Elphinstone Group Superannuation Fund ANNUAL REPORT. Building a secure future AND Superannuation developments

Transcription

1 ANNUAL REPORT 2017 Building a secure future AND Superannuation developments

2 2016/17 in review Welcome to the Annual Report for members of the Elphinstone Group Superannuation Fund (ABN ). It was a positive year for the Fund, with overall favourable market conditions contributing to solid investment performance. Some changes were made during the year for the changing legislative and investment environment. These included revisions to some investment options objectives and asset allocations, which were outlined in the June 2017 newsletter. The Trustee continues to monitor the Fund s investment objectives and strategy to ensure they remain appropriate. The Trustee also provided Fund members with the opportunity to learn more about the Government s changes to superannuation by hosting some information sessions. You can find the latest newsletter and listen to the information session on the superannuation changes at the Fund s website at We remain focused on helping members prepare for the future. Should you have any questions about your superannuation you can contact the Fund Administrator on About your Annual Report The information in this document is general information only and does not take into account your particular objectives, financial circumstances or needs. It is not personal or tax advice. Any examples included are for illustration only and are not intended to be recommendations or preferred courses of action. You should consider obtaining professional advice about your particular circumstances before making any financial or investment decisions based on the information contained in this document. Information on tax and superannuation legislation is current as at the date of publication and may change. Issued by Elphinstone Group Superannuation Pty Ltd (ABN ), as Trustee of the (ABN , MySuper Authorisation number ).Preparation of this Annual Report was completed on 6 September 2017.

3 $ Financial strength The Fund assets rose by 9.2% to $66,368,050 Focused on you We help 618 members save for the future. Working for the future Use the Fund s features to build for tomorrow. See pages 2 and 3. Find what you need Our new website is easy to navigate A year of growth Contents Markets performed well contributing to solid growth for your super. Building a secure future Past performance is not necessarily a reliable indicator of future performance. Investment option 30 June 2017 Five-year 10-year compound compound average average net return net return (per year) (per year) Growth 15.5% 13.5% 5.6% Balanced (MySuper option) 10.2% 10.2% 5.4% Conservative 4.5% 6.6% 4.9% Cash 1.2% 2.0% 3.2% 2 Review our performance 4 How we invest your superannuation Notes: The investment returns shown are for Accumulation and Retained Benefits Division members. Investment returns for Account-Based Pension members are on page 4. Investment returns are net of tax, investment fees, any unallocated expenses and an allowance of 0.083% per year from 1 July 2013 to 30 June 2016 to build up the Operational Risk Financial Requirement reserve (refer to page 8). 7 Superannuation developments 12 Running the Fund 14 Financials 16 Contact us Annual Report

4 Building a secure future It takes effort to build something of substance. The Fund has a number of features that can help you build a secure future. Getting the foundations right A number of simple steps can set you up for the future. 1. Get the lay of the land Have a good look at your superannuation landscape. Logging in to your account online or looking at your last Personal Statement of Benefits can tell you some important things: How much you have saved; Whether you are contributing; What options you are invested in; How much insurance you have (if eligible); and Who you have nominated as the beneficiary for your death benefit. If you haven t previously logged in to the Member Centre, go to and click on Member Centre login to Register now. There is also an option on the site if you have forgotten your password. 2. Survey your investment choice Your superannuation will grow over time with the net investment earnings of your chosen investment choice. If you haven t made a choice, your account will be invested in the Balanced (MySuper option) or the Balanced Pension option for retirement Account-Based Pension members. You can see how your superannuation is invested look at your Statement or on your account online. Are your investments a good fit for your life stage and attitude to risk? Remember that each of the Fund s investment options has a different potential risk and return. It s a trade-off generally, the higher the potential return in the long term, the higher the risk of short term loss. See pages 9 to 11 to learn more about the investment choices. If you want to change your investment choice you can do so online or by completing an Application & Change form available from the Fund s website at Superannuation provides your support structure Superannuation provides support for you throughout your working life, not just in retirement. Insurance for the unexpected The Fund may provide eligible members with insurance cover if you die, suffer a terminal illness or are totally and permanently disabled. This insurance can provide protection for you and your family against the unexpected. Being adequately insured is an important part of your financial security. The Fund offers eligible members the option to also buy extra insurance cover for death and disablement through the Fund. To learn more, read the Insurance Guide, available from the Fund s website. You can change your insurance cover or buy extra cover by completing the Application & Change form or Application for additional voluntary insurance cover, available from the Fund s website. Nominate your beneficiaries Making a nomination of beneficiaries and keeping it up to date keeps the Trustee aware of how you would like your superannuation paid out if you die. There are two types of nominations. If you have a binding nomination that is valid at the time of your death, the Trustee will be legally required to pay your benefit according to your wishes (even if your personal circumstances have changed). In the case of a non-binding nomination, the Trustee will investigate your personal circumstances at the time of your death and act in the best interests of your dependants when making a decision. To make a binding nomination, simply complete the Application & Change form, available at the Fund s website, have it witnessed by two people (who are not your beneficiaries) and return as directed. Non-binding nominations can be completed via the form or the online Member Centre. 2

