monitoring and custody services. This fee, together with investment management charges levied by wholesale investment managers, is deducted from investment returns before earnings are applied to member accounts. These fees are disclosed in aggregate as the Indirect Cost Ratio (ICR) on member statements. For the year ending 30 June 2017, the total ICR of the fund was 0.41%. We estimate the total ICR of the fund will be 0.53% from 1 July This estimate incorporates the adoption of new fee and cost disclosure standards that apply to superannuation products from 30 September This estimate may change depending on the types of underlying investments that the fund holds and the disclosure of fees and costs by the underlying wholesale investment managers. Contributions cannot be accepted AUSfund cannot accept employer or member contributions. If you or your employer made any contributions to AUSfund prior to 1 January 2014, those contributions may remain in the Fund and will continue to earn interest. Transfer of lost and unclaimed accounts to the ATO Twice each year, super funds are required to transfer to the ATO unclaimed super accounts for the following categories of Members: aged 65 years or older, non-member spouses, deceased members, former temporary residents small lost member accounts, and insoluble lost member accounts. In 2016/17 AUSfund transferred approximately 2,000 member accounts and $1.4 million to the ATO. The ATO pays interest on these accounts at a rate equivalent to CPI inflation. If you have a lost account at the ATO you may be able to reclaim your account balances by registering at my.gov.au. 4

6 AUSfund Australia s Unclaimed Super Fund AUSfund: Still the market leader for ERFs AUSfund was named the Top Rated ERF for the 10th time in 2017 by the Heron Partnership. It has received Heron s highest rating every year since the review commenced. Heron s ratings are based on analysis of information provided by third parties, as well as general market knowledge. There is no guarantee or warranty as to the accuracy or correctness of any third party information. For further information go to heronpartners.com.au. Caring for your money This Annual Report is issued by IFI. IFI directors meet regularly to assess AUSfund s objectives, investment strategy and performance and to oversee the activities of service providers. IFS, or current directors, can nominate new directors to the IFI Trustee Board. Directors The directors of the IFI Trustee Board during the year were: Roberta Campo (resigned 2017) Paul Faure (since 2011) David Issa (since 2015) Michael Migro (since 2012) Felicity Pantelidis (appointed September 2017) Linda Rubinstein (since 2013, appointed Chair April 2016) Chloe Shorten (appointed August 2017) The Directors were appointed in accordance with the IFI Constitution. Copies of the relevant extract from the Constitution and also the Trust Deed are available on the AUSfund website at ausfund.com.au. Other key IFS management personnel Name Position Employer Catharine Bowtell Chief Executive Officer (from April 2016) John Meehan Chief Financial Officer IFS Lisa Rayner Andrew Steggall David Vernon Executive Manager, Legal Governance and Insights Company Secretary (resigned September 2017) Executive General Manager SMI and IFI (resigned August 2016) IFS IFS IFS IFS IFI has Professional Indemnity insurance in place. Insurance cover extends (subject to policy terms and conditions) to the conduct of representatives/employees who no longer work for AUSfund but who did at the time the conduct occurred, and that could give rise to a claim for compensation. 5

7 Annual Report Investment in AUSfund Superannuation is a long-term investment. Returns fluctuate from yearto-year, but the aim for AUSfund is to deliver a moderate return over time. How we invest your money AUSfund s membership is largely made up of accounts transferred from other superannuation funds. IFI is accountable for making decisions about how to invest the money held in the Fund. It has adopted a diversified investment strategy appropriate for members. However, all investments entail some risk and the performance of the fund is not guaranteed. Investment objectives - what we aim for when we invest your super: Money should be invested to give security to members funds over the medium term. The asset mix should be structured to limit the likelihood of a negative return to one in every seven years (or approximately three years in every 20). A long-term asset mix should be selected to take account of the risk constraints and allow the highest possible return for an agreed level of risk. The investment process should be cost efficient. The long-term investment strategy should be reviewed at least annually. The short-term investment strategy should be controlled by adjusting cash flow between investments as the investment environment dictates, while remaining within the longer-term strategy. The portfolio s Liquidity should be maximised without materially affecting investment returns. To deliver an after tax return of at least inflation (as measured by the change in Consumer Price Index) plus 2.25% per annum over rolling ten-year periods, at least two thirds of the time. Strategic Asset Allocation at 30 June 2017 Asset class Strategic asset allocation % Allocation range % Australian equities International equities Unhedged Hedged Private Equity Liquid alternatives Alternative debt Australian fixed interest International fixed interest Cash Changes to strategic asset allocation from 1 September 2017 The Trustee of AUSfund approved a change to the strategic asset allocation of the Fund to that listed in the following table, effective from 1 September Asset class Strategic asset allocation % Allocation range % Australian equities International equities Unhedged Hedged Private equity Liquid Alternatives Alternative debt Australian fixed interest International fixed interest Cash Total 100 Growth assets Defensive assets

