AXA Australia Staff Superannuation Plan. Trustee Report

Transcription

1 AXA Australia Staff Superannuation Plan Trustee Report as at 30 June 2005

2 The year in review 30 June 2005 Plan assets $290 million Plan Membership 2,361 Trustee The AXA Australia Staff Superannuation Plan (Plan) is managed by the Trustee, AXA Australia Staff Superannuation Pty. Ltd. ABN (Trustee). Structure of the Annual Report Your Annual Report is split into three sections: information which is relevant to all members of the Plan (see pages 2-6 and 15-19); information which relates to the specific Category/Division in the Plan to which you belong (see pages 7-10); and the Benefit Statement Guide for your Category/Division of membership (see pages 11-14). The Benefit Statement Guide includes a flowchart outlining how your basic withdrawal or leaving service benefit is calculated. You are encouraged to read the Benefit Statement Guide and follow the information on the flowchart. Each component of your benefit has been colour-coded and highlighted on the sample statement for your convenience. Note that the Guide on pages is not applicable for Deferred Benefit Members, Retirement Pensioners or certain accumulation members. Annual Benefit Statement You are encouraged to read your Annual Benefit Statement in conjunction with this Report. Your Annual Benefit Statement has been provided to you (with this Annual Report). Plan membership For the purpose of this Report, the Plan s membership is divided into two divisions: the Defined Benefit Division and the SELECT Superannuation Division. Reference is made to these two divisions throughout this Report: the SELECT Super Division includes all members who joined the Plan on or after 1 April 2001 and pre-1 April 2001 members who elected to take up the transfer offer effective 15th April the Defined Benefit Division includes all other members. (This includes all members who have a defined benefit, as well as some Category T and other members who have an accumulation style benefit.) 2 Date of report: December This report and your Annual Benefit Statement forms the periodic statement required by the Corporations Act This document is intended to provide information and not advice. It should not be relied upon or take the place of professional advice. This document has been prepared without taking into account your individual objectives, financial situation or needs. Before making any decisions regarding your interests in the Plan please consult the Product Disclosure Statement or contact the Plan s Administrator.

3 Introduction from the Chairman Following a strong performance last year, the investment markets continued their positive run in as companies released encouraging profit reports and investor sentiment remained positive. All of the SELECT Super investment options benefited, delivering positive performance across the board and the earning rate for the Defined Benefit Division of the Plan for the year to 30 June 2005 was 13.0%. These positive conditions also contributed to the Defined Benefit Division maintaining its satisfactory financial position. Changes to superannuation law made sure we were kept very busy this year. Choice of Fund legislation was introduced on 1 July 2005, marking the beginning of a new environment for superannuation in Australia. In the lead-up to the introduction of Choice we worked with AXA Australia to ensure you received information to understand these changes. You can read more about Choice on page 4. During the year there was also a Trustee election for Member Nominee Directors. John Barton, Howard Grenville, Mandy Sisson and David Warren were elected as Directors to the Board, with their new terms effective from 1 January This year the Plan also faced some challenges culminating in the Trustee entering into Enforceable Undertakings with both the Australian Prudential Regulation Authority (APRA) and the Australian Securities & Investments (ASIC). Affected members were notified. At the time, comprehensive steps were taken to ensure that the Trustee complied with all of its obligations under the Enforceable Undertakings. For SELECT Super members, we also announced that AXA Australia will now meet the costs of: basic Death and Total & Permanent Disablement (TPD) premiums; Salary Continuance Insurance premiums; and the weekly Member Fee of $1.50. These improvements bring us closer to our aim of providing SELECT Super Division members with a range of flexible and cost effective options for their superannuation. We look forward to the superannuation plan continuing to provide our members with a competitive and robust suite of benefits and strong returns. Paul Cooper Chairman Paul Cooper 3

