Annual Report. IAG & NRMA Superannuation Plan. for the year ended 30 June Plan website: Plan Helpline:

Transcription

1 IAG & NRMA Superannuation Plan Annual Report for the year ended 30 June 2013 S YOUR Plan website: Plan Helpline: IAG & NRMA Superannuation Pty Limited (ABN , AFSL #439233) is the Trustee of the IAG & NRMA Superannuation Plan a (ABN IAG 115 & 920) NRMA and Superannuation the issuer of this Plan Annual Annual Report. Report GPO 2013 Box 4303, Melbourne VIC 3001.

2 Table of contents page 1 page 3 Plan facts and figures Investment returns S page 4 Market round-up The Plan s investment strategy and objectives How the Plan s investments are managed How the Plan s assets are invested Large assets of the Plan Use of derivatives Plan Reserves FOR ACCUMULATION ACCOUNTS AND RETIREMENT INCOME STREAM ACCOUNTS page 8 Your benefit Your investment purchases units Recent investment returns YOUR page 9 Australian Shares Option Shares Option MySuper and Pension Growth Options Balanced and Pension Balanced Options Conservative and Pension Conservative Options Cash and Pension Cash Options page 16 Investment performance benchmarks FOR DEFINED BENEFIT MEMBERS page 16 Comparison of annual effective rates of net return and declared rates Defined leaving during the year FINANCIAL DETAILS page 18 The Plan s financial statements Accounts as at 30 June 2013 Sub-plan reporting The Plan s financial position page 20 The Trustee Changes to the Trustee over the year Meeting attendance A chance to have your say Indemnity insurance Trust Deed and Rules Concessional tax treatment Management assistance page 22 Receiving your benefit as a lump sum Receiving your benefit as an allocated pension Receiving your benefit as a lifetime pension Eligible rollover fund and unclaimed money Contribution surcharge tax Restrictions on when you can access your benefits page 24 What s changing in super page 26 Resolving disputes and complaints If you d like more information Questions? S YOUR

3 A message from the Trustee Dear Member We are pleased to bring you the 2013 Annual Report for the IAG & NRMA Superannuation Plan. The past year has been extremely busy for all involved in the management of the Plan ensuring that the Plan would receive authorisation to provide a MySuper product and comply with all the requirements of the new Stronger Super regulatory environment. Here is an overview of what has happened in the Plan over the year: S The Plan s investment performance It is pleasing to report that all of the Plan s investment options achieved positive results over the 2012/13 year. Four of the Plan s six investment options also managed to deliver double digit returns for the first time since 2006/07. Hopes of a record breaking year, as at the end of April, were tempered by an end of year downturn in equity markets. Pleasingly this downturn has subsequently reversed and returns are making a solid start in early 2013/14. Remember you can see current information on the Plan s net investment returns under Benefits and investments on the Plan website MySuper now live Plan Management and the Trustee have had a busy time over the past year ensuring that the Plan was eligible for a MySuper licence. We are pleased to advise that the Australian Prudential Regulatory Authority approved the Plan s licence in July and the Plan went live with its MySuper offering on 1 August As previously advised the introduction of MySuper means little in the way of direct change for members of the IAG & NRMA Superannuation Plan. A new death benefit beneficiary nomination option In line with the wishes of members the Plan has introduced a new option for the nomination of beneficiaries which is binding on the Trustee. This option gives you certainty in relation to how your benefit in the Plan (including any insurance) will be paid in the event of your death. From 1 July 2013 the Plan has offered you the alternative option of making a non-lapsing death benefit nomination. A nonlapsing death benefit nomination is binding on the Trustee to the extent that the nomination is in favour of one or more of your dependants or your legal personal representative. The Trustee will be bound to act in accordance with a properly completed and signed non-lapsing death benefit nomination. However, if a portion of your death benefit is unable to be paid in accordance with your instructions (because the nominated person died before you, or has ceased to be a dependant) then that portion of your death benefit will be paid to your legal personal representative (your estate). If you nominate your legal personal representative, you should ensure that you have a valid, up-to-date, Will. You ll find the Non-lapsing death benefit nomination form on the Plan website New way to access your super account details You can now access your super account details on your iphone or other smartphone via a new mobile friendly website for the Plan. You can check your account balance or benefits, your personal details, investments, contributions and transaction history. To access the site you ll need a QR reader app on your smartphone (available for free from your app store). You can then scan the code below to be taken directly to the Plan s mobile website. Don t forget to bookmark the site for future ease of access. YOUR 1 IAG & NRMA Superannuation Plan Annual Report 2013

4 Director election coming soon Every three years the Trustee holds an election for Member Representative Directors. The term of office for the current Member Representative Directors ends on 30 April Whilst all members have the right to vote in the election, eligibility to nominate or to be nominated is limited to members who are employees of IAG or NRMA. This election will be conducted online with all communication distributed by . To ensure you get your chance to have your say in the management of the Plan, please ensure the Plan holds a current address for you. We anticipate making the call for nominations in early 2014, keep your eyes out for an and announcements on the Plan website Educational webinars now available on the Plan website A number of short, easy-to-understand educational webinars are now available on the Plan website to help you understand more about your super. Understanding market volatility focuses on how your super is affected by the share market, explaining the reasons behind market fluctuations and the impact on various asset types. Insurance is also explained in the webinar, Why personal insurance? Other webinar topics cover contribution strategies and the ins and outs of transition to retirement pensions. You ll find the webinars under the Webinars & planning tools tab on the website and can view them any time at your own pace. New concessional contribution limits The government has introduced higher concessional contribution limits for those 60 and over in the 2013/14 year. If you turn 60 on or before 30 June 2014 then the concessional contribution limit for you is now $35,000 (this amount is not subject to indexation). Those members who are 50 and over in the 2014/15 year will receive this $35,000 limit from 1 July For other members the $25,000 limit remains unchanged for 2013/14, but is expected to be indexed to $30,000 in 2014/15. Read the SuperNews section of this report for a more detailed overview of the key proposals and changes to superannuation. Up to date personal details While you are on the Plan website, why not sign in and ensure your and mobile phone details are up to date. You will need your member number and PIN. If you don t have a PIN, you can call the Plan Helpline on The Plan is committed to reducing our carbon footprint and sending information electronically means not only do you receive it faster, we save money through reduced print and mailing costs, which is a big plus for you and the environment. Please support our commitment by visiting the Plan website and updating your details. IAG & NRMA Superannuation Plan your Plan for life More and more of our members are finding that, as an IAG & NRMA Super Plan member, you have a super plan for life. If you change your employer, you can stay with the Plan and have your new employer pay your superannuation contributions into the IAG & NRMA Plan. Download the Reserved member brochure, When you re on a good thing, make the most of it, from the Plan website for more information or call the Plan Helpline. If you re looking to retire, consider taking advantage of the Plan s Transition to Retirement Income Stream or an account based pension. There s no need to change super funds. You can download a copy of the Retirement Income Stream PDS from the Plan website. To find out more about transitioning to retirement and for personal advice, at no cost over the phone, call the Plan Helpline. If you have a question Please take the time to read this Annual Report. It contains information about the Plan s investment performance for the year to 30 June 2013, the Plan s financial situation and an overview of what s new in super. Understanding superannuation and how you can make the most of it can sometimes feel overwhelming. But we re here to help! Visit the Plan website, or call the Plan Helpline on to have any questions answered. Sincerely, Troy Maguire Senior Manager, Superannuation IAG & NRMA Superannuation Pty Limited S YOUR 2 IAG & NRMA Superannuation Plan Annual Report 2013