5 3. Gather your materials Do you have superannuation in a number of different funds due to changing jobs in the past? If you have superannuation in other funds, consider rolling it into one account. You could save yourself extra fees and paperwork. Before rolling over, it s important to check whether you will be charged exit fees or will lose any valuable benefits, such as insurance cover, if you withdraw your benefit from your other fund. You can build your stash online by using the Fund s simple rollover tool or complete a Rollover form available from the Fund s website. 4. Keep building Can you turbocharge your savings by contributing extra? The earlier you start to save even small amounts, means that you get more benefit from compounding earnings. Over your working life these savings add up and set you up for the future. As long as you stay within the Government s contribution caps, your contributions should be eligible for tax concessions (see page 13 for more details on the limits). To top up your contributions, complete an Application & Change form, available from the website. Tools for the future Use the MoneySmart Retirement planner to see what retirement income you and your partner might have. The tool is interactive, so you can try out different scenarios to see how you might be able to improve your retirement income, such as by: Increasing your contributions; or Delaying your retirement. There is a link to the MoneySmart Retirement planner on the Fund s website at and click on Additional Information and drop down to ASIC MoneySmart Calculators then find the Retirement planner under Calculators and resources. Getting advice If you need some guidance to help you plan for your future, consider speaking with a licensed financial adviser. Towers Watson Australia Pty Ltd offers financial planning services through qualified financial planners: call (03) Alternatively, you can contact the Financial Planning Association of Australia at or by calling You can also find information about working with a financial adviser in the Government s guide, Financial advice and you, from Follow these steps: Hover over the Calculators and resources tab, then go to Publications. Scroll down to the Investing category Annual Report