4 Recent developments in super Choice of Fund From 1 July 2005, the new Choice of Fund ( Choice ) laws came into force. The new laws allow certain employees to choose which fund their future superannuation guarantee contributions will be paid to. Choice is not available to all employees. If you are eligible for Choice, your decision to choose another fund could have a significant impact on your existing super entitlements in the Plan, including: any insurance cover; the level of contributions your employer will make to another fund; and whether you will have to pay higher administration or management costs in a new fund. If you have any questions about Choice, you should contact the Plan Administrator. It s also recommended you seek advice from a licensed financial adviser before making any financial decisions regarding your super. Updated reasonable benefit limit thresholds Your super benefits will be subject to tax when they become payable to you. A higher rate of tax will apply to any part of your benefit that exceeds your Reasonable Benefit Limit (RBL), which is set by the Government. Most super benefits and employer eligible termination payments you receive in your lifetime are added together and compared with this limit. RBLs are indexed each 1 July in line with increases in Average Weekly Ordinary Time Earnings (AWOTE). For most members, the RBLs are: Benefit taken as a lump sum At least 50% of benefit taken as a complying pension tax year tax year $619,223 $648,946 $1,238,440 $1,297,886 Some members may be entitled to a higher transitional RBL based on their circumstances in 1994 when the current RBL rules were introduced. As the RBL rules are very complex, before you retire you should seek advice from a licensed financial adviser if your benefits may be close to or above the RBL limits. Surcharge tax Since 1996, higher income earners have been liable for an additional tax on all employer contributions and member pre-tax contributions to super. (Contributions include any fees and charges, such as administration fees or insurance premiums.) The surcharge tax may also have applied to an eligible termination payment made by your employer. It could also have applied automatically if you had not provided your tax file number regardless of how much you earned. For the tax year, the superannuation surcharge phased in gradually once your adjusted taxable income (ATI*) exceeded $99,710. The maximum surcharge rate of 12.5% applied if your adjusted taxable income exceeded $121,075. The Federal Government has now removed the surcharge on super contributions made on or after 1 July 2005 and eligible termination payments made by an employer on or after 1 July However, it will continue to apply in respect of the period up to 30 June 2005 and super fund trustees still need to report surchargeable contributions for the tax year. This means that the Australian Taxation Office (ATO) will continue to issue surcharge assessments in respect of contributions and eligible termination payments made by employers before 1 July Super fund trustees could therefore continue to receive surcharge assessments for several years for periods ending before 1 July If the Plan is required to pay surcharge tax in respect of you, the tax payable is deducted from your account in the Plan. If you roll over benefits into the Plan from another super fund any liability to pay the surcharge tax for contributions to that fund that has not been paid may be transferred to the Plan. This also applies to any amounts rolled into the Plan by your employer on your behalf. If we receive a surcharge assessment after you have left the Plan, we will return it to the ATO. The ATO will either forward it to the fund to which your benefit was paid, or to you if your benefit was paid directly to you. * ATI includes your taxable income, reportable fringe benefits, most benefits paid by an employer on leaving employment, any employer contributions or member pre-tax contributions paid to a superannuation fund, and certain income in respect of family and other trusts. 4

5 Plan information Contribution splitting In December 2005, the Federal Government legislated to allow contribution splitting. This allows members to split their personal and employer accumulation benefit contributions made on or after 1 January 2006 with their spouse. The splitting of contributions by superannuation funds will not take place until 1 July Portability transferring your benefit while still in service Changes to superannuation law that took effect from 1 July 2005 mean you may be able to transfer all or part of your superannuation benefit to another superannuation fund before you leave your employer s service. These changes allow you to request that all or part of your withdrawal benefit be transferred to another fund of your choice. The trustee must generally comply with your request; however there are certain circumstances in which a transfer request can be refused. These include: if you have defined benefits; if the trustee has already complied with a transfer request within the previous 12 months; if you request to rollover or transfer only part of your interest in the Plan and the amount remaining would be less than $5,000; and if the fund you nominate refuses to accept the rollover or transfer. For further information on transferring your superannuation benefit, including how this will affect your remaining superannuation entitlements such as your death and disability benefits, and details of any withdrawal fees that may apply, call the Plan Administrator. The trustee recommends you seek advice from a licensed or appropriately authorised financial adviser before making any financial decisions, regarding your super. Your Trustee Directors The Trustee of the Plan is a company called AXA Australia Staff Superannuation Pty. Ltd. (ABN ) with an equal number of Employer Nominee and Member Nominee Directors. The Trustee is responsible for managing the Plan for the benefit of all members in accordance with the Trust Deed and relevant legislation. As at 30 June 2005, the Directors were: Employer Nominee Directors Paul Cooper Chairman (Full year) Director, AXA Asia Pacific Holdings Limited Craig Dainton (Full year) Finance and Investments Operations Manager Milena Penca (Full year) Group General Counsel & Company Secretary Andrew Penn (Full year) Managing Director Group Strategic Development Member Nominee Directors Mandy Sisson (Full year) Adviser and Customer Service Retail Service Manager John Barton (Full year) Head of Marketing, ipac Securities Howard Grenville Analyst Programmer David Warren Head of Financial Operations Financial Protection Changes to the Trustee Board during the year Jason Brown resigned as a Member Nominee Director on 10 September 2004 and was replaced by David Warren on 8 December A member nominee election was held in November As a result of the election, at 1 January 2005, John Barton, Mandy Sisson and David Warren were reappointed and Howard Grenville was appointed as a Member Nominee Director. In accordance with Plan rules, Mandy Sisson and David Warren were appointed for a four-year term and John Barton and Howard Grenville were appointed for a twoyear term. Mary Duggan did not nominate for reelection and resigned when her term expired on 31 December Since 30 June 2005, Craig Dainton resigned as an Employer Nominee Director on 11 August 2005, and Mandy Sisson resigned as a Member Nominee Director on 16 August Contributions The Trustee believes that all contributions due and payable by the Employer have been received by the Plan. 5

