BOC Super. It s my fund

Transcription

1 BOCSUPER ANNUAL REPORT FOR THE ENDING 30 JUNE 2011 BOC Super. It s my fund Issued by BOC Superannuation Pty Ltd ABN AFS Licence No as trustee of the BOC Gases Superannuation Fund ABN Julius Avenue, North Ryde NSW 2113 Helpline Fax

2 Year in review BOC Super Trustee board COMPANY-APPOINTED DIRECTORS MEMBER-ELECTED DIRECTORS Welcome to the Annual Report for members of BOC Super for the year to 30 June It was a busy year with a number of improvements to BOC Super worth highlighting. BOC Super s investment options posted strong returns for the second year running. Returns were, however, below the levels achieved in 2010 due to considerable volatility in investment markets. Kathy Hocker, Chairman Myles Foley Graeme Bartram Ray Shina Angela Stock Warwick Webb In mid October 2010, JANA Investment Advisers Pty Ltd was appointed as BOC Super s new investment manager. JANA was selected because we believed they were best placed to provide protection against risk along with strong competitive performance which would benefit all members. Their appointment has also provided more active control of the Fund s investments, particularly in challenging times such as have been seen recently. More recently, August 2011 has seen falls comparable to those experienced during the Global Financial Crisis of The Trustee reduced the level of investment risk in most options in late July. This action provided greater flexibility to respond to market developments. The Trustee and JANA continue to monitor developments closely. During the year, BOC Super s contribution arrangements were expanded to help you build your savings for the future. Employee and Retained members can now make personal contributions by BPAY. BOC Super can also accept online contributions from employers other than BOC Limited. This is useful for Retained members and anyone with a second job. BOC Super has significantly expanded the coverage available to members in the case of death or total and permanent disablement. OnePath (formerly ING) was appointed as an external insurer for BOC Super from 1 January As a result, permanent BOC employee members can now apply for additional voluntary insurance for death cover. New permanent BOC employee members are able to obtain up to $200,000 of additional death cover without providing medical evidence if they apply within the first 90 days of joining BOC Limited. This cover is in addition to the free death and disability benefits provided by BOC Limited for eligible employees. All other members can now apply for voluntary insurance for death or death and total and permanent disablement. For further information on the conditions which apply to BOC Super s new insurance, see the Product Disclosure Statement or contact the BOC Super Helpline. From 1 January 2011, administration fees were increased for Retained, Spouse and Pension members following BOC s decision to reduce subsidies on fees for these members. These fees remain low, particularly when compared to those charged by retail super funds offered by financial institutions. Your Trustee is committed to strengthening BOC Super for the future benefit of all members. We encourage you to take time to review this Report. If you have any questions about your super, please contact the BOC Super Helpline on The Directors BOC Super 2 BOC SUPER ANNUAL REPORT 2011

3 Market review Over 2010/11, the Australian economy continued to grow as it emerged from the Global Financial Crisis. Despite natural disasters and rising uncertainty in the global economy, the domestic market remained resilient. Following the Queensland and Victorian floods and Cyclone Yasi at the start of 2011, seasonally adjusted Gross Domestic Product (GDP) in Australia increased by 1.4% for the year to June In addition, inflation for the year to June was a manageable 3.6%, allowing the Reserve Bank of Australia to leave the official cash rate at 4.75%. Australian unemployment levels decreased from 5.1% to 4.9% over the financial year. Globally, a number of scenes were presented. In the US, the rate of economic recovery was slower than expected interest rates remained near zero and unemployment persisted at a rate of 9.2%. The prosperity of European markets was varied, with some economies (in particular, Germany and France) strengthening, while others such as Greece, Ireland, Spain and Portugal struggled. The European Central Bank tightened monetary policy as interest rates rose to 1.25% in April, in an effort to control inflationary pressure. Meanwhile, China continued to experience strong growth, with GDP growing 9.5% over the financial year, and inflation rising to 6.4% in June Following the natural disasters earlier in the year, Japan faced challenges in both supply and demand, however the subsequent actions taken by the Bank of Japan helped to stabilise the situation. Despite the S&P/ASX 300 Accumulation Index delivering a return of 11.9%, the Australian share market endured a volatile fiscal year which culminated in a negative June quarter on the back of global economic concerns. In addition, the rising Australian dollar closing at US cents after a historical high of 110 US cents in May 2011, continued to put pressure on domestic companies with offshore earnings. Domestic listed property performance was weak relative to last year s strong return of 20.3%, with the S&P/ASX 300 Property Accumulation Index returning 5.9% for 2010/11. The performance of Australian fixed interest and cash investments was solid, returning 5.6% and 5.0% respectively. Global share markets provided a strong return of 27.1% in local currency terms over the year, however the appreciation of the Australian dollar resulted in a more modest gain of 3.2% for the MSCI World ex Australia Accumulation Index on an unhedged basis. Sovereign debt concerns continued to be a driver of markets during the year, with volatility stabilising on the back of the prospect of a second round of bailouts for peripheral European countries. Throughout the year, BOC Super s Trustee board and Investment Committee have continued to closely monitor and manage the investment portfolios with the aim of helping members navigate through the changing investment environment and deliver a healthy long-term return on their superannuation. Note: This investment commentary does not constitute advice. All investment figures quoted relate to before-tax performance of the relevant industry benchmark. BOC SUPER ANNUAL REPORT