5 The Plan at a glance This section provides a brief summary of the operations of the Plan during the year. Further details are set out later in the report. Plan facts and figures Plan membership as at 30 June 2013 Accumulation 8,630 Defined Benefit 420 Lifetime Pension 177 Reserved 5,378 Retirement Income Stream 94 Total 14,699 Net Plan assets as at 30 June 2013 were in excess of $1,300 million. About your Plan In this report, a reference to: IAG means a company in the Insurance Australia Group; NRMA means the National Roads and Motorists Association Limited and its related bodies corporate. The Plan has two sub-plans: The IAG sub-plan for current and former employees and officers (and their eligible spouses) of companies in the Insurance Australia Group, and The NRMA sub-plan for current and former employees and officers (and their eligible spouses) of the National Roads and Motorists Association and its related bodies corporate. Generally, if you joined the Plan after 1 January 1999, you belong to the Accumulation section of the Plan. You will also be in the Accumulation section if you chose to transfer to this section. Otherwise, you belong to the Defined Benefits section. Some members who transferred from the SGIC Staff Superannuation Fund, the RACV Superannuation Fund, the CGU Superannuation Fund or the CGU-VACC Pension Fund are also Defined. In this Annual Report, unless noted otherwise, references to Accumulation members generally cover Reserved members, Retained members, Spouse members and Retirement Income Stream members. Separate investment performance information is provided for Retirement Income Stream members. It is important to understand that, while past performance is useful as a guide in reviewing the historical investment returns, it should not be relied upon as indicative of future performance and does not guarantee such performance. Investment returns The following is a summary of the net investment returns for the year as well as the average returns over the last five years and the last ten years. Accumulation members Investment option Annual net investment return* for the year ended 30 June 2013 (%) Compound average annual rate of net investment return over the last five years (% p.a.) Compound average annual rate of net investment return over the last ten years (% p.a.) Australian Shares n/a Shares Growth/MySuper Balanced Conservative Cash n/a * The net investment returns above are shown after the investment fee (which covers all investment expenses) and taxes on investment income. Retirement Income Stream Investment option Annual net investment return* for the year ended 30 June 2013 (%) Compound average annual rate of net investment return over the last five years** (% p.a.) Pension Growth Pension Balanced Pension Conservative Pension Cash * The net investment returns above are shown after the investment fee (which covers all investment expenses) and allowing for the effect of tax. ** These options were introduced on 1 July 2007, so longer term performance is only available since that date. Defined Credited to member accounts* Earned on Plan assets Annual net investment return for the year ended 30 June 2013 (%) Compound average annual rate of net investment return over the last five years (% p.a.) Compound average annual rate of net investment return over the last ten years (% p.a.) * This return is the effective rate of net return for compulsory account balances of Defined. Refer page 16 for further information. S YOUR 3 IAG & NRMA Superannuation Plan Annual Report 2013

6 Your Plan s investments Market round-up The 2013 financial year produced some of the best investment returns in the last decade. The Australian sharemarket returned 21.9% (pre fees and tax) while overseas shares did even better, producing a return of 33.1% including the impact of the fall in the Australian dollar. Property and alternatives (comprising hedge funds and private equity) also generated double-digit returns. In contrast, returns on cash and fixed interest investments were depressed reflecting a number of reductions in the official cash rate by the Reserve Bank over the year. The Plan s MySuper option (previously known as the Growth option), the largest investment option and the default option for accumulation members where no specific investment choice is nominated, delivered a net investment return of 14.2% for the year after investment fees and taxes. The corresponding returns for the Balanced and Conservative options, which have less exposure than the MySuper option to shares and property, were 10.8% and 6.7%, respectively. The Cash option s investment return of 2.8% net of fees and taxes reflected the low official cash rates over the year. The Plan s Shares and Australian Shares options benefited from strong share markets providing net investment returns of 21.8% and 17.1% respectively. Details of longer term returns for all the Plan s superannuation and pension options are included on page 3 in this report. Looking forward, 2014 is unlikely to be as good for investment markets as the past year. There is a great deal of uncertainty and returns are expected to be volatile. The Chinese economy has slowed and most Europe economies continue in the doldrums. While the US unemployment situation has improved somewhat, at the time of writing, the political impasse between Congress and the President has the potential to damage not only the US economy but other economies around the world. Governments are expected to maintain a low interest rate environment to try and stimulate economic activity. Inflation is expected to remain benign. Against this background, the Trustee currently considers that growth assets (shares, property and alternatives) are more likely than not to outperform cash and fixed interest over the short to medium term and, therefore, has adopted a small bias to growth assets in the options that invest in multiple asset classes. The Trustee also considers that the Australian Dollar is currently overvalued (and therefore more likely to fall against other currencies over the medium term). However, following the recent fall in the value of the Australian dollar, the Plan s foreign currencies hedges have been increased to bring them closer to, but still below, the neutral position. The Plan provides members with a range of investment options to suit all level of risk appetite. You can choose one or more of these investment options for your existing account balance and future contributions and can change these choices on-line at any time. However, before making any change to your investment choices, you should speak to a licensed or appropriately qualified financial adviser. For further information about investment choices and for general advice, you can call the Plan Helpline on S YOUR 4 IAG & NRMA Superannuation Plan Annual Report 2013

7 The Plan s investment strategy and objectives For each investment option, the Trustee has set an investment strategy and objective. Please note that the objectives are not a forecast or guarantee of future performance. The Trustee regularly monitors each investment option s performance against its objective. There are different levels of investment risk associated with each of the Plan s investment options. Please refer to the Plan PDS or the Retirement Income Streams PDS and the relevant factsheets for more information. You can download copies from the Plan website, or you can call the Plan Helpline on Although the Plan offers investment choice for members, the Trustee retains overall responsibility for the investment of the assets of the various options in line with their specific investment objectives. Members can choose the investment option/s that suit their individual needs and preferences. For defined benefit members, investment choice only applies in respect of any additional accumulation accounts in the Plan. How the Plan s investments are managed Specialist investment managers appointed by the Trustee invest in securities such as Australian and overseas shares, property trusts, fixed interest securities, cash and short-term securities or any other investments in line with their appointment. This can be done directly or through pooled funds. The Trustee, through its asset consultants, monitors the activities and performance of all the external managers. During 2012/13 the Plan appointed Vinva Investment Management Limited to manage approximately half of the assets invested in Australian Shares. Vinva replaced BT and Northward. Vinva formally took control of the portfolio on 4 July S YOUR 5 IAG & NRMA Superannuation Plan Annual Report 2013