6 review our performance The table below shows the Fund s investment returns. Your superannuation performance will fluctuate each year depending on how investment markets perform. Superannuation returns can be either positive or negative. In most cases though, superannuation is a long-term investment. For instance, returns earned over a period of 10 years, instead of one or two years, are likely to better indicate your superannuation s performance. Detailed returns are also provided on your Personal Statement of Benefits and the most recent returns are available on A history of your returns Past performance is not necessarily a reliable indicator of future performance Five-year compound average net return (per year) 10-year compound average net return (per year) Investment options for Accumulation, Retained Benefits Division and Transition to Retirement Pension 1 members Growth 15.5% -1.0% 11.3% 18.6% 24.6% 13.5% 5.6% Balanced % 2.0% 9.3% 13.3% 16.8% 10.2% 5.4% Conservative 4.5% 5.7% 7.1% 7.3% 8.2% 6.6% 4.9% Cash 1.2% 1.6% 2.1% 2.1% 2.9% 2.0% 3.2% Investment options for retirement Account-Based Pension members Balanced 10.6% 1.5% 10.4% 14.5% 18.6% 11.0% N/A 3 Cash 1.5% 2.0% 2.5% 2.5% 3.4% 2.4% N/A 3 Notes: Investment returns for Accumulation and Retained Benefits Division members are net of tax, investment fees, any unallocated expenses, and an allowance of 0.083% per year, from 1 July 2013 to 30 June 2016, to build up the Operational Risk Financial Requirement reserve. Returns for Account-Based Pension members are net of investment fees, any unallocated expenses and an allowance of 0.083% per year, from 1 July 2013 to 30 June 2016, to build up the Operational Risk Financial Requirement reserve (see page 8 for more information). Returns are for periods to 30 June. 1 Applicable from 1 July Transition to Retirement Pension members received the Account-Based Pension members returns up to 30 June This is also the option for MySuper members. 3 The Balanced and Cash options for Pension members commenced on 1 July 2009, so longer-term investment return information is not available. For the year ending 30 June 2017, the return of 10.2% for the Balanced (MySuper) option in the Elphinstone Group Superannuation Fund compares to the median return of 10.5% for Balanced Funds (the top 50 Industry and Retail funds), the median return of 11.1% for Not for Profit funds (Industry funds) and the median return of 9.3% for Master Trusts. Source: SuperRatings SR50 Balanced (60 76) Index survey median returns, published on 19 July 2017, This survey includes funds with growth allocations of between 60% 76%. SuperRatings statistics are not financial product advice; independent professional advice should be obtained before making any financial decisions. Superannuation bytes Asset classes: These are different types of investments e.g. shares, property, fixed interest and cash. Growth assets: Returns from growth assets come from the change in the asset s value (such as an increase in share prices) and the income from the investment (such as dividends). Shares, property, infrastructure and hedge funds are common examples of growth assets. Returns are generally higher than other assets over the longer term but can also be negative from time to time. Income assets: These assets include cash, corporate debt and fixed interest. Their market value can also fluctuate, but usually with less volatility than is the case with growth assets. 4