8 AUSfund Australia s Unclaimed Super Fund Actual asset allocation as at 30 June 2017 How investment earnings are applied to your account Investment earnings, in the form of crediting rates, are applied to your account at the end of each financial year. The crediting rate is the net return, after deductions for tax on earnings, investment management fees, and any other costs incurred in administering the Fund. In any year some of AUSfund s investment earnings may be allocated to, or taken from the Fund s reserves. For further details please refer to Reserves on page 10. As a result, in any year if reserves are increased, the crediting rate may also be decreased and if reserves are decreased, the crediting rate may also be increased. IFI also determines an interim crediting rate each month, for the purpose of allocation of interest to exiting members accounts. Use of derivatives Financial derivatives may be used by appointed external investment managers consistent with their own internal policies or by IFI from time to time. AUSfund s past performance AUSfund applied a 7.70% crediting rate to members accounts for the year ending 30 June 2017 (other than to limited information members i.e. members whose identity cannot be verified on the basis of the information currently held by the Fund). The crediting rate is the rate of return applied to members accounts. The table below details the historical crediting rates applied at 30 June each year. Year Average compound crediting % p.a. 1 Year 7.70 How much does AUSfund have invested? Net assets under management as at 30 June for the last five years: Year $ million Years Years Years 5.05 The crediting rates shown in the above table are an average for the Fund. Your personal return may differ depending on, for example, when you joined the Fund, when transfers or contributions were received to your account and, if relevant, when you exited the Fund. Past performance is not a reliable indicator of future performance and investments can rise and fall in value. 7

9 Annual Report AUSfund s investment managers AUSfund s investments by investment manager as at 30 June 2017 and 2016 Investment Manager Allocations Australian Equities IFM - Enhanced Index Australian Equity Fund $ million $ million Perpetual Australian Share Fund Perpetual Smaller Companies Fund Total - Australian Equities International Equities BlackRock WS Index International Equity Fund BlackRock Indexed Hedged International Equity Fund Blackrock Indexed Emerging Markets Fund Total - International Equities Australian Fixed Interest BlackRock WS Index Australian Bond Fund Total - Australian Fixed Interest Alternative Debt IFM Specialised Credit Fund T.Rowe Price Dynamic Global Bond Fund Total - Alternative Debt International Fixed Interest BlackRock Global Bond Index Fund Total - International Fixed Interest Investment Manager Allocations Liquid Alternatives $ million $ million Invesco WS Global Target Return Fund Pinebridge Global Dynamic Asset Allocation Fund Total Liquid Alternatives Cash IFM Transaction Cash Fund ME Bank Term Deposit & Cash Notice Accounts National Australia Bank (custodian) Total - Cash Private Equity IFM - Private Equity Total - Private Equity INVESTMENTS DIRECTLY HELD Private Equity ME Bank Ltd Industry Super Holdings Pty Ltd Total - investments directly held Total investments