6 Plan information Actuary s report As reported last year, due to the combined impact of additional lump sum employer contributions, an increase in regular employer contributions and a favourable investment return, the Plan s financial position improved dramatically over 2003/04, with coverage of both accrued benefit liabilities* and vested benefits increasing to above 100% at 30 June (Refer to page 16 for a description of vested benefits.) The actuarial investigation of the Plan effective 30 June 2004 concluded that further additional employer contributions were not expected to be required to maintain the Plan in a satisfactory funding position. Subject to annual review and re-assessment, along with consideration to building a funding buffer against adverse experience, my report recommended continuation of the regular Defined Benefit Division employer funding program comprising: basic contribution rates of 9.8% of Salaries for FinSuper members and 12.8% of Salaries for Non-FinSuper members, plus deemed member contributions. This was in addition to AXA s ongoing obligation to pay contributions of 6% of superannuation salaries for active SELECT super members for whom a 3% contribution is made to Finsuper, 9% of superannuation salaries for other active SELECT super members and additional (salary sacrifice or other agreed) contributions. As recommended, a review of the Plan s financial position and funding program will be carried out as at 30 June This will take into account the impact of the Plan s financial experience over 2004/05. * Accrued Benefit Liabilities are the total present value of the projected future benefit payments relating to service completed at the date of the valuation, based on the actuarial assumptions adopted (such as rates of future salary increases, pension indexation, investment earnings, resignation, crediting rates etc). Paul Shallue BSc, FIAA Plan Actuary Automatic rollover of benefits If you leave service, and within 90 days you fail to provide payment details, nominate a rollover fund, or the rollover fund you nominate refuses to accept your payment, the Trustee may pay your benefit to an Eligible Rollover Fund (ERF). Eligible Rollover Funds are designed to accept such benefits and in accordance with Government legislation are required to protect the whole of the benefits they receive. The ERF selected by the Trustee is the National Preservation Trust. The Trustee of the National Preservation Trust is N.M. Superannuation Pty Ltd. You can contact the administrator of the National Preservation Trust by writing to: GPO Box 2163T Melbourne, Vic. Australia 3001 Telephone: You will be able to contact the National Preservation Trust at any time and request payment of your benefit to you (if allowed) or roll it over into the fund of your choice. When your benefit has been paid to the ERF you are no longer a member of or have any rights under the AXA Plan. The conditions of the ERF are different from those in the Plan. ERFs generally do not provide insurance cover. About the National Preservation Trust Set out below is a summary of some of the more significant features of the National Preservation Trust (NPT), current as at 1 August The NPT has adopted a capital stable investment strategy. There is no investment choice available to members in the NPT. The NPT has a two-tiered basis for crediting interest to members accounts. This comprises a low interest rate, which applies to the first $2,000 of members accounts, and a high interest rate, which applies to the balance in excess of $2,000. The high rate is based on a target rate, which is set to reflect cash rates. If the actual annual return for the NPT exceeds the target rate, part of the excess earnings is transferred to reserves, subject to a maximum of 10% of members accounts. If the actual return for NPT falls short of the target rate, a transfer from reserves will occur to make up the shortfall, subject to a minimum reserve level of zero. Interim crediting rates are adopted for members who leave the NPT during the current financial year. An administration levy is deducted from members accounts. The NPT does not deduct more in administration levies than the interest credited. The administration levy is used to pay the administrator s fees; any excess is then used to pay other expenses, such as fees payable to the trustee of the NPT and investment advisor. The NPT is unable to accept contributions from members or their employers; however, rollovers from other superannuation funds are permitted. Current fees and investment returns together with other information regarding the NPT can be obtained directly from the NPT at the address above. If you wish to know more information about the National Preservation Trust, contact the ERF Administrator for a copy of the Product Disclosure Statement. 6