4 Your super investments Investment policy BOC Super has an investment policy which sets the investment strategy and objectives for the Fund, and sets benchmarks for monitoring the Fund s performance. It helps ensure that BOC Super gets strong investment returns for you. The investment policy also covers details like the appointment of investment managers and guidelines for investing in futures and options. How your investment returns are calculated Investment earnings are calculated on your daily account balance. The crediting rate depends on the investment performance of the investment option(s) in which your account is invested and is determined from the net investment earnings of each option after deducting investment-related expenses (and tax, where applicable). Crediting rates are calculated weekly to enable pricing of contribution receipts and benefit payments. These weekly rates are used to calculate the benefit values shown in your personal account pages on the Fund s website. Any surcharge payments applying are deducted from the relevant members accounts. Tax credits The Fund must pay tax on its investment income, apart from income earned in respect of Pension members which is tax free. The tax payable on the Fund s investment income is complicated. It depends on how much the Fund receives from different sources, such as company dividends, interest paid on bonds and capital gains and losses that occur when investments like shares are bought and sold. For the High Growth Super option, the overall tax payable in any Fund year can only be calculated accurately three or four months after the end of each year, when the Fund s annual accounts and tax return are prepared. When setting the Fund s crediting rates and prices each week for High Growth Super option members, the Trustee must make advance allowance for the tax that will be paid on their investment income. To do this, the Trustee makes an estimate of the tax that will apply for each investment option. In any Fund year, the actual tax payable on the High Growth Super option investment income will normally turn out to be a little higher or lower than the estimated tax included in weekly crediting rates. Once the actual tax payable is known, an adjustment is then made to take account of the difference between the estimated and actual tax. This adjustment is made during the following Fund year. For the other Super options, tax is payable on investment income and applied to weekly crediting rates on an ongoing basis by the investment manager. Who manages your investments During the year to 30 June 2011, the Trustee used a number of professional investment managers to manage BOC Super s assets. A formal tender process was conducted and as a result JANA Investment Advisers Pty Ltd ( JANA ) was appointed as BOC Super s investment consultant. JANA oversees the management of a considerable portion of BOC Super s assets through the JANA implemented consulting platform. In order for JANA to provide its implemented asset consulting service, the Trustee invests in JANA Investment Trusts and MLC Corporate Investment Policies. Environment, Social and Governance (ESG) Issues The Trustee has long been conscious of how ESG issues can make a difference to the performance of individual companies and, therefore, to the investment returns achieved by the Fund through shareholdings in those companies. The Trustee s Investment Committee has again reviewed the management of ESG issues in BOC Super s investments over With assets invested through the underlying managers within the JANA trust structure, the opportunity to screen shareholdings is not presently available. The Trustee has concluded, however, that appropriate consideration of ESG matters is being given by the managers making day to day investment decisions which affect BOC Super assets. 4 BOC SUPER ANNUAL REPORT 2011