7 Investment market update Despite significant political uncertainty, returns for shares over 2016/17 were strong and volatility remained subdued. Global trade and investment regained momentum, driven by strengthening investment in advanced economies, increased trade flows with China, and improved import demand from commodity-exporting emerging market and developed economies. Strong share market returns were experienced with all but one of the MSCI developed market country indices delivering double digit returns. The UK was the exception and delivered the weakest return for the year, returning 9.9%. As share markets went from strength to strength, bond market returns were relatively flat, with increasing global growth and inflation leading to rising bond yields in key markets. In the US, investors responded favourably to the election victory of Republican candidate Donald Trump, ushering in a period of growth in share markets. Despite finishing the financial year with some mixed economic data, the US experience was largely positive for the year. In Europe, the political environment was generally improved by the end of the financial year when compared to its rocky start immediately post Brexit. The French rallied behind centrist candidate Emmanuel Macron, denying the nationalist candidate, Marine Le Pen, who campaigned on a protectionist agenda which threatened to erode the relationship between France and the EU. Populism also reared its head in elections in Austria, the Netherlands, and Germany. Despite this, the Eurozone performed strongly. Over the financial year the Euro Stoxx 50 Index returned 20.1% (in local currency terms), more than regaining losses experienced over the previous year. In its September 2016 meeting the Bank of Japan (BoJ) launched a new form of monetary easing where it set a cap of 0% on the 10-year bond yield and vowed to overshoot its 2% inflation target. It also maintained its extensive Japanese Government Bond repurchasing program and held the interest rate at -0.1%. Despite remaining significantly below the 2% inflation target, the measures were effective at returning the nation to positive inflation territory. In China, it was a solid and largely uneventful financial year from an economic perspective, with annualised growth coming in at 6.9% year on year (as at March 2017), a marginal increase over the 6.7% expansion the year prior. One of the most notable developments for Chinese financial markets was the decision from the MSCI to include some China A-Shares in their share market indices, signalling a positive further step towards the opening up of the Chinese share market and its global integration. Australian economic indicators were largely positive for the financial year. However, while political uncertainty reigned at home and abroad, markets were largely unmoved. The Australian share market had its least volatile year in 16 years. The Australian economy outperformed its forecast and delivered annualised GDP growth of 1.7% for the year (as at March 2017), marking 103 quarters without two consecutive negative periods, generally regarded as the longest stretch of positive growth of any developed nation. The Reserve Bank of Australia (RBA) decided to cut the official cash rate in August of 2016 to a record low of 1.5%, stating that the reduced rate was adequate to generate sustainable economic growth and to maintain inflation in its target range. The RBA maintained rates at 1.5% for the rest of the financial year, citing mixed domestic economic signals, particularly concerns around the labour and housing markets. Australian shares, as measured by the S&P/ASX 300 Index, returned 13.8%, compared to 0.9% and 5.6% for the previous two financial years respectively. The main detractor from performance was Telecommunication Services, which was the only sector to experience a negative annual return. The Australian dollar experienced its lowest volatility in 27 years relative to the US dollar. The Australian dollar rose over the year, despite the US dollar s strength following the Presidential election, to end at US cents (up from US cents). Over the same period the Australian dollar also strengthened against the currencies of its major trading partners, with the Trade Weighted Index ending the year at 65.5 (up from 62.5 from last year). Both Australian and international bond yields climbed over the course of the financial year, with significant upward shifts occurring in October 2016 and June The Australian 10 Year Government bond yield finished 0.6% higher than in June last year at 2.6%, while the US 10 Year Government bond yield climbed 0.8% (to 2.3%) over the same period. Australian cash, as measured by the Bloomberg AusBond Bank Bill Index, returned 1.8% for the year, down from 2.2% last year. Australian bond markets delivered almost flat performance for the year, with the Bloomberg AusBond Composite Index returning 0.2%, compared to 7.0% for the last financial year. Global fixed interest performance was marginally above Australian fixed interest, with the Barclays Global Aggregate Index (hedged to AUD) returning 0.5% for the financial year, down significantly from 9.3% for the previous year. Note: This investment commentary does not constitute advice. All investment figures quoted relate to before-tax performance of the relevant industry benchmark Willis Towers Watson. All rights reserved Annual Report

8 Returns on your superannuation Your accounts receive the actual investment return for your chosen option(s) after allowing for tax (if applicable) and investment fees, any unallocated expenses and, from 1 July 2013 to 30 June 2016, a small deduction to build up the Operational Risk Financial Requirement reserve (see page 8 for more information). If you are a retirement or Transition to Retirement Account-Based Pension member, your actual returns up to 30 June 2017 are calculated in the same manner, but there is no tax on those investment returns. Refer to the Fund s Account-Based Pension PDS for changes to Account-Based Pensions from 1 July Investment returns can be positive or negative. If you leave during the year Investment returns are calculated each month. If your superannuation needs to be paid out before investment returns have been calculated, an interim earning rate will be used. This will cover the period from the previous date that investment earnings were declared until the date your benefit is paid. An interim rate may also be used if you switch investment options. The interim rate is based on the Fund s estimated monthly net investment returns. Superannuation bytes Product Disclosure Statement (PDS): The PDS is the main disclosure document for new members of superannuation funds. 6