7 Your benefits in the Plan This section is applicable to Category S members of the AXA Australia Staff Superannuation Plan (i.e. ex-ac & L Superannuation Fund Members as at 31 December 1999). The purpose of the Plan is to provide superannuation benefits for its members and members dependants. Details of how your particular benefits are determined are set out in the Benefit Statement Guide which can be found on pages 11 to 14 of this Report. For the majority of members (including your category of membership), the Plan is a defined benefit plan. Category S defined benefit members are part of the Defined Benefit Division. This means the main employer funded benefits on retirement, death, or resignation are calculated as a multiple of salary. As such, these benefits do not depend on the investment returns achieved by the Plan. Additional accumulation benefits (if you have any) are subject to the Plan s investment performance. Should you have any queries regarding your superannuation benefit, please contact the Plan s Administrator on The Funding of your benefits Your benefits are partly funded by contributions made by the Employer and you (if any). Employer s contribution The Employer pays the cost of funding members defined benefits. The Employer s contribution rate varies over time depending on the recommendation of the Plan s Actuary (refer to the Actuary s Report on page 6). The combined contributions from members and the Employer (less costs) are invested and form a pool of assets from which benefits are paid. Member contributions You are not required to make member contributions, however you can choose to make member contributions to the Plan either from your pre-tax or post-tax salary. Your contribution rate As a Category S member of the Plan, you can choose to commence contributions or change your contribution rate at any time. To do so, please contact the Plan s Administrator. FinSuper (if applicable) The maximum salary threshold above which the employer ceases to pay contributions to FinSuper is currently $50,000. FinSuper contributions are made only for members with a Superannuation Salary below this threshold and who elected to have contributions made to FinSuper. Where FinSuper contributions are made, the Plan benefit accrues at a lower rate. Members whose Superannuation Salary increases to or above the $50,000 FinSuper threshold, will receive higher benefit accrual rates in the Plan, with no further contributions being paid to FinSuper. S 7

8 Investment report Objectives and strategy The Trustee has set investment objectives and a strategy to achieve those objectives. The Trustee s primary objective is for the Defined Benefit Division s overall investment return (net of tax and investment management fees) to exceed defined benefit member salary growth by 1.5% p.a. to 30 June 2002 and from 1 July 2002 by 3% p.a. over rolling three, five and 10 year periods. Secondary investment objectives for investment performance are: that the medium term investment performance should exceed the median manager s performance as measured in an appropriate industry survey of Market Linked Pooled Funds. This objective is measured quarterly over rolling three year periods and should be achieved two-thirds of the time. to exceed the returns which could be achieved on a benchmark portfolio over the medium term, measured quarterly over rolling three and five year periods. The objectives are not forecasts or guarantees of investment returns. The assets of the Defined Benefit Division Plan are invested in AXA Life Policies and a discrete portfolio. The monies in the Policies are invested in a range of assets which are managed on behalf of AXA (The National Mutual Life Association of Australasia Limited) by Alliance Capital Management Australia Limited (ACMAL), via National Mutual Funds Management Ltd. ACMAL employs an active investment management style. The discrete portfolio assets are also managed by ACMAL. The Trustee has set specific asset allocation constraints on the Plan s investments. These constraints include a benchmark percentage for each asset class and an allocation range within which the Defined Benefit Division of the Plan s aggregate exposure will be managed. The benchmarks and allocation ranges applicable to the Defined Benefit Division investments are shown in the following table: Asset Class Benchmark % Range % Australian Shares International Shares Property Total: Listed Trusts 5.0 Direct Property 5.0 Australian Fixed Interest International Fixed Interest Cash 10.0 Balance Special assets As a result of the NMHI Superannuation Plan transfer into this Plan at 1 July 2000, assets also include a $500,000 investment in Superannuation Members Home Loans bonds. The Plan also holds shares of AXA Asia Pacific Holdings Limited - as a consequence of the demutualisation of National Mutual (now known as AXA Australia). Representing 1.1% of Plan assets, these shares are held by a custodian. The Trustee also operates a bank account for administrative purposes. This account is held with the Westpac Bank. Review of investments Investment performance is reviewed through quarterly written reports from AXA Funds Management together with at least half-yearly presentations. Further consideration is being given to the structure of the Plan s investments. Asset allocation The spread of investments between the major asset classes at 30 June 2005 and as at 30 June 2004 are shown in the table below: As at 30 June Australian Shares 39% 39% International Shares 19% 20% Property (Listed) 5% 5% Property (Direct) 4% 4% Australian Fixed Interest 17% 17% International Fixed Interest 5% 4% Cash 11% 11% As at 30 June 2005, the top 10 holdings of Australian shares within the AXA Life Policies in the Plan were: % of Australian Share holdings BHP Billiton Limited 10.8% Commonwealth Bank of Australia 6.2% Westpac Limited 5.3% ANZ Banking Group 4.6% Ticor Ltd 4.4% National Australia Bank Limited 3.9% Westfield Group 3.8% QBE Insurance Group 3.4% Macquarie Infrastructure Group 3.3% Suncorp Metway 3.3% Policy on derivatives Further constraints are placed on currency exposure and the use of derivatives (i.e. options and futures) in managing the assets. The Trustee has reviewed the Risk Management Statements (i.e. derivatives risk statements) to ensure that the use of derivatives reflects the Trustee s strategy. 8 The Trustee does not invest directly in derivative instruments.