8 How the Plan s assets are invested This table shows the proportion of Plan s assets invested with each investment manager by asset class. Proportion of total assets as at 30 June Asset Class Investment Manager 30 June 2013 (%) 30 June 2012 (%) Cash IAGAM Cash Management Trust Sub-total Fixed Interest IAGAM Fixed Interest Trust Sub-total Australian Shares Northward Capital 8.30 BT Core Australian Equity 6.95 Alleron Northcape Small Cap Dimensional Australian Value Trust Vinva Sub-total Overseas Shares IAGAM World Equity Trust Generation IM Global Equity Fund Investec Global Emerging Markets Equity Fund Wells Fargo Emerging Markets Equity Fund Sub-total Property Invesco Global Property APPF Retail Unlisted Property Trust APPF Industrial Unlisted Property Trust GPT Wholesale Office Fund Sub-total Alternative Investments IAGAM Sustainable Investments Trust IAGAM Private Equity Trust AQR Wholesale Delta Fund GMO Systematic Global Macro Fund Sub-total Total Notes: 1. At 30 June 2013 this portfolio was in transition, being managed by JP Morgan. Vinva formally took control of this portfolio on 4 July IAGAM has appointed specialist international share managers to manage the World Equity Trust s assets. These managers are: Arrowstreet Capital, T. Rowe Price Global Equity Fund and MFS. 3. Investment manager engaged by the Trustee to select and manage an investment portfolio across a range of global listed property investments. 4. The IAGAM Sustainable Investments Trust is invested in the Generation Climate Solutions Fund. 5. Horsley Bridge Partners has been appointed to manage the assets of the IAGAM Private Equity Trust. S YOUR 6 IAG & NRMA Superannuation Plan Annual Report 2013

9 Large assets of the Plan Part of the Plan s assets are invested under mandates by investment managers appointed by the Trustee. The securities covered by these mandates remain in the Trustee s name. No individual security under the mandates represented more than 5% of the Plan s total assets. The remaining assets of the Plan primarily consist of units in unit trusts or other pooled funds. The Plan s holdings in the IAGAM Cash Management Trust, the IAGAM World Equity Trust, the IAGAM Fixed Interest Trust and the Dimensional Australian Value Trust each exceeded 5% of the Plan s total assets. Use of derivatives Derivatives are special contracts e.g. futures and forward exchange rate agreements which can be used to manage the risk of changes in the future value of investments. The investment managers are permitted to use derivatives in the management of the Plan assets. These instruments are typically used for the following purposes: hedging; seeking to protect against adverse changes in the market value of assets and movements in currency exchange rates to obtain prices that may not be available if assets are bought directly to reduce the costs of buying and selling assets directly to change the term of a fixed interest security or portfolio to manage cash flows efficiently to manage asset weightings for the different asset classes. Derivatives may not be used for speculative purposes. The Plan held derivatives during the year ended 30 June 2013 in respect of its Australian shares, overseas shares and fixed interest investments. The Plan s exposure to derivatives is limited to 20% of the market value of the assets of the Plan. Within each asset class, exposure to derivatives is limited to 20% of the market value of the asset class. The Plan also holds derivatives to hedge part of the currency exposure in relation to its investment in international shares and alternative investments. Derivatives are not used for speculative purposes. Plan Reserves The Trustee has established an Operational Risk Reserve for the Plan as required by superannuation legislation and the prudential standards. The purpose of the Operational Risk Reserve is to provide funding to meet the costs associated with rectifying any loss caused by an operational risk event. The Trustee has a policy in relation to the establishment, management, investment, use of and, if required, replenishment of the Operational Risk Reserve. The Trustee has set a target funding level for the Operation Risk Reserve of 0.26% of Plan assets. The Operational Risk Reserve is invested in the Plan s Cash investment option to minimise the likelihood of negative investment returns. The Trustee commenced the Reserve from 1 July 2012 with an allocation from investment earnings with the aim of achieving the target funding level by 30 June The reserve levels for 30 June 2013 and preceding years are shown below. As at 30 June Reserve Balance ($,000) % of assets S YOUR 7 IAG & NRMA Superannuation Plan Annual Report 2013

10 Investment information for Accumulation accounts and Retirement Your benefit For Accumulation members, your super benefit is your member account balance. For Retirement Income Stream members, it is your retirement income stream account balance. Your account is invested (after allowing for tax and expenses) according to your choice of investment option(s). So the amount you ultimately receive is directly linked to the investment performance of your selected option or mix of options. For Defined, your additional accumulation accounts are invested according to your choice of investment option(s). Your investment purchases units Your account balance is applied to buy what are known as units in your chosen investment option(s). The number of units bought depends on the unit price at the relevant time. For example, if your account balance is $1,000 and the unit price of your selected investment option is $1.00 at that time, then 1,000 units would be bought on your behalf. Recent investment returns Accumulation accounts The following table shows the net investment returns for each investment option for the past five years ended 30 June plus the average over that period. The annual net investment return is earnings after taxes and investment related fees and expenses. Investment option Net investment return (%) Year ended 30 June Compound average rate of net return over the past five years (% p.a.) Australian Shares Shares Growth Balanced Conservative Cash Unit prices are generally calculated daily and will go up and down as investment markets shift, affecting the value of your units and consequently the value of your investment. The unit price for each option also takes into account tax, investment related fees and other expenses. (Investment earnings in the pension investment options are not taxed.) The value of your account balance at any time is simply the number of units you have multiplied by their unit price at that time. Net investment returns on your chosen investment options (which may be positive or negative) will be reflected via changes in unit prices. If the net investment returns for the option are positive, the unit price will increase. If the net investment returns are negative (a loss), the unit price will decrease. The effective rate of net investment return for a given period can therefore be determined by the proportionate increase (if a positive return) or decrease (if a negative return) in the unit prices from the start to the end of the period. Daily unit prices are posted on the Plan s website. Retirement The following table shows the net investment returns for each pension investment option available to retirement income stream members for the past five years ended 30 June plus the average over that period. The annual net investment return is earnings after investment related fees and expenses. No tax is levied on allocated pension accounts. However, these accounts still received the benefit of franking credits attached to dividends on Australian shares. Investment option Net investment return (%) Year ended 30 June Pension Growth Pension Balanced Pension Conservative Compound average rate of net return over the past five years (% p.a.) Pension Cash S YOUR Investment returns for an investment option may be positive or negative. The value of your investment depends on the performance of your chosen option(s). Each option bears a different level of risk, depending on the mix of asset classes that make up the portfolio. More information about the associated risks and allocation of asset classes for each option are detailed on the following pages of this report. 8 IAG & NRMA Superannuation Plan Annual Report 2013

11 Your investment options in detail Information in this section applies to Accumulation * Each of the Plan s options has a specific investment objective and strategy set by the Trustee. The objectives are not a forecast or guarantee of future performance. Each option has a different risk profile and the Trustee s aim is to achieve the best possible returns relative to the level of risk associated with investing in that option. The investment returns for any option fluctuate depending on the volatility of investment markets and the performance of the underlying asset classes. The performance of each asset type is measured against a benchmark set by the Trustee which reviews this performance regularly. The target asset allocation for each option is the proportion of that option that would ideally be invested in each asset class if the Trustee had no particular view that one asset class was likely to outperform any other asset class. However, within the ranges specified in this Annual Report, the Trustee may decide to invest more than the target allocation in an asset class it expects to outperform and less in one it expects to underperform. The aim is to maintain the asset allocations for each investment option within the target ranges stated in this Annual Report. Nevertheless, from time to time, market movements and/or cash flows into or out of an option may cause the actual allocation temporarily to fall outside the target ranges. This will normally be addressed at the next available rebalancing opportunity. When considering the following information, please note that past performance for each investment option should not be relied upon as indicative of future performance and does not guarantee such performance. S YOUR * Retirement Income Stream members can select from the Pension Growth, Pension Balanced, Pension Conservative and Pension Cash Options. 9 IAG & NRMA Superannuation Plan Annual Report 2013