9 how we invest your superannuation The Fund has four investment options for you to choose from if you are an Accumulation or Retained Benefits Division member, each with a different investment objective and strategy. If you don t choose an option, your superannuation will be invested in the Balanced (MySuper) option. The four investment options also apply to Transition to Retirement Pension members from 1 July There are two options for Account-Based Pension members, which are available only to retirement Account-Based Pension members from 1 July We know that it is crucial for you to find the most appropriate investment choice for your circumstances. If you wish to change how the Trustee invests your superannuation, please complete and return an Application & Change form which is available from the Fund Administrator by phoning Alternatively, you can make your change via the Member Centre at See pages 9 to 11 to read about the investment objectives and strategy of each option. Refer to the right for more information on the Fund s Investment Managers. Our investment objectives Investment objectives are specific goals that the Trustee sets for the performance of the Fund and each investment option. They are not intended as forecasts or guarantees of future investment returns. In general, the Trustee aims to: Invest the Fund s assets prudently as permitted by the Trust Deed and by superannuation Law; Invest across a diverse range of assets; Ensure that the Fund is able to make benefit payments to members when they are due; and Monitor the performance of the Fund s Investment Managers to ensure they exercise integrity, prudence and professional skill in fulfilling the investment tasks delegated to them. See pages 9 to 11 to learn more about the specific investment objectives for each investment option. Superannuation bytes Trust Deed: This legal document sets out the rules relating to the establishment and operation of the Fund. Our investment strategy An investment strategy is the plan the Trustee follows to achieve the objectives of an investment option. Each investment option has its own investment strategy. For the details of each option s investment strategy, see pages 9 to 11. Investment Managers The Trustee appoints professional Investment Managers to manage the Fund s investments. These managers and their products may be changed from time to time without prior notice to, or consent from, members. The Fund s Investment Managers at 30 June 2017 were: Schroder Investment Management Australia Ltd (Australian Equity Fund). BlackRock Investment Management (Australia) Ltd (Indexed Hedged International Equity Fund and Wholesale Indexed International Equity Fund). Vanguard Investments Australia Ltd (Australian Shares Index Fund and Conservative Index Fund). State Street Global Advisors (SSgA Australian Cash Trust). Westpac Corporate Cheque Account. Superannuation bytes Investment objective: This is a fund s investment goals. A fund s investment objectives are usually set in terms of risk and return. For example, the Fund might aim to achieve returns that exceed the rate of inflation by a set amount. Asset allocation: The distribution of investments across various asset classes (such as shares, property, fixed interest and cash) Annual Report

10 Other investment information Derivatives A derivative is a security whose price is dependent on or derived from, one or more underlying assets. The derivative itself is merely a contract between two or more parties with its value being determined by fluctuations in the underlying asset. They are generally used as an instrument to hedge risk. Futures contracts, forward contracts, options and swaps are the most common types of derivatives. The Trustee does not invest directly in derivatives. The Fund s Investment Managers may use derivatives for risk control purposes or to more efficiently change asset allocations. Derivatives are not used in a speculative manner. Investment Managers are required to have risk management processes in place in relation to the use of derivatives and the purposes for which they are used. Each year, the Trustee obtains confirmation from the Managers that they have complied with their processes. Deferred tax assets Superannuation funds normally pay tax on capital gains. If the Fund experiences capital losses (which can arise, for example, due to falls on share markets), superannuation funds are allowed to accumulate the tax benefits associated with those losses and use them to offset the tax on future capital gains. Currently the Fund holds some capital losses. Australian Accounting Standards require that future tax benefits are recognised only to the extent that it is likely that future taxable gains will be available to utilise the capital losses. In order to prudently manage the Fund s tax position, the Trustee has imposed a limit on the level of taxation benefits rising from these capital losses. The capital losses are below this limit, so there has been no impact on the calculation of investment earnings. Reserves General reserve The Trustee maintains a general reserve, which is used over time to finance certain Fund expenses. The general reserve is invested in the Balanced (MySuper) option. The level of the general reserve over the past three years is shown below. Operational Risk Financial Requirement (ORFR) reserve From 1 July 2013, superannuation funds have been required to set aside financial resources to address the fund s operational risks. The Trustee has established an ORFR reserve of 0.25% of net assets in the Fund for this purpose. The reserve has been funded by setting aside a small proportion of the Fund s investment earnings on a monthly basis for the period from 1 July 2013 to 30 June The Trustee has decided that the Operational Risk Financial Requirement (ORFR) reserve will be invested in the same way as the Fund s Balanced (MySuper) option. Now that the desired level of 0.25% has been reached, the Trustee will periodically monitor the reserve to ensure that it remains close to this level. Should the reserve fall below a predetermined shortfall limit, the Trustee will enact a plan for its replenishment. The Trustee will update members annually on the status of the reserve. Level of reserves As at 30 June General reserve % of Fund net assets ORFR reserve % of Fund net assets % ($50,534) 0.250% ($168,265) % ($42,284) 0.250% ($152,497) % ($42,797) 0.169% ($101,232) 8