9 Crediting rate policy and crediting rates As mentioned, defined benefits do not depend on the investment returns achieved by the Plan. However, investment returns will affect your additional accumulation balances (if you have any). As such, the Trustee applies crediting rates in respect of the additional accumulation balances in accordance with its crediting rate policy. A summary of the crediting rate policy applicable from 1 July 2003 is set out below: The declared Investment Crediting Rate will be determined for each year in arrears by the Trustee having regard to the advice of the Actuary and the actual earning rate for the year (net of tax and investment management fees) for the relevant Defined Benefit Division investments (taxexempt investments in respect of current pension liabilities and the cash account are excluded). The Investment Crediting Rate will apply to the accumulation balances (if any) of active Plan members. For members leaving service prior to the declaration of the 2005/06 crediting rates the method of calculating interest on leaving service benefits is as follows: In the calculation of your leaving service benefit, an Interim Investment Crediting Rate (as current at the time of the calculation) will be used to credit interest to your accumulation accounts (if any) for the period from 1 July 2005 up to your date of leaving service. The Interim Investment Crediting Rate will be determined having regard to the actual earning rate for the year to date and the advice of the Actuary. For the period between the date of leaving service and the date of payment of your benefit, interest will be credited to your leaving service benefit at a separate rate of interest denoted as the Interim Cash Crediting Rate. This reflects the Plan s practice of holding monies to meet pending benefit payments in the Plan s cash account. The Trustee reviews the crediting rate policy from time to time and the arrangements described above may change in the future. 2004/05 Declared rate The declared Investment Crediting Rate for 2004/05 has been set at 13.0% per annum for relevant accumulation accounts within the Defined Benefit Division. This is the actual net of tax earning rate of Defined Benefit Division investments (excluding taxexempt investments in respect of current pension liabilities and the cash account). 2005/06 Interim rates The interim rates from 1 July 2005 at the date of preparation of this report were: Interim Investment Crediting Rate 9.6% p.a. for the period 1 July 2005 to 31 October 2005 and 4.8% p.a. for the period from 1 November 2005 Interim Cash 4.8% p.a. for the period Crediting Rate from 1 July 2005 Review of crediting rate policy In accordance with its obligations, the Trustee reviews its crediting rate policy from time to time having regard to the Plan s experience and the advice of the Actuary, among other things. The crediting rate policy described above may, therefore, change in the future at the Trustee s discretion. A history of the earning and crediting rates The following table sets out the Earning Rates and Crediting Rates over the past five years for the Defined Benefit Division and accumulation accounts of Category S Members: Earning Crediting Rate Rate Year % p.a. % p.a. 1/7/04-30/6/ /7/03-30/6/ /7/02-30/6/ * 1/7/01-30/6/ * 1/7/00-30/6/ Notes: * Consistent with the terms of the enforceable undertakings entered into between the Trustee, APRA and ASIC in May 2005, members who were affected by the negative Investment Crediting Rates in 2001/02 and 2002/03 received an interest rate adjustment to their relevant accumulation accounts. This adjustment put the affected members in the same position as if the Investment Crediting Rates for those years were set at 2.0% pa. The Earning Rates from 2001/02 represent earnings on Defined Benefit Division assets other than the separate taxexempt policy backing pension liabilities and, from 2002/03, also excludes the Plan s cash account. The compound average Earning Rate for the period 1 July 2000 to 30 June 2005 was 4.6% p.a. Please be aware that past performance is not indicative of future performance. 9