12 Australian Shares Option Strategy Aims to invest 100% of assets in Australian shares (apart from a small cash holding). Investment objective This option aims to achieve a net investment return of at least 5.0% p.a. above inflation (as measured by the Consumer Price Index) over rolling ten year periods. Level of risk high Likelihood of a loss in any one year period is approximately five in twenty. Because shares are market driven investments which respond quickly to changes in market conditions, shares are highly volatile and investors can expect performance to show periods of significantly high growth, as well as periods of poor or even negative returns. Over a longer period of time, shares generally can be expected to produce higher returns than any other asset class. The performance of the Australian Shares Option is measured against a benchmark portfolio, which consists of the target asset allocation as shown below. Target asset allocation Benchmark % Range % Australian shares Cash Where the assets were invested as at 30 June 2013: Australian shares 95.6% Cash 4.4% As at 30 June 2013, the Australian Shares Option had investment assets of $35.5M. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Rate of return (% p.a.) Five year compound average net rate of return 1.2 S YOUR 10 IAG & NRMA Superannuation Plan Annual Report 2013

13 Shares Option Strategy Aims to invest approximately half the assets in Australian shares and half in overseas shares (apart from a small cash holding). By combining overseas shares with Australian Shares, this option provides greater diversification across countries and industries than the Australian Shares Option. Investment objective This option aims to achieve a net investment return of at least 5.0% p.a. above inflation (as measured by the Consumer Price Index) over rolling ten year periods. Level of risk high Likelihood of a loss in any one year period is approximately five in twenty. Because shares are market driven investments which respond quickly to changes in market conditions, shares are highly volatile and investors can expect performance to show periods of significantly high growth, as well as periods of poor or even negative returns. Over a longer period of time, shares generally can be expected to produce higher returns than any other asset class. Exposure to overseas shares means that there is also a currency risk although the Trustee has chosen to hedge part of this risk. The performance of the Shares Option is measured against a benchmark portfolio, which consists of the target asset allocation as shown below. The Trustee may vary the actual asset allocation at any time either up or down within the below ranges. Target asset allocation Benchmark % Range % Australian shares Overseas shares Cash Where the assets were invested as at 30 June 2013: Australian shares 46.8% Overseas shares 50.9% Cash 2.3% As at 30 June 2013, the Shares Option had investment assets of $84.3M. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Rate of return (% p.a.) Five year compound average net rate of return 3.4 S YOUR 11 IAG & NRMA Superannuation Plan Annual Report 2013

14 MySuper and Pension Growth Options The MySuper Option was formerly know as the Growth Option. Strategy Aims to invest the majority of the portfolio (70%), in growth assets such as Australian and overseas shares and property trusts, and the remaining (30%) in less volatile assets such as fixed interest and cash. Investment objective These options aim to achieve a net investment return of at least 4.0% p.a. above inflation (as measured by the Consumer Price Index) over rolling ten year periods. Whilst both the MySuper and Pension Growth Options are invested in the same pool of assets, returns will differ between them because earnings in the Pension Growth Option are not taxed. Level of risk medium to high Likelihood of a loss in any one year period is approximately four in twenty. While a large portion of the assets is invested in the more volatile share markets, this is partially offset by the stability of the fixed interest and cash components of the portfolio. For this reason, some fluctuation from year to year can be expected. However this fluctuation is not expected to be as great as for the Australian Shares Option and the Shares Option. The performance of the MySuper Option and Pension Growth Option are measured against a benchmark portfolio, which consists of the target asset allocation shown below. The Trustee may vary the actual asset allocation at any time either up or down within the below ranges. Target asset allocation Benchmark % Range % Australian shares Overseas shares Property Alternatives Fixed interest Cash Where the assets were invested as at 30 June 2013: Australian shares 28.4% Overseas shares 29.0% Property 10.4% Alternatives 4.8% Fixed interest 22.8% Cash 4.6% As at 30 June 2013, these options had investment assets of, in total, $896.3M. This includes the assets in respect of Defined as explained on page 16. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June MySuper Option Rate of return (% p.a.) Pension Growth Option Five year compound average net rate of return S YOUR For Accumulation members, the MySuper Option is also the default option. This means that this option will apply to your superannuation investment if you do not choose an investment option. The Trustee has chosen this option as the default option because the Trustee views superannuation as a long-term investment. However, it s important that you individually assess your own situation and retirement planning strategy (for example, if you are near to retirement age), as the default option may not be appropriate for you. You are encouraged to make your own choice between the available options and to seek professional advice. 12 IAG & NRMA Superannuation Plan Annual Report 2013

15 Balanced and Pension Balanced Options Strategy Aims to have 50% of the portfolio in growth assets, which will participate in the higher returns expected from shares, property and alternative assets but will be cushioned from the associated high volatility by an equal allocation (50%) to defensive assets. Investment objective These options aim to achieve a net investment return of a least 3.0% p.a. above inflation (as measured by the Consumer Price Index) over rolling five year periods. Whilst both the Balanced Option and the Pension Balanced Option are invested in the same pool of assets, returns will differ between them because earnings in the Pension Balanced Option are not taxed. Level of risk medium Likelihood of a loss in any one year period is approximately three in twenty. With greater levels of diversification and reduced risk, these options are not expected to experience as high a level of year-onyear volatility in investment returns as the Australian Shares Option, Shares Option or MySuper Option. The performance of the Balanced Option and Pension Balanced Option are measured against a benchmark portfolio, which consists of the target asset allocation as shown below. The Trustee may vary the actual asset allocation at any time either up or down within the below ranges. Target asset allocation Benchmark % Range % Australian Shares Overseas Shares Property Alternatives Fixed Interest Cash Where the assets were invested as at 30 June 2013: Australian Shares 21.1% Overseas Shares 19.6% Property 7.6% Alternatives 2.3% Fixed Interest 31.4% Cash 18.0% As at 30 June 2013, these options had investment assets of, in total, $119.7M. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Balanced Option Rate of return (% p.a.) Pension Balanced Option Five year compound average net rate of return S YOUR 13 IAG & NRMA Superannuation Plan Annual Report 2013

16 Conservative and Pension Conservative Options Strategy Aims to invest mainly in fixed interest bonds and cash, which are stable investments producing a more predictable return than the Australian Shares, Shares, MySuper and Balanced Options in the longer term. The growth component of this portfolio is achieved by a relatively small investment in shares and property. Investment objective These options aim to achieve a net investment return of at least 2.0% p.a. above inflation (as measured by the Consumer Price Index) over rolling three year periods. Whilst both the Conservative Option and the Pension Conservative Option are invested in the same pool of assets, returns will differ between them because earnings in the Pension Conservative Option are not taxed. Level of risk medium to low Likelihood of a loss in any one year period is approximately one in twenty. Investment returns are expected to remain more stable in the short-term than the returns of all the other options except the Cash Option. The performance of the Conservative Option and Pension Conservative Option are measured against a benchmark portfolio, which consists of the target asset allocation as shown below. The Trustee may vary the actual asset allocation at any time either up or down within the below ranges. Target asset allocation Benchmark % Range % Australian shares Overseas shares Property Fixed Interest Cash Where the assets were invested as at 30 June 2013: Australian Shares 9.6% Overseas Shares 10.8% Property 4.9% Fixed Interest 42.8% Cash 31.9% As at 30 June 2013, these options had investment assets of, in total, $89.2M. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Conservative Option Rate of return (% p.a.) Pension Conservative Option Five year compound average net rate of return S YOUR 14 IAG & NRMA Superannuation Plan Annual Report 2013