11 Your investment options Options for Accumulation, Retained Benefits Division and Transition to Retirement Pension members (from 1 July 2017) Growth What are the investment objectives for this option? Achieve a return (after tax and investment fees) that is at least 3% per year more than movements in the Consumer Price Index (CPI) over moving 5-year periods. Limit the probability of achieving a negative return over moving one-year periods to around six years in 20. What investment strategy does this option use? Balanced (MySuper option) Achieve a return (after tax and investment fees) that is at least 2% per year more than movements in the Consumer Price Index (CPI) over moving 5-year periods. Limit the probability of achieving a negative return over moving one-year periods to around five years in 20. To invest primarily in shares with about 50% in Australian shares and the rest in international shares. How are this option s assets invested? 30 June 2017 To invest about 70% in growth assets and around 30% in income assets. 30 June % 25% 50% 17% 11% 34% 25% 2% 1% 18% 13% 30 June June % 25% 50% 17% 11% 34% 25% 2% 1% 18% 13% What are the asset allocation ranges* for this option? Australian shares 46% to 54% International shares (hedged) 21% to 29% International shares (unhedged) 21% to 29% Australian shares 30.0% to 38.0% International shares (hedged) 11.4% to 19.4% International shares (unhedged) 13.7% to 21.7% Emerging market equities (unhedged) 0% to 4.9% Australian fixed interest 4.2% to 12.2% Global aggregate bonds (hedged) 15.2% to 23.2% Cash 0.6% to 8.6% *New ranges effective 1 July Australian shares International shares (hedged) International shares (unhedged) Emerging market equities (unhedged) Property Australian fixed interest Global aggregate bonds (hedged) Cash Annual Report

12 Options for Accumulation, Retained Benefits Division and Transition to Retirement Pension members (from 1 July 2017) Conservative What are the investment objectives for this option? Achieve a return (after tax and investment fees) that is at least 1% per year more than movements in the Consumer Price Index (CPI) over moving 5-year periods. Limit the probability of achieving a negative return over moving one-year periods to less than three years in 20. Cash Achieve a return (after tax and investment fees) that exceeds movements in the Consumer Price Index (CPI) over moving 5-year periods. Avoid negative returns in all circumstances (note: capital is not guaranteed). What investment strategy does this option use? To invest about 70% in income assets and around 30% in growth assets. How are this option s assets invested? To invest exclusively in cash. 30 June % 13% 30 June % 24% 12% 2% 3% 100% 30 June June % 13% 36% 11% 2% 4% 100% 24% What are the asset allocation ranges* for this option? Australian shares 8.0% to 16.0% International shares (hedged) 1.5% to 9.5% International shares (unhedged) 6.5% to 14.5% Emerging market equities (unhedged) 0% to 6.0% Australian fixed interest 14.0% to 22.0% Global aggregate bonds (hedged) 38.0% to 46.0% Cash 6.0% to 14.0% *New ranges effective 1 July Cash 100% 10