5 INVESTMENT MANAGERS/PRODUCTS AS AT 30 JUNE # JANA Core Australian Shares 21.9% JANA High Alpha Australian Shares 7.8% JANA Passive Australian Shares (Vanguard) 6.4% JANA Core Global Shares 12.0% JANA High Alpha Global Shares 3.3% JANA Passive Global Shares (Vanguard) 4.0% JANA Emerging Markets 0.8% Marathon Global Equities 3.0% DEXUS Unlisted Property 0.7% JANA Listed Property 2.1% JANA Triplepoint 2.7% JANA Absolute Return Unit 1.6% Shenkman Global Bank Loans 2.0% JANA Diversified Fixed Interest 11.6% JANA Cash 8.4% AMP property and alternative assets 11.3% 11.8% Ibbotson Australian shares 26.6% Ibbotson international shares 26.9% Ibbotson international property (hedged) 3.8% Ibbotson Australian property 0.4% Ibbotson Australian bonds 7.3% Ibbotson global trading strategies 3.6% Ibbotson Alpha strategies 0.3% Ibbotson international bonds(hedged) 8.1% Ibbotson cash trust 11.2% Other 0.4% Total 100.0% 100.0% #Holdings under 0.25% have not been shown. SPECIALIST INVESTMENT MANAGERS Following are the specialist investment managers used by JANA within various sectors as at 30 June DOMESTIC SHARES BEM, Concise, Fidelity, Solaris, Cooper, Invesco, Northcape, Northward, Paradice, Vanguard INTERNATIONAL SHARES Acadian, Capital, Janus, Baillie Gifford, Carnegie, Harding Loevner, Pzena, Charlemagne, Marvin & Palmer, Marathon, Vanguard BONDS Franklin Templeton, GIGC, PIMCO, UBS PROPERTY AMP, LaSalle, Morgan Stanley, Resolution, DEXUS ALTERNATIVES AMP, Aurora, GMO, Shenkman, RARE, Triplepoint CASH Antares Our policy on derivatives As it is not the policy of the Trustee to directly invest the assets of the Fund, the Trustee would not directly invest in derivatives. External investment managers may utilise derivatives in managing investment portfolios for the Trustee and in managing pooled investment vehicles in which the Trustee invests. No investment manager is permitted to use derivatives (e.g. futures contracts, forward transactions and options) to an extent greater than the total value of the assets they manage. Derivatives may be used provided this is in accordance with investment management agreements between JANA and its appointed managers. The management and use of derivatives directly by the underlying managers in the JANA Trusts is governed by the managers Derivative Risk Statements. BOC SUPER ANNUAL REPORT

6 How the investment options performed Super members Note that past performance is not necessarily a reliable indicator of future performance. AUSTRALIAN SHARES INTERNATIONAL SHARES PROPERTY GROWTH ALTERNATIVES DEFENSIVE ALTERNATIVES FIXED INTEREST CASH Net return for Super members 2010/11* Investment strategy Investment objective High Growth Aggressive Growth # Low Growth ## Cash (default option) 9.40% 8.18% 6.30% 4.50% Aims to deliver a high level of return, within a portfolio invested across a diverse mix of assets and markets, including shares, property, alternative assets and bonds. To earn a rate of return (net of tax and fees) of CPI + 4% per annum over rolling 7-year periods, with the potential for a negative return once in every 4 years (5 times in 20 years.) Aims to deliver the maximum possible long-term return, by accepting increased volatility in returns over the short to medium term. It may be invested in fewer markets than the other diversified options and has a very high exposure to Australian and international share markets. To earn a rate of return (net of tax and fees) of CPI + 5% per annum over rolling 10-year periods, with the potential for a negative return once in every 3 years (7 times in 20 years.) A substantially more defensive option than High Growth, although it offers higher returns than the Cash option with commensurately higher risk. It is also invested across a diverse mix of assets and markets, including shares, property and bonds. To earn a rate of return (net of tax and fees) of CPI + 1% per annum over rolling 3-year periods, with the potential for a negative return once in every 10 years (twice in 20 years.) Risk profile Medium to high High Medium to low Low Minimum investment horizon Investment mix as at 30 June 2011 (figures in brackets show investment mix as at 30 June 2010) 6.9% (0.0%) 3.7% (8.1%) 12.0% (13.4%) 7 years 10 years 3 years 12.2% (16.3%) 3.1% (4.1%) 24.3% (29.5%) 37.8% (28.6%) 13.1% (14.5%) 28.8% (28.9%) 5.1% (0.0%) 53.0% (42.8%) 20.6% (24.7%) 38.8% (42.3%) 14.2% (12.5%) 7.4% (0.0%) 9.0% (8.5%) 10.0% (4.2%) Aims to preserve capital after fees and tax, and match the return of the bank bill index (the common measure of the institutional cash rate). It offers minimal scope of positive returns after inflation. To earn a positive rate of return (net of tax and fees) over rolling 1-year periods with negligible chance of a negative annual return. 100% (100%) Net returns for Super members for periods ending 30 June 2011* % % % % % 5-year compound average (per year) 1.2% 10-year compound average (per year) 4.6% % % % % 2007** 11.9% Compound average since 1 October 2006 (per year) -1.4% % % % % 2007** 4.0% Compound average since 1 October 2006 (per year) 2.2% % % % % 2007** 3.7% Compound average since 1 October 2006 (per year) 4.8% *All rates are net of fees and taxes. **As the option was introduced from 1 October 2006, the return is for 9 months to 30 June 2007 only. # Note in 2010, 7.3% was invested in growth alternatives and 6.5% in cash. ## Note in 2010, 7.8% was invested in growth alternatives. 6 BOC SUPER ANNUAL REPORT 2011