17 Cash and Pension Cash Options Strategy Invests solely in deposits in banks, bills of exchange, promissory notes and other short term securities. Cash is the most stable investment with very little risk of negative returns over the short term. However, the long term performance of cash has historically been lower than returns on the other investment options available under the Plan, particularly during periods of high inflation. Investment objective These options aim to provide capital stability and capital preservation by matching the return on the cash benchmark as measured by the UBS Bank Bill Index after allowance for tax. Whilst both the Cash Option and the Pension Cash Options are invested in the same pool of assets, returns will differ between them because earnings in the Pension Cash Option are not taxed. Level of risk low Likelihood of a loss in any one year period is very small, less than one in twenty. Investment returns are expected to remain more stable than the other options over both the short and long term. As this option is invested only in cash, its performance will be measured by the UBS Bank Bill Index, which is the index for cash. Target asset allocation Benchmark % Range % Cash Where the assets were invested as at 30 June 2013: Cash 100% As at 30 June 2013, these options had investment assets of, in total, $101.4M. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Cash Option Rate of return (% p.a.) Pension Cash Option Five year compound average net rate of return S YOUR 15 IAG & NRMA Superannuation Plan Annual Report 2013

18 Measuring performance Investment performance benchmarks The investments are reviewed to monitor how they are performing against investment objectives. The following are the benchmarks used by the Trustee to measure the performance of each asset class. Asset type Australian shares Overseas shares Property Alternatives Fixed interest Cash Performance benchmark Composite index consisting of the S&P/ASX 300 Accumulation Index and the S&P/ASX Small Ordinaries Accumulation Index Composite index consisting of the MSCI World (ex Australia) Accumulation Index with net dividends reinvested (50% hedged) and the MSCI Emerging Markets Accumulation Index with net dividends reinvested Composite index consisting of the FTSE EPRA/NAREIT Global REIT Index (100% hedged) and the Mercer IPD Unlisted Property Index UBS Australia Bank Bill Index UBS Australia Composite Bond Index (All Maturities) UBS Australia Bank Bill Index Investment information Information in this section applies to Defined As Defined, some of your benefits may be based on your salary and period of service, and some on your account balances in the Plan. The compulsory account balances of Defined are credited with a declared earning rate. The Trustee has chosen to invest the assets supporting the entitlements of Defined in the MySuper Option refer page 12. The Trustee has generally determined the declared earning rate by averaging actual returns over three years. The declared earning rate of 7.6% for the year to 30 June 2013 represents the average of the return for the last three years. This approach is known as smoothing and results in less fluctuation in the rate of interest being applied to members accounts than would apply if the actual earnings were applied each year. However, over longer periods, the difference in overall result is substantially reduced. Any additional voluntary account balances are invested in the Cash Option or such other option as chosen by the member. Prior to 1 June 2011, the smoothed rate also applied to these account balances. S YOUR 16 IAG & NRMA Superannuation Plan Annual Report 2013

19 Comparison of annual effective rates of net return and declared rates The Plan s annual net investment returns and declared earning rates since 1990 for account balances of Defined Benefit members are as follows: Year ended 30 June Net investment return (% p.a.) Declared earning rate (% p.a.) Five year compound average rate of return (% p.a.) Ten year compound average rate of return (% p.a.) Twenty year compound average rate of return (% p.a.) Twenty-three year compound average rate of return (% p.a.) S YOUR Note: past performance is not an indicator of future performance Defined leaving during the year For Defined leaving the Plan during the year, before a final earning rate is available, benefits are calculated using an interim rate. The Trustee sets interim rates each quarter. 17 IAG & NRMA Superannuation Plan Annual Report 2013

20 The Plan s financial details The Plan s financial statements A summary of the Plan s audited accounts for the 2012 and 2013 years is shown below. Copies of the audited accounts and the auditor s report are available by contacting the Plan Helpline on Accounts as at 30 June Statement of change in net assets 2013 ($,000) 2012 ($,000) NET ASSETS AT START OF YEAR 1,154,839 1,134,381 Plus Contributions 108,057 98,174 Transfers from other funds 19,272 16,113 Insurance proceeds, rebates and other income 2,307 2,338 Investment income 43,423 42,647 Realised investment gains (losses) 13,824 (10,475) Unrealised investment gains (losses) 110,816 (29,875) Total revenue 297, ,922 Less Benefits paid 88,607 79,966 Administration expenses 4,460 4,081 Insurance premiums 3,496 2,957 Contribution surcharge tax 2 Income tax expense 26,889 11,458 Total expenses 123,452 98,464 NET ASSETS AT END OF YEAR 1,329,086 1,154,839 S YOUR Statement of net assets 2013 ($,000) 2012 ($,000) ASSETS Investments 1,330,482 1,140,650 Investment income receivable 11,657 8,960 Other receivables Deferred tax asset 1,073 11,949 Total assets 1,343,535 1,161,833 Less LIABILITIES Benefits payable 76 1,245 Provisions for income tax 5,794 3,976 Derivatives contracts 6, Other (including share creditors) 2,240 1,566 Total liabilities 14,449 6,994 NET ASSETS AT END OF YEAR 1,329,086 1,154, IAG & NRMA Superannuation Plan Annual Report 2013

21 2013 Sub-plan reporting In accordance with the Plan s Trust Deed, from 1 December 2003, the Plan has been administered as two sub-plans, the IAG sub-plan and the NRMA sub-plan. The following secondary sub-plan report has been prepared for the financial year to 30 June Statement of change in net assets IAG sub-plan ($,000) NRMA sub-plan ($,000) NET ASSETS AT START OF YEAR 1,004, ,848 Transfers between sub-plans 1,811 (1,811) Plus Contributions 96,357 11,700 Transfers from other funds 16,119 3,153 Investment revenue and changes in net market value of investments 147,845 20,218 Insurance proceeds and rebates 1, Total revenue 261,831 35,868 Less Benefits paid 81,081 7,526 Administration expenses 4, Contribution surcharge tax Insurance premiums 3, Income tax expense 23,874 3,015 Total expenses 112,108 11,344 NET ASSETS AT END OF YEAR 1,156, ,561 Statement of net assets Total assets 1,170, ,182 Less Total liabilities 13, NET ASSETS AT END OF YEAR 1,156, ,561 S YOUR The Plan s financial position As noted earlier, the Plan is administered as two sub-plans, the IAG sub-plan and the NRMA sub-plan, each with separate accounts. The Plan s actuary determines how much each employer needs to contribute to ensure that the respective sub-plans have sufficient assets to pay Defined Benefit entitlements in the future. The required level of employer contributions will vary over time depending on how the value of Defined entitlements compares with the assets attributed to each sub-plan to support those entitlements. The market value of the assets attributed to the IAG sub-plan as at 30 June 2013 covered 101.1% of the value of benefits that would have been paid to members registered in that sub-plan if they all left their employment with IAG on that day. For the NRMA sub-plan, the corresponding percentage coverage was 103.2%. The Trustee, together with the Plan s actuary, continues to carefully monitor the Plan s financial position on an ongoing basis. The Trustee confirms that employer contributions have been paid into the Plan as recommended by the actuary. 19 IAG & NRMA Superannuation Plan Annual Report 2013