10 AUSfund Australia s Unclaimed Super Fund AUSfund s financials The 2017 Financial Statements, as summarised, are derived from the audited accounts of AUSfund. A copy of the audited accounts and associated audit report for the year ended 30 June 2017 can be obtained from the AUSfund website at ausfund.com.au or by contacting us on Statement of Financial Position Assets 2017 ($ 000) 2016 ($ 000) 1 Investments 514, ,649 Other assets 17,830 26,872 Total assets 532, ,521 Liabilities Total liabilities 5,494 6,052 Net assets available for member benefits 526, ,469 Member liabilities (521,860) (512,563) Net assets 5,024 6,906 Equity Operational Risk Reserve 1,416 1,381 Investment and Administration Reserve 3,608 5,525 Total equity 5,024 6,906 Statement of Changes in Member Benefits 2017 ($ 000) 2016 ($ 000) 1 Opening Balance 512, ,913 Employer Contributions Transfers from other superannuation funds Income tax on contributions and rollovers 27,315 15,940 (44) 3 Net after tax contributions 27,294 16,037 Benefits to members (47,084) (27,405) Reserves transferred to / (from) members Net benefits allocated, comprising: - 3 Net investment income 39,141 21,202 Net administration fees (10,054) (12,187) Closing balance 521, ,563 Income Statement Revenue Changes in the fair value of investments 2017 ($ 000) 2016 ($ 000) 1 10,295 (13,215) Trust distributions 25,945 31,256 Interest 943 1,028 Other revenue Total revenue 37,564 19,379 Expenses General administration expenses 10,054 12,187 Other expenses Total expenditure 10,054 12,221 Operating results 27,470 7,158 Net benefit allocated to members accounts Operating result before income tax expenses Income tax benefit / expense Operating result after income tax (29,086) (9,018) (1,616) (1,860) 265 (826) (1,881) (1,034) 9 1. The financial position and results of operations of the Fund were affected by the adoption of AASB 1056 Superannuation Entities that applies to annual reporting periods beginning on or after 1 July As a result the Fund has restated amounts previously reported under AAS 25 Financial Reporting by Superannuation Plans for the year ended 30 June 2016.

11 Annual Report Reserves AUSfund's reserves comprise an Operational Risk Financial Reserve (ORFR) and a Contingency Reserve. The ORFR is required by the prudential regulator to act as a source of funds to meet the cost of operational errors. AUSfund is required to hold 25 basis points of fund net assets available to pay member benefits. The ORFR was $1.4 million or 0.27% of net assets as at 30 June The Contingency Reserve, also known as Investment and Administration reserve, is held to provide the Trustee with limited flexibility to manage abnormal events and make minor adjustments to crediting rates. The contingency fund at 30 June 2017 was $3.6 million or 0.69% of net assets. Major service providers IFI formally reviews all professional advisers and service providers on a regular basis. Accountancy services Administration: Auditor: Custodian: Investment Advisers: Shared between AAS* and Industry Fund Services Australian Administration Services (AAS)* Deloitte Touche Tohmatsu National Australia Bank Frontier Advisors * The services provided by AAS were provided by Superpartners prior to September Let us know about your dependants It is important we have a current list of your dependants to assist in distributing your death benefit in the event you die while you have money with AUSfund. Please write to us if you need to change your nominated beneficiaries or complete a Non-binding death benefit nomination form which is available on the Fund website at ausfund.com.au. We need to know who your dependants are, their relationship to you (e.g. husband, child) and what percentage of the benefit you would like to go to them. Your nomination of dependants is not binding upon the Trustee, and IFI is not obliged to pay a death benefit to your nominated beneficiaries. However, your nomination would be used by IFI as a general guide to the exercise of its discretion as Trustee in the payment of death benefits. For more information about this, please read the Notes for completing the non-binding death benefit nomination form which are attached to the Non-binding death benefit nomination form available in the forms library at ausfund.com.au. AUSfund s privacy policy It has always been important for us to safeguard your personal information. We manage your personal information in accordance with our legal obligations under the Australian Privacy Principles. For more information on AUSfund s privacy policy, please refer to the Fund s website: ausfund.com.au. Complaints AUSfund works hard to make sure that you do not have cause to make a complaint. However, if you do have a complaint we will ensure it is resolved as soon as possible. If you wish to make a complaint please contact us using the details below: AUSfund Complaints Officer Locked Bag 5132 Parramatta NSW 2124 or admin@ausfund.com.au or phone: If we cannot resolve your complaint, you may contact the Superannuation Complaints Tribunal (SCT) on or at sct.gov.au. The SCT cannot consider your complaint unless our internal dispute resolution process has been completed. 10

12 Phone: (if calling from overseas) Hours: Website: Mail 8.30am to 5.00pm Monday to Friday ausfund.com.au admin@ausfund.com.au AUSfund Administrator Locked Bag 5132 Parramatta NSW 2124 AUSfund_AR_1017