7 Pension members Note that past performance is not necessarily a reliable indicator of future performance. AUSTRALIAN SHARES INTERNATIONAL SHARES PROPERTY GROWTH ALTERNATIVES DEFENSIVE ALTERNATIVES FIXED INTEREST CASH Net return for Super members 2010/11* Investment strategy Investment objective Assertive Aggressive # Conservative Cash (default option) 9.91% 9.63% 7.70% 5.24% Aims to deliver a high level of return, within a portfolio invested across a diverse mix of assets and markets, including shares, property, alternative assets and bonds. To earn a rate of return (net of fees) of CPI + 4% per annum over rolling 7-year periods, with the potential for a negative return once in every 4 years (5 times in 20 years.) Aims to deliver the maximum possible long-term return, by accepting increased volatility in returns over the short to medium term. It is potentially invested in fewer markets than the other diversified options and has a very high exposure to Australian and international share markets. To earn a rate of return (net of fees) of CPI + 5% per annum over rolling 10-year periods, with the potential for a negative return once in every 3 years (7 times in 20 years.) A substantially more defensive option than the Assertive option, although it offers higher returns than the Cash option with commensurately higher risk. It is also invested across a diverse mix of assets and markets, including shares, property and bonds. To earn a rate of return (net of fees) of CPI + 1% per annum over rolling 3-year periods, with the potential for a negative return once in every 10 years (twice in 20 years.) Aims to preserve capital after fees and tax, and match the return of the bank bill index (the common measure of the institutional cash rate). It offers minimal scope of positive returns after inflation. To earn a positive rate of return (net of fees) over rolling 1-year periods, with negligible chance of a negative annual return. Risk profile Medium to high High Medium to low Low Minimum investment horizon Investment mix as at 30 June 2011 (figures in brackets show investment mix as at 30 June 2010) 7 years 10 years 3 years 8.3% (16.3%) 5.1% (0.0%) 2.0% (8.1%) 10.2% (13.4%) 4.6% (4.1%) 41.8% (28.6%) 10.0% (14.5%) 2.0% (7.3%) 5.0% (0.0%) 51.1% (42.8%) 29.6% (24.7%) 12.1% (12.5%) 8.1% (8.5%) 10.0% (4.2%) 28.0% (29.5%) 31.9% (28.9%) 33.1% (42.3%) 2.0% (7.8%) 5.1% (0.0%) 100% (100%) Net returns for Pension members for periods ending 30 June 2011* 2011** 9.9% % % % % 5-year compound average (per year) 1.3% 10-year compound average (per year) 4.9% 2011** 9.6% % % % 2007*** 14.1% Compound average since 1 October 2006 (per year) -1.4% 2011** 7.7% % % % 2007*** 4.7% Compound average since 1 October 2006 (per year) 2.6% % % % % 2007*** 4.4% Compound average since 1 October 2006 (per year) 5.6% *All rates for Pension members are net of investment fees only. **Note that new options were introduced for Pension members on 21 October 2010 (but which remain similar to the ongoing investment options for Super members). Returns prior to this date were for the Low Growth (now Conservative), High Growth (now Assertive) and Aggressive Growth (now Aggressive) options, net of fees. ***As the option was introduced from 1 October 2006, the return is for 9 months to 30 June 2007 only. # Note in 2010, 6.5% was invested in cash. BOC SUPER ANNUAL REPORT