22 How your Plan is managed The Trustee The Trustee, IAG & NRMA Superannuation Pty Limited, manages the Plan. The Trustee Board normally has nine directors. Two directors are appointed by Insurance Australia Group Services Pty Limited. Two directors are appointed by National Roads and Motorists Association Limited. Four directors are elected by members of the Plan for a period of three years. One member representative director is elected by NRMA Road Service Patrols and three directors are elected by other employees who are members of the Plan. As at 30 June 2013, there was also one independent director, Michelle Tredenick who was appointed by the other Trustee directors. The directors of the Trustee company as at 30 June 2013 were: Chair and Independent director Michelle Tredenick Company-appointed directors Tom Mooney NRMA Nicholas Mowat NRMA Dennis Fox IAG David McClatchy IAG Member-representative directors Mark Gold IAG Christopher Hutchinson IAG Elaine Loo IAG Jonathan Street NRMA Road Service Patrol Changes to the Trustee over the year On 26 February 2013 David McClatchy was appointed to the Trustee Board replacing Carolyn McCann who resigned effective 25 February Our thanks to Carolyn for her contribution while serving on the board. Meeting attendance During the year, four Board meetings were held, together with five meetings of the Risk Management and Compliance Committee and five meetings of the Investment Committee. Attendances were as follows: Board RMCC Investment Committee Michelle Tredenick 8/8 Jonathan Street 8/8 Christopher Hutchinson 7/8 5/5 Elaine Loo 8/8 7/7 Mark Gold 8/8 5/7 Dennis Fox 8/8 5/5 Tom Mooney 5/8 5/5 Caroyln McCann 3/4 3/3 Nicholas Mowat 6/8 7/7 David McClatchy 4/4 As an Alternate Director, Steve Rove attended the September 2012 Board meeting as an Alternate for Carolyn McCann. As an Alternate Director, Ainsley Lee attended the March 2013 Board meeting, as an Alternate for Tom Mooney. S YOUR 20 IAG & NRMA Superannuation Plan Annual Report 2013

23 A chance to have your say As member-representative directors are elected by the members of the Plan, you get the chance to nominate and vote for representatives on the Trustee Board. The Plan has a specific set of rules applying to the appointment and removal of member directors and the filling of casual vacancies. These rules are available by calling the Plan Helpline on Indemnity insurance The Trustee and its directors may be reimbursed and indemnified out of the Plan for all liabilities which they properly incur in administering the Plan including liabilities that arise as a result of an honest mistake. To protect the assets of the Plan against certain losses arising from the conduct of the Trustee and its directors and administrators, the Trustee has taken out trustee indemnity insurance cover. Trust Deed and Rules The Trust Deed and Rules may be amended from time to time. During the year to 30 June 2013, amendments were made to the Trust Deed and Rules to allow for the change to fee arrangements for casuals and asset based fees and for the introduction of non-lapsing death benefit nominations. Concessional tax treatment In order to qualify for concessional tax rates, funds have to be classified as complying superannuation funds under the income tax laws. To be eligible, funds must report regularly to APRA and demonstrate their compliance with superannuation laws and APRA guidelines. The Plan is classified as a complying superannuation fund and the Trustee is not aware of any matter that would cause the Plan to lose its complying status. Management assistance The Plan is administered by Mercer Outsourcing (Australia) Pty Ltd. The administrator performs such functions as determining member benefits, processing and allocating contributions and ensuring all membership data is correct. Contact details for Mercer can be found on page 27 of this report. The Plan s compliance status is monitored by the Plan s Compliance Manager. The Trustee is assisted by a number of professional organisations who provide advice and assistance in the administration of the Plan. These include: Administration, superannuation, actuarial and communication consulting Mercer Outsourcing (Australia) Pty Ltd ABN Mercer Consulting (Australia) Pty Ltd ABN Auditor KPMG ABN Insurer MLC Limited ABN Investment consulting Mercer Investments (Australia) Ltd ABN Solicitor mackenzie thomas ABN Custodian JPMorgan ABN S YOUR 21 IAG & NRMA Superannuation Plan Annual Report 2013

24 If you leave employment On ceasing service with IAG or NRMA, if your account balance is $5,000 or more, you have the option of leaving your super in the Plan. By leaving your super in the Plan you can continue death and total and permanent disablement insurance cover (on modified terms) and you can continue to benefit from the other features the Plan provides such as access to Retirement Income Stream products. Your super is an important investment and you are encouraged to consider carefully how you wish to receive it and/or where you want to invest it. Receiving your benefit as a lump sum If you leave employment before you reach your preservation age, part or all of your superannuation benefit will be subject to preservation and cannot be paid directly to you. If your account balance is $5,000 or more, you can remain a member of the IAG & NRMA Superannuation Plan in the Reserved category. If you don t give the Trustee instructions as to where to transfer your super, you will automatically remain a member of the Plan as a Reserved member. If your account balance is less than $5,000, see below under the heading Eligible Rollover Fund and unclaimed money. If you were an Accumulation member before becoming a Reserved member, you will continue in the same investment option(s). You can elect a new investment choice at any time. If you were a Defined Benefit member before becoming a Reserved member: the amount of your benefit represented by your additional accumulation account will remain invested in the same investment option(s), and the remainder of your benefit (your defined benefit entitlement) will be invested in the Cash option. As a Reserved member you may change your investment options at any time. Additionally, if you are a Reserved member and are now employed with another employer, by exercising your right to choose your super fund, you may be able to have your employer contribute to the IAG & NRMA Superannuation Plan. To do this, you must complete a Standard choice form and return this form to your new employer. Your new employer can contribute to the Plan via BPAY on the Plan website, or by completing the Employer remittance form and sending the Plan a cheque. These forms are available from the IAG & NRMA Superannuation Plan website or by calling the Plan Helpline on You can also make personal contributions (after-tax) to the Plan. These can be made using BPAY using your phone or internet banking facilities or by completing the Application to make lump sum contributions form and sending the Plan a cheque. As a Reserved member you can also continue to make rollovers of other superannuation monies into your account in the Plan. You can transfer your entitlement to another approved superannuation entity, including an eligible rollover fund, superannuation fund, deferred annuity, approved deposit fund, retirement savings account or allocated pension. See page 23 for details on preservation. Receiving your benefit as an allocated pension After you reach your preservation age (see next page) and provided your benefit in the Plan is at least $50,000, you can choose to receive your benefit from the Plan as an allocated pension. Please see the Plan s Retirement Income Stream Product Disclosure Statement (RIS PDS) for more information. You can download the PDS from the Plan website, or request a copy by calling the Plan Helpline on Receiving your benefit as a lifetime pension Certain categories of Defined may be entitled to a lifetime pension or to a deferred pension (a lifetime pension that commences at a future date) on ceasing employment. If this is the case, you will be informed about your pension options. Other members can request the Trustee to provide them with a pension in lieu of their lump sum entitlements. In this case, the terms of any pension offered are at the discretion of the Trustee in conjunction with advice from the Plan s actuary. Eligible rollover fund and unclaimed money If you do not tell the Trustee within 90 days how you want your benefit paid and your account balance in less than $5,000, it will automatically be transferred to an eligible rollover fund (ERF). An ERF is a fund approved by APRA to receive benefits payable to members who cannot be located, or who do not advise how and where their benefit is to be paid. The ERF currently used by the Trustee is SuperTrace Eligible Rollover Fund (SuperTrace). Its contact details are: The Senior Administrator SuperTrace Eligible Rollover Fund Locked Bag 5429 Parramatta NSW 2124 Tel: If you have reached Government pension age when you leave your employer and you have not given the Trustee instructions regarding the payment of your benefit from the Plan, and you cannot be contacted, your benefit may be treated as unclaimed money according to superannuation law. In this instance, your benefit will be placed with the Australian Tax Office. If your benefit is transferred to an ERF or treated as unclaimed money, you will no longer be a member of the Plan. However, you have rights to claim your benefit from the ERF or the relevant Government body as the case may be. S YOUR 22 IAG & NRMA Superannuation Plan Annual Report 2013