10 Taxes and fees Performance against objectives The following table compares the performance of the Defined Benefit Division investments with the Trustee s investment objectives. Please refer to the Investment Objectives and Strategy on page 8. All figures shown below are net of tax and investment management fees. Taxes and Fees All administration and insurance costs as well as the 15% contributions tax associated with the defined benefits are met from the Employer s contributions. The 15% tax on Employer accumulation contributions (including member pre-tax contributions) and any Surcharge Tax are deducted from benefits - refer to your Benefit Statement Guide for further details. Primary Objective 3 years 5 years 10 years % p.a. % p.a. % p.a. Division Earning Rate Salary Growth Salary Growth plus 3.0%* * 1.5% prior to 1/7/2002 Secondary Objective 3 years 5 years % p.a. % p.a. Division Earning Rate Mercer Survey Median 8.5 Benchmark Return Please note the Earning Rates in the objective tables above: Assume tax is payable on all earnings up to 2000/01 and from 2001/02 allow for the tax exemptions on investments supporting current pension liabilities. Are net of investment management fees. Represent earnings on all assets backing Defined Benefits, with the exclusion of the cash account from 2002/03. 10

11 Benefit statement guide 2005 Refer to the benefit statement on next page to cross-reference the numbers below. 1 Member details Please check that your details are correct. Your Superannuation Salary is at 30 June Your Final Average Salary is your average salary over the past 12 months. Your Total Employment Cost (if applicable) is at 30 June Components The Preserved amount shown on this statement has been calculated under the preservation legislation which came into effect from 1 July The Preserved amount shown must be preserved in a superannuation plan or rollover fund until you meet a Condition of Release as set out in legislation. Conditions of Release include your permanent retirement from the workforce at or after your preservation age, leaving employment after age 60, your death or you becoming permanently disabled. Earlier release of preserved amounts may be available if you meet a test of financial hardship or payment is approved on compassionate grounds. The Unrestricted Non-Preserved amount shown may be withdrawn at any time if Trustee consent has been granted. The Restricted Non-Preserved amount shown is the amount available to you as cash (net of tax) if you leave service. 3 Death benefit The Death Benefit is equal to your Leaving Service Benefit calculated with an Early Withdrawal Factor of 100% (rather than a factor which is based on the age you die - see page 14) plus an amount of insurance which is the greater of: four times your Superannuation Salary at the date of death, or 16 2 / 3% of Superannuation Salary for each year or part thereof remaining from the date of death to age 65. For those members whom AXA Australia pays 3% to Finsuper, this amount will be reduced by an amount equal to one unit of death insurance cover from FinSuper. You may be entitled to a guaranteed minimum death benefit. Contact the Fund Administrator for further information. 4 Withdrawal benefit This is your Basic Withdrawal Benefit as determined by the defined benefit component. Your actual Withdrawal Benefit is your Basic Withdrawal Benefit plus the Balance of your accounts in the Plan (refer to the flow chart on page 14). 5 Accumulation accounts Some members also have an Additional Account, which holds the amount of additional Member Contributions. These amounts are also adjusted with interest at the declared interest crediting rate. Interest may be positive or negative. 6 Surcharge offset account Some members benefits will be reduced by a Surcharge Offset Account. Surcharge is an additional tax levied on the Plan based on Notional Surchargeable contributions determined for individual members. The Surcharge Offset Account is a negative account which, when added to your benefit at the time of leaving the Plan reduces your total entitlement. Interest charged on the Surcharge Offset Account has been calculated at the declared interest crediting rate from the date the Surcharge was paid from the Plan to the Australian Taxation Office (ATO). The interest charged will also be deducted from your benefit at the time of leaving the Plan. It is possible that the ATO may assess further Surcharge amounts in relation to previous years. If this occurs, the further amounts will be detailed on a future Benefit Statement. 7 Special notes/conditions In this area of the Statement, other special notes/conditions relating to your particular situation may be shown. 11

12 AXA Australia Staff Superannuation Plan Benefit Statement as at 30 June

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14 Flowchart how your category works Your Withdrawal Benefit Final Average Salary Accrued Benefit Multiple Early Withdrawal Factor Accrual Rate % of full-time work Period of Membership Additional Benefit Multiple Your Early Withdrawal Factor is based on your age on leaving the Plan. Balance of Accounts in the Plan ONLY applicable if you were a member at 1 January Age Factor 35 or less 75.00% % % % % % % % % % % % % % % % % % % % 55 plus % 14