8 Looking after your super BOC Super s advisers INVESTMENT CONSULTANT Ibbotson Associates Australia Limited until mid-october 2010 JANA Investment Advisers Pty Ltd from mid-october 2010 MASTER CUSTODIAN OF ASSETS BNP Paribas Fund Services Australasia Pty Ltd until mid-october 2010 National Australia Bank Asset Service from mid-october 2010 AUDITOR Ernst & Young ADMINISTRATOR Mercer (Australia) Pty Ltd* LEGAL ADVISER Mercer Legal Pty Ltd Henry Davis York ACTUARY Towers Watson Australia Pty Ltd SUPERANNUATION CONSULTANT Professional Financial Solutions COMMUNICATIONS Towers Watson Australia Pty Ltd * The BOC Super Helpline is operated by Mercer (Australia) Pty Ltd, a corporate authorised representative No of Mercer Investment Nominees Limited AFSL No The Trustee Your Fund is run by a Trustee company, BOC Superannuation Pty Limited, in line with its governing legal document, the Trust Deed, and super laws. There are six Directors in the Trustee Company three elected by you, the members of BOC Super, and three appointed by BOC Limited. There is also a superannuation manager who is appointed by BOC Limited. Directors of the Trustee as at 30 June 2011 COMPANY-APPOINTED DIRECTORS Kathy Hocker (Chairman) Myles Foley Graeme Bartram MEMBER-ELECTED DIRECTORS Ray Shina Angela Stock Warwick Webb SUPERANNUATION MANAGER Allan Murphy There were no changes to the Trustee Directors during the year to 30 June Changes to the Trust Deed During the year, the Trust Deed was amended to allow BOC Super to: offer members additional voluntary insurance benefits pay benefits on terminal illness improve the death and terminal illness benefits for Category A members under age 65 clarify the provision of accidental injury coverage for members and improve the death and disability benefit for Category A members on approved leave of absence. Trustee insurance protection The Trustee has indemnity insurance covering it for any loss suffered in exercising its power and duties as Trustee, other than where the loss is because of dishonest acts or intentional or reckless failure to exercise due care and diligence. The box to the left shows the specialist advisers who help run BOC Super. 8 BOC SUPER ANNUAL REPORT 2011

9 Don t want to be ERFed? If we lose contact with you and don t have your current address then we might have to ERF your super. This means transferring your account from BOC Super to an Eligible Rollover Fund (ERF). An ERF is a fund designed for the benefits of members who cannot be located or who do not respond to letters from their superannuation fund. BOC Super may transfer your benefit to an ERF if: (i) You leave employment with BOC and (a) Your gross benefit is less than $5,000, and THE ERF CURRENTLY NOMINATED BY THE TRUSTEE IS: AMP Eligible Rollover Fund The Administrator Locked Bag 5400 Parramatta NSW 1741 Phone: Fax: (b) We do not receive your response to our request for payment instructions within 90 days of requesting it, or (ii) We write to you advising that your benefit will be transferred to an ERF unless, within the timeframe specified in the notice, you nominate an alternative fund that is eligible to receive the benefit. A summary of some of the significant features of the ERF as at 1 July 2011 is shown below. The assets of the ERF are invested in a capital guaranteed life insurance policy (ERF Policy) issued to AMP Superannuation Limited ( ASL ) by AMP Life Limited ( AMP Life ). The ERF Policy is a participating policy in AMP Life s Number 1 Statutory Fund ( AMP No 1 Fund ). There is no choice of investment available to members within the ERF. Returns are guaranteed never to be negative. For larger account balances (currently over $2,500), the investment objective is to provide returns over the longer term, exceeding those from cash, with security of capital. The investment strategy for the assets in the AMP No 1 Fund (that are backing the ERF Policy) is centred on cash and fixed interest investments, supplemented by investments in shares and property to provide long-term growth. AMP Life declares multi-tiered crediting rates of investment earnings with respect to the ERF Policy. The earnings to be credited to a member s account are calculated on a member s daily balance and credited annually (or on withdrawal). Where a member s account balance is less than $1,000, no earnings are credited. There are no fees charged directly to an ERF member s account by ASL. AMP Life deducts administration and investment fees as well as taxes (including earnings tax) before declaring any earnings to be credited under the ERF Policy. The ERF is unable to accept contributions from members or their employers, however rollovers from other superannuation funds are permitted. The ERF does not provide insurance cover. You can obtain the ERF s Product Disclosure Statement using the contact details above. BOC SUPER ANNUAL REPORT