13 Options for Account-Based Pension members (available only to retirement Account-Based Pension members from 1 July 2017) Balanced Pension (default option) What are the investment objectives for this option? Achieve a return (after investment fees) that is at least 2% per year more than movements in the Consumer Price Index (CPI) over moving five-year periods. Limit the probability of achieving a negative return over moving one-year periods to around five years in 20. What investment strategy does this option use? To invest about 70% in growth assets and around 30% in income assets. Note: This is a different investment option to the Balanced option offered to Accumulation, Retained Benefits and Transition to Retirement Pension members (from 1 July 2017). How are this option s assets invested? 30 June % Cash Pension Achieve a return (after investment fees) that exceeds movements in the Consumer Price Index (CPI) over moving five-year periods. Avoid negative returns in all circumstances (note: capital is not guaranteed). To invest exclusively in cash. 30 June % 11% 34% 100% 2% 1% 18% 13% 30 June % 30 June % 11% 34% 100% 2% 1% 18% 13% What are the asset allocation ranges* for this option? Australian shares 30.0% to 38.0% International shares (hedged) 11.4% to 19.4% International shares (unhedged) 13.7% to 21.7% Emerging market equities (unhedged) 0% to 4.9% Australian fixed interest 4.2% to 12.2% Global aggregate bonds (hedged) 15.2% to 23.2% Cash 0.6% to 8.6% *New ranges effective 1 July Cash 100% Australian shares International shares (hedged) International shares (unhedged) Emerging market equities (unhedged) Property Australian fixed interest Global aggregate bonds (hedged) Cash Annual Report

14 superannuation developments Budget 2017 snapshot Further to what was outlined in the June 2017 newsletter, Your superannuation update, there were two key proposals in this year s Federal Budget aimed at improving housing affordability: A First Home Super Saver Scheme which lets first home buyers use the superannuation system as a way to save extra money for a deposit on a first home; and Encouraging over 65 s to downsize their home and put some of the proceeds into superannuation. This is intended to free up larger homes for younger families. The following provides more details. It is important to remember that these are currently proposals and must be passed by Parliament before they become law. Additional conditions may also apply. First Home Super Saver Scheme When is the Scheme scheduled to start? Starting from 1 July 2017, it is proposed that you can make voluntary contributions to your superannuation fund and be able to access your savings starting from 1 July Superannuation contributions are usually preserved in the superannuation system until you reach your preservation age or satisfy another condition of release. Members wanting to take advantage of this Scheme should check that it is legislated before making contributions, to avoid losing early access to savings. How much can be saved? If you are single, you can save up to $15,000 per year. The maximum savings is limited to $30,000 of voluntary contributions in total. If you are a couple, you can save up to $30,000 per year. The maximum savings is limited to $60,000 of voluntary contributions in total. Amounts invested are deemed to receive earnings equal to the 90 day Bank Bill rate plus 3% p.a. To see how you might benefit from the First Home Super Saver Scheme, use the Government s online estimator at What type of contributions can be made? You can make contributions from: Before-tax salary; or After-tax salary. How do these contributions work? Before-tax contributions Tax at 15% is deducted from your contribution when it is paid into the superannuation fund. Amounts you contribute count toward your concessional contributions cap. This cap is $25,000 per year for everyone. Amounts above the cap will attract higher tax. The cap includes your employer s contributions. Withdrawals from superannuation under this Scheme are taxed at marginal rates less a 30% tax offset. After-tax contributions There is no tax on these contributions when you pay them into the superannuation fund or when they are withdrawn. These contributions count towards your non-concessional contributions cap. From 1 July 2017, the cap is $100,000 per year with the ability to bring forward up to two future years of limits. There are transitional rules for people who have triggered this bring forward rule in the 2015/16 or 2016/17 financial years. Other rules may also apply. 12