15 Financial report The following information is taken from the audited financial statements of the Plan for the year ended 30 June The audited accounts and Auditor s Report are available from the Plan s Administrator (refer to page 19 for contact details). Investments Statement of Net Assets as at 30 June $ $ Cash 929,466 1,180,389 Life Office Policies 264,992, ,089,960 Shares in Listed Company 3,154,572 2,412,743 Investment Bond 500, ,000 AXA Managed Portfolio 30,301,899 26,239,086 Other Assets Contributions Receivable - 8,000 Other Receivables and prepayments 494,491 1,342,403 GST Receivable 49,923 33,644 Total Assets 300,423, ,806,225 Less Liabilities Benefits Payable 9,103,353 2,250,702 Creditors and Accruals 457, ,338 Deferred Income Tax Liability 451,395 66,406 Current Tax Liability 189,242 3,822,845 Prepaid Contributions - 286,948 Total Liabilities 10,202,186 6,610,291 Net Assets Available to Pay Benefits at 30 June 290,221, ,195,934 Statement of Changes in Net Assets for the Year Ended 30 June $ $ Net Assets Available to Pay Benefits at 1 July 273,195, ,916,400 Plus: Changes in Net Market Value of Investments 35,345,337 30,885,395 Investment Income 2,759,109 1,042,381 Employer Contributions 16,064,242 40,935,738 Member Contributions 1,438,899 1,649,049 Transfers from other Funds 1,917,504 2,333,271 Other Income 150, ,084 Total Gross Income for the Year 57,675,846 77,033,918 Less: Benefit Payments 32,742,103 33,609,219 Transfers out - - Administration and Consulting Services 3,487,332 1,959,770 Group Life Insurance 487, ,425 Income Tax Expense 1,890,331 5,860,730 Investment Expenses 1,325,775 1,156,350 Surcharge Expenses 717, ,875 Total Outgoings for the Year 40,650,690 43,973,369 Net Assets Available to Pay Benefits at 30 June 290,221, ,195,934 15

16 Financial position Vested Benefits at 30 June 2005; $278,956,674 Vested benefit entitlements are the total value of benefits for all members at 30 June 2005, assuming that all current employees had voluntarily left service at 30 June In determining this amount, allowance is made for the value of future pensions for current pensioners and pension options for current and deferred benefit members. Net assets at 30 June 2005 represented 104% of vested benefits. In accordance with AXA Australia s preferred approach, the existing employer contribution program was aimed at: ensuring that benefits are fully funded as and when they fall due, and maintaining a target funding level of around 100% of vested benefits. In practice, coverage will fluctuate from year to year (depending on how actual financial experience compares with the funding assumptions) and the employer contribution program will require adjustment to move the vested benefits coverage back to the target level of 100%. Vested benefits coverage at 30 June 2005 was 104%, as compared with 103% at 30 June 2004 and 90% at 30 June 2003 (as measured in the 30 June 2003 actuarial review report). Refer to the Actuary s Report (page 6) for further comments. Fluctuations in the funding level are a normal feature of the operation of the Plan. The Trustee wishes to reassure members that these fluctuations are not expected to have any impact on the payment of benefits. The Trustee and the Plan Actuary will continue to monitor the coverage level and seek adjustments to the employer contribution program as considered appropriate to ensure that benefits are fully funded as and when they fall due. Membership Membership movement during the 12 months to 30 June 2005 was: Total Membership at 30 June ,527 Plus New Members 369 Less Members Leaving the Plan 1xxxxxxx535 Total Membership at 30 June ,361 Membership comprises: 30 June June 2004 Employee membership: Defined Benefit 879 1,054 SELECT Superannuation Pensioners Spouse Pensioners Deferred Benefit members

17 Other information Under the Superannuation Industry (Supervision) Act, the Trustee is required to advise you of the following information. Appointment and Removal of Directors Employer Nominee Directors are appointed at the discretion of the Employer and may be changed by the Employer at any time. Elections are held every two years for Member Nominee Directors. Any employee member is eligible for election provided that they are not a disqualified person or otherwise ineligible under legislation. The term of office is generally four years. At each election there are two vacancies to be filled. Nominations for a Member Nominee Director must be made and seconded by another employee member. All employees who were members of the Plan 14 days prior to the issue of ballot papers are eligible to vote. A Returning Officer is appointed to conduct the election in accordance with the Trustee s Election Rules. The next election is planned to be held in the last quarter of Member Nominee Directors cease to hold office: on completion of their term if they leave the service of the Employer, or if they cease to be a member of the Plan. On ceasing to hold office prior to the next scheduled election, a Member Nominee Director may be replaced by a member invited by the remaining Member Nominee Directors. All Directors cease to hold office if they retire, resign, die, become mentally ill or incapable of carrying out their responsibilities or are disqualified by law. Trustee Liability Insurance The Directors and Officers of the Trustee rely on an insurance policy obtained by AXA Asia Pacific Holdings Limited on behalf of directors and officers in the AXA group generally, including on behalf of the Trustee Directors specifically. This policy supports the indemnity provided for Directors and Officers under the Constitution of the Trustee and under the Plan s Trust Deed. The Trustee is not insured for liability arising from dishonest conduct. The Trust Deed and Legislation The Plan is governed by a legal document known as a Trust Deed. The Trust Deed sets out the rights and obligations of the members, the Employer and the Trustee. It sets out the rules under which the Plan is administered and benefits paid. During the year the Trust Deed was amended to allow the Plan to accept Government Cocontributions. Any Government Co-contributions received by the Plan in respect of a member will be credited with net investment earnings and included in the member's benefit. The operation of the Plan is also subject to relevant Government legislation and regulations. 17