10 Enquiries, compliments, complaints We re always happy to help you, so if you have a question about your super account or benefits, please call us on Most enquiries can be dealt with over the phone but you may be asked to put your enquiry in writing. If so, we aim to get back to you within 28 days. If you have a problem and it isn t resolved to your satisfaction, you should send a written complaint addressed to BOC Super s Complaints Officer (see back page for address details). The matter will be investigated and you will be advised of the Trustee s decision on progress as soon as possible and definitely within 90 days of receiving your complaint. If you are not happy with the Trustee s handling of your enquiry or complaint, you may then contact the Superannuation Complaints Tribunal. The Tribunal is an independent body set up by the Federal Government to deal with certain enquiries or complaints that the Trustee has not dealt with to your satisfaction. You can contact the Tribunal on or by to info@sct.gov.au. There are some complaints that the Tribunal cannot consider, such as those relating to the management of the Fund as a whole. Time limits also apply to certain complaints relating to total and permanent disability claims and to complaints about objections to the payment of death benefits. If your complaint is in relation to one of these areas, please contact the Helpline or refer to the Tribunal s website on as soon as possible for further information. For privacy-related matters, the Federal Privacy Commissioner may review your complaint. You can contact the Privacy Commissioner on BOC SUPER ANNUAL REPORT 2011

11 The Fund s financials A summary of BOC Super s unaudited financial statements for the year ended 30 June 2011 is shown below. The final audited financial statements are expected to be available in November If you would like a copy of the audited financial statements and the audit report, please call the Helpline on STATEMENT OF CHANGE IN FINANCIAL POSITION 2010/11 Net assets at 30 June 2010 $461,912,058 Plus Net investment revenue $39,234,562 Employer contributions $21,702,849 Employer reimbursement of expenses $1,056,428 Member contributions $1,885,518 Transfers from other funds $3,550,004 Total revenue $67,429,361 Less Benefits paid $29,241,644 Superannuation contributions surcharge $65 General administration expenses $1,566,330 Group life premiums $145,234 Total expenses $30,953,273 Income tax expense $4,449,974 Equals Net assets at 30 June 2011 $493,938,172 STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2011 Assets Investments $481,007,644 Deferred tax assets $11,509,204 Cash at bank $2,612,862 Other assets $49,739 Total assets $495,179,449 Less Liabilities Accrued expenses $225,858 Provision for tax $1,015,419 Total liabilities $1,241,277 Equals Net assets at 30 June 2011 $493,938,172 Vested benefits at 30 June 2011 $472,551,490 BOC SUPER ANNUAL REPORT

12 Contact BOC Super We re here to help. If you have any questions about BOC Super, please contact us at: BOC Gases Superannuation Fund GPO Box 4303 Melbourne VIC 3001 Helpline Fax Issued by BOC Superannuation Pty Limited ABN AFS Licence No RSE Licence No L as Trustee of the BOC Gases Superannuation Fund ABN RSE Registration No. R Julius Avenue, North Ryde NSW 2113 Thanks to BOC employee Tony Barber for permission to use his photo in this document.