25 About SuperTrace Set out below is a summary of some of the more significant features of SuperTrace. The assets of SuperTrace are invested in an investment policy (the SuperTrace Policy) issued to Colonial Mutual Superannuation Pty Ltd by The Colonial Mutual Life Assurance Society Limited (CMLA). The SuperTrace Policy is invested solely in the Capital Stable Fund in CMLA s No. 2L Statutory Fund. There is no investment choice available to members. The investment objective of the Capital Stable Fund is to provide a reasonably high level of security and consistent returns. The investment strategy for the assets in the Capital Stable Fund is to invest in a broad range of assets with a majority in defensive investments. Investment returns are credited to members accounts as an annual crediting rate effective 30 June. The crediting rate is derived from the earning rate of the SuperTrace Policy which is net of tax on investment earnings, less any asset charge. The crediting rate is not guaranteed and the rate applied can be negative. The following fees and charges apply in SuperTrace: an asset charge of 1.55% p.a. (actual cost net of tax) is deducted from the earnings of SuperTrace prior to the crediting rate being declared SuperTrace is unable to accept contributions from members or their employers. However, rollovers from other superannuation funds are permitted. SuperTrace does not provide insurance cover. Should you wish to know more about SuperTrace, contact the SuperTrace Customer Service Representatives on between 8.30am and 6pm Monday to Friday (Eastern Standard Time) or for a copy of their Product Disclosure Statement. Contribution surcharge tax While the contribution surcharge tax was abolished with effect from 1 July 2005, it still has potential application in some cases (possibly where there has been an amended assessment or a transfer of benefits to the Plan with an outstanding surcharge liability). In such a case, the applicable surcharge will be levied against your benefit in the Plan. If you are an Accumulation member, this will usually be by deduction from your accounts. If you are a Defined Benefit member, if the Trustee is required to pay surcharge tax, the amount paid will be accrued, with interest at the Plan s net earning rate, and deducted from your benefit when it is paid. Restrictions on when you can access your benefits Preservation rules Superannuation is a long-term investment and the Federal Government has placed restrictions on when a person can have access to benefits. These restrictions are known as preservation. When you leave the Plan, some or all of your benefit may have to be preserved. This means you may not be able to take all your benefit (less tax) in cash when you leave the Plan. Your benefit statement shows how much of your benefit is preserved. Preserved benefits must generally be kept in the superannuation system until you: retire permanently at or after your preservation age (see below) leave your employer at or after age 60 reach age 65 become permanently incapacitated or suffer a terminal medical condition as defined by Superannuation Industry Supervision (SIS) law (see below), or die. Your preserved amount is shown on your benefit statement. Your preservation age depends on your date of birth according to the table below: Date of birth Your preservation age Before 1 July July 1960 to 30 June July 1961 to 30 June July 1962 to 30 June July 1963 to 30 June After 30 June Preservation of disablement benefits In some cases it is possible that, even though you may have qualified for a total and permanent disablement benefit from the Plan, the benefit may not be paid to you in cash until you have satisfied one of the above payment triggers. This is due to the difference in definitions between the terms total and permanent disablement, as defined in the Trust Deed (or the Plan s insurance policy) and permanent incapacity in SIS. For preservation purposes, permanent incapacity, in relation to a member who has ceased to be gainfully employed, means ill-health (whether physical or mental), where the Trustee is reasonably satisfied that the member is unlikely, because of the ill-health, ever again to engage in gainful employment for which the member is reasonably qualified by education, training or experience. S YOUR 23 IAG & NRMA Superannuation Plan Annual Report 2013

26 Super News The Australian superannuation industry is undergoing a period of profound change. Stronger Super is one of the most significant parcels of reforms to the superannuation industry since the Superannuation Guarantee was first introduced more than 20 years ago. In this update, we give a summary of the other changes in super that have taken place over What s changing in super In April, the Federal Government announced several proposed reforms to superannuation, which were confirmed in the May 2013 budget. Further changes were announced in August. Some of these have been legislated and we explain these in more detail below. Briefly, the proposals still to be legislated at the time of going to press are: From 1 July 2014 the tax exemption for investment earnings on superannuation assets supporting income streams will be capped at $100,000 a year for each individual, with a concessional tax rate of 15% applying for investment earnings over this. Account-based superannuation income streams commenced from 1 January 2015 will be subject to the normal deeming rules for social security pension income tests. The Government has already put in place a number of initiatives through the Australian Taxation Office (ATO) to help reunite members with lost super accounts. The account balance threshold for lost super to be transferred to the ATO has increased from $200 to $2,000 from 31 December 2012, and the former Labor Government announced a further increase to $4,000 from 31 December 2015 and again to $6,000 from 31 December These accounts will receive interest equal to increases in the Consumer Price Index (CPI) after being transferred to the ATO. Increase in Superannuation Guarantee From 1 July 2013, the minimum employer superannuation contribution (Superannuation Guarantee) increased from 9% to 9.25% of Ordinary Time Earnings. The rate is scheduled to increase to 9.5% from 1 July 2014 with further increases each year until the rate reaches 12% in From 1 July 2013, the Superannuation Guarantee requirements will also apply to members over age 70. The new coalition government has previously announced that they will defer the future increases in the Superannuation Guarantee. Higher concessional contributions limit from 1 July 2013 The Federal Government has introduced a higher concessional (before-tax) contribution limit of $35,000 a year for people aged 60 or over, applying for the 2013/14 financial year. This higher limit will extend to anyone aged 50 or over from 1 July Concessional contributions include employer and salary sacrifice contributions. The higher limit for older workers will be fixed and not indexed (i.e. not increased periodically). In the meantime, for younger workers, indexation of the standard $25,000 a year concessional limit is expected to resume from 1 July 2014, when it is likely to rise to $30,000 a year. The earlier Government proposal for an annual $50,000 concessional limit for people aged 50 or over with a balance of less than $500,000 won t proceed. Table 1 shows the current limits and how the proposed increased limits may apply in the coming financial years. Table 1: Concessional contribution limits Concessional contribution limit Limit per financial year 2012/ / /15 Standard limit $25,000 $25,000 $30,000 1 People aged $25,000 $25,000 $35,000 People aged 60 or over 2 $25,000 $35,000 $35,000 1 Anticipated limit if indexation of the current limit recommences from 1 July Ages are based on your age as at the end of each financial year. New tax treatment of excess concessional contributions Excess concessional (before-tax or employer) contributions made from 1 July 2013 will no longer be subject to the excess contribution tax inside super (previously 31.5%). Instead, the excess contributions must be included in an individual s assessable income for the year in which the contributions were made and will be taxed at marginal tax rates. A 15% non-refundable tax offset will be provided to offset the contributions tax which would have already been paid inside super. There will also be a new interest charge on any excess concessional contributions made from 1 July The charge will apply from the first day of the income year to which the excess contributions relate. This charge effectively charges interest on excess contributions for up to 12 months before the contributions were made and will accumulate daily. S YOUR 24 IAG & NRMA Superannuation Plan Annual Report 2013