18 Other information Inquiry and Complaint Procedure The Plan has an inquiry and complaint procedure for members which, together with the Superannuation Complaints Tribunal, forms the Plan s dispute resolution mechanism. To make an inquiry or complaint, you should contact the Plan s Administrator, on the telephone number or address listed at the back of this Report. Forms are available to facilitate the submission of your request. Under legislation, the Trustee has 90 days in which to respond to your inquiry or complaint. However, a response will generally be given to you sooner. The Trustee may endeavour to resolve all complaints through this procedure. If your inquiry or complaint has not been resolved within 90 days or you are not satisfied with the Trustee s final decision, you may be able to lodge a complaint with the Superannuation Complaints Tribunal, an independent body established by the Federal Government. The Tribunal has been set up to consider complaints by members, former members and their beneficiaries about decisions of the Trustee. Members may approach the Tribunal only if they have first been through the Plan s internal complaints procedure. The Tribunal does not have the power to hear or determine all types of complaints. For example, the Tribunal cannot review decisions of the Trustee which concern the management of the Plan as a whole. The Tribunal may first attempt to resolve the matter by conciliation, which involves assisting members and the Trustee to come to a mutual agreement. If this is not successful, the Tribunal may review the matter and make a determination which is binding on all parties. You can contact the Superannuation Complaints Tribunal on Nomination of Beneficiaries In the event of your death while a member of the Plan, a death benefit may be paid to your dependants. While the Trustee has the discretion to determine who will receive the death benefit, your wishes will be considered. You should therefore keep the Trustee informed of who you wish to receive your death benefit by completing a Nomination of Beneficiaries Form. A Nomination of Beneficiaries Form is included with your Annual Review Kit for this purpose. 18

19 Services to the Trustee To assist the Trustee in the management and administration of the Plan, the Trustee engages the following professional providers: Administrator Mercer Human Resources Consulting Pty Ltd ABN Exhibition Street Melbourne Vic 3000 Actuary Paul Shallue Mercer Human Resources Consulting Pty Ltd ABN Exhibition Street Melbourne Vic 3000 Auditor Deloitte Touche Tohmatsu ABN Bourke Street Melbourne Vic 3000 Banker Westpac ABN Collins Street Melbourne Vic 3000 Plan Executive Team Cyril Twomey Plan Executive George Liberopoulos Suzanne A'Vard 447 Collins Street Melbourne Vic 3000 For Further information For further information on the Plan, you should contact: Plan Administrator* AXA Australia Staff Superannuation Plan 16th floor 33 Exhibition Street Melbourne Vic 3000 Telephone: Facsimile: (03) * Plan Administrator personnel are not representatives of the Fund Trustee. Any general financial product advice given by personnel of the Plan Administrator is provided on behalf of Mercer Human Resource Consulting Pty Ltd as a corporate authorised representative # of Mercer Investment Nominees Limited ABN AFSL Custodian Folio Nominees Pty Ltd ABN Subdelegated to: State Street Global Advisors Australia Limited ACN Level 44, Gateway 1 Macquarie Place Sydney NSW 2000 Insurer The National Mutual Life Association of Australasia Limited ABN Trading as AXA Group Insurance 447 Collins Street Melbourne Vic 3000 Investment Manager National Mutual Funds Management Ltd* ABN Member of the Global AXA Group 447 Collins Street Melbourne Vic 3000 * By arrangement with The National Mutual Life Association of Australasia Limited for Life Policy Investments. Refer to the Investment Report for further details of the underlying investment managers. Information Available on Request The following documents are available to you on request: the latest audited accounts and Auditor s Report the Trust Deed the Actuarial Review 19

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