27 The ATO will make a determination of any excess concessional contributions, the amount of additional tax and interest which must be paid. The individual has the right to object in some circumstances. As a result of the interest charge, for those on the top marginal tax rate, the treatment of excess contributions under these provisions will be harsher than the current rules. Once a notice of excess concessional contributions is received, an individual may choose to have up to 85% of the amount of their excess contributions released from their superannuation. The remaining 15% relates to the contributions tax paid by the super fund. This is a different approach to that currently used to release amounts from a super fund to pay excess concessional contributions tax. Funds will have to pay any amount requested to the ATO (subject to the member s account being sufficient) from the member s accumulation account. If there is insufficient money in the accumulation account, the member will be required to fund the payment from other monies. Additional contributions tax for high income earners The Government s additional contributions tax of 15% on some or all concessional contributions for members on incomes of $300,000 or more has been legislated. The tax applies retrospectively from 1 July 2012 and operates in a similar way to excess contributions tax. The member will be responsible for paying the additional tax and can generally request to have this paid from their super account. Application of the tax to accumulation accounts is expected to be a relatively straight forward process. However, how the tax will apply has yet to be confirmed. Indications are that notional contributions will not be capped at the concessional contribution limit as generally applies for excess contributions. However, it is not clear how notional contributions will be determined. Any additional tax liability relating to a defined benefit may be deferred until a benefit is paid. We will provide more information about how this tax applies to Defined as details are confirmed. Temporary residents can apply for a refund of this additional tax when they have left Australia. Pension minimum draw down rates return to normal After four years of relief in response to the prolonged investment market downturn, the minimum pension draw down rates returned to normal levels from 1 July Minimum draw down rates had been reduced by 25% over the 2012/13 financial year, in a continuation of relief following the Global Financial Crisis to allow pension accounts to recover losses incurred in the market downturn. The minimum draw down rates from 1 July 2013 are shown in Table 2. Table 2: Minimum pension draw down rates from 1 July 2013 Age* Normal minimum % Under * Age is your age as at the start of the financial year or when you start a pension in the case of the first year. If you have an account based pension or transition to retirement pension, your minimum payment amount will be calculated using the relevant draw down factor from 1 July You may wish to speak to your licensed financial adviser about how this change may affect your pension payments and whether any adjustment is required. Low Income Earners Government Contribution For most members who earn up to $37,000 a year, the Government provides a special contribution of 15% of the employer s contributions up to a maximum Government contribution of $500. The first such Government contributions will be in respect of the 2012/13 financial year and are likely to be paid in early For this purpose, income includes taxable income, salary sacrifice superannuation contributions, reportable fringe benefits and some other items. Removal of member protection Prior to MySuper rules taking effect, superannuation law required super funds to protect members with balances under $1,000 from account fees where investment earnings were less than the administration or account fee. This was called Member Protection. Under MySuper rules, all members with a MySuper balance must be charged the same fees and costs. This has prompted the Government to remove member protection on 1 July This means that, from 1 July 2013, account fees will be deducted from all member accounts, regardless of the account balance. S YOUR 25 IAG & NRMA Superannuation Plan Annual Report 2013

28 More information Resolving disputes and complaints If you have a question about your benefits in the Plan, please contact the Plan Helpline on Most enquiries can be dealt with over the phone. If not, you may be asked to put your enquiry in writing and provide a contact address for the reply. Enquiries will generally be answered within 28 days. Complex queries should be addressed to: The Enquiries Officer IAG & NRMA Superannuation Pty Limited Level George Street Sydney NSW 2000 If you have a query or a problem which is not resolved to your satisfaction, you should send a written complaint (including all relevant details) to: The Complaints Officer IAG & NRMA Superannuation Pty Limited Level George Street Sydney NSW 2000 The matter will be investigated by the Complaints Officer and, where necessary, the Audit, Risk Management and Compliance Committee on behalf of the Trustee. You will be advised of the Trustee s decision as soon as possible and within 90 days of your complaint being received or within 30 days of the Trustee s decision, whichever is earlier. Please remember to include an address to which the response can be mailed. If the Trustee has not responded to your complaint within 90 days, or you are not satisfied with the Trustee s decision, you may be able to take the matter to a special government body called the Superannuation Complaints Tribunal (see right). While the Trustee has a process in place to deal with complaints from members, the Trustee s objective is to avoid complaints by providing a good level of service to members and, if complaints do occur, to resolve them to the satisfaction of all concerned. A copy of the Trustee s dispute resolution procedure is available on request from the Plan Helpline on Superanuation Complaints Tribunal The Tribunal is an independent body set up by the Federal Government to provide a low-cost, informal forum for resolving most superannuation disputes. Before the Tribunal can consider a complaint, it must be satisfied that the matter has been referred to the Trustee under the procedure set out above. Any complaints must be lodged with the Tribunal within certain time limits. In particular, there is a two year time limit on complaints about total and permanent disablement claims. For more information about requirements and time limits, you can call the Superannuation Complaints Tribunal on If the Tribunal accepts your complaint, it will try to help you and the Trustee reach a mutual agreement through conciliation. If conciliation is unsuccessful, the Tribunal can make a determination, which is binding. S YOUR 26 IAG & NRMA Superannuation Plan Annual Report 2013

29 If you d like more information For Accumulation members, full details of the benefits provided by the Plan are set out in the Plan s Product Disclosure Statement, which is available on the Plan website or from the Plan Helpline. For Defined, full details of the benefits provided by the Plan are set out in a member s booklet. As a member of the Plan, you can inspect other Plan documents by contacting the Helpline, the documents available include: the Plan s Trust Deed and rules the Plan s Product Disclosure Statement the Plan s Retirement Income Streams Product Disclosure Statement the Plan s Lifetime Pensions Product Disclosure Statement the Trustee s Risk Management Strategy and Plan the Plan s insurance policies for death and disablement benefits the Plan s investment policy statement extracts from actuarial reports the latest audited Plan accounts the Plan s Privacy Policy Statement the rules covering the appointment and removal of member representative Trustee directors and the independent Trustee director, and the Plan s enquiries and complaints procedures. There is no charge for this additional information. Be aware that the Trustee cannot provide you with any financial advice. For financial advice regarding superannuation, the selection of an investment option(s) and insurance options, you should speak to a licensed or appropriately authorised financial adviser. Financial advice can be arranged through the Plan s Administrator by calling the Plan Helpline on Questions? If you have questions about your superannuation benefits, please call the Plan Helpline on Mercer Outsourcing (Australia) Pty Ltd (Mercer) administers the Plan on behalf of the Trustee. You can write to the Plan Administrator at: Plan Administrator IAG & NRMA Superannuation Plan GPO Box 4303 Melbourne Vic 3001 S YOUR 27 IAG & NRMA Superannuation Plan Annual Report 2013