15 Contributing money from home sale to superannuation What does this proposal involve? This measure, proposed to start from 1 July 2018, will allow eligible people to contribute up to $300,000 from the sale of a home into superannuation. Couples can put in $300,000 each. Who is able to participate in this? You need to be over age 65 and selling your principal place of residence. You must have owned the home for at least ten years. What is the advantage of this proposal? People over age 65 normally face a number of restrictions to putting money into superannuation. Generally you need to be between age 65 and 74 and able to satisfy a work test. Over age 75, you are not eligible to contribute. The Government proposes to remove the restrictions so those over age 65 who downsize their home are able to make these specific contributions to their superannuation. Lower limits on contributions from 1 July 2017 In the June 2017 issue of Your superannuation update, we advised you that the Government has reduced the amount of contributions each year that can receive special tax treatment. If you go over these limits, higher tax applies. Concessional contributions Concessional contributions to superannuation such as before-tax salary sacrifice and employer contributions will be limited to $25,000 per year regardless of age. Non-concessional contributions Non-concessional contributions (generally after-tax contributions) to superannuation will be limited to $100,000 per year. Members under age 65 may be able to bring forward up to two future years of limits. This accommodates members who want to make larger non-concessional contributions. Contact your financial adviser if you are thinking of doing this, as conditions and complex transitional rules also apply. Also, under new rules from 1 July 2017, non-concessional contributions can generally only be made if your total superannuation balance was less than $1.6 million. However, it is proposed that this rule will not apply to downsizing contributions. Will sale proceeds contributed to superannuation count towards the Age Pension assets test? Yes, any change in your superannuation balance will count towards the assets test for the Age Pension. Do these contributions count toward any caps? Contributions from downsizing will not count toward your annual non-concessional contributions cap. Contributions will count towards the new $1.6 million cap on the amount that can be held in pensions where earnings are exempt from tax Annual Report

16 running the Fund A Trustee manages the Fund and uses several advisers who provide their services to the Fund. Who is your Trustee? The Fund Trustee is Elphinstone Group Superannuation Pty Ltd (ABN ). The sole purpose of this company is to be Trustee of the Fund. A Board of six Directors carries out the Trustee s responsibilities. Half of the Directors are appointed by the Company and half are elected periodically by Fund members. Trustee Directors at 30 June 2017 were: Company-appointed Dale Elphinstone Peter Hansen Warren Young Member-elected Justin Byrne Jevan Davenport Lacinda House Peter Hansen was appointed on 26 August 2016 to replace Neville Esler who retired as a Company-appointed Director and Fund/Company Secretary. How to contact the Trustee Peter Hansen Fund Secretary Phone: (03) Fax: (03) phansen@elphinstonegroup.com.au Indemnity insurance The Trustee is currently covered by a Trustee Professional Indemnity insurance policy that protects the Fund s assets from a legal liability to the extent allowed by law and the policy conditions. Crediting rate adjustment Each year, the Fund s crediting rates are adjusted to allow for any unallocated expenses and actual tax on investment earnings for each investment option. The unallocated expenses are costs incurred by the Fund during the year which are not covered by the dollar fees paid by members. For the 2016/17 year the Trustee estimated that the Fund s unallocated expenses would be around 0.3% of your account balance (it is not possible to determine the exact amount in advance). For the year ended 2016/17 the actual fee was 0.48% of the Fund s assets. The Fund s final crediting rates for each investment option were adjusted for the unallocated expense and the actual tax applicable. The final crediting rates on page 4 are inclusive of these adjustments. 14 For the 2017/18 year, the Trustee expects the Fund s unallocated expenses to be around 0.3% of your account balance. This percentage-based fee is an estimate and is deducted from monthly returns, prior to the returns being credited to your account with a final adjustment made at the year end. A final adjustment is made at the end of the year for tax on investment earnings. Who advises the Fund? The following organisations provide specialist services to the Trustee. Consultant and actuary Administrator Investment consultant External auditor Towers Watson Australia Pty Ltd* Towers Watson Australia Pty Ltd* (outsourced to Link Superannuation Pty Limited (ABN ) a Corporate Authorised Representative (No ) of Pacific Custodians Pty Limited (ABN , AFSL )) Towers Watson Australia Pty Ltd* Crowe Horwarth (Fund auditor and tax agent) Internal auditor Towers Watson Australia Pty Ltd* Insurer MetLife Insurance Limited * Globally, Towers Watson merged with Willis on 5 January 2016 to create Willis Towers Watson. As at the date of this Report, Towers Watson Australia Pty Ltd (being part of Willis Towers Watson) continues to provide consulting, investment and administration services to superannuation funds. How can you resolve any problems or concerns? Although our aim is to ensure that the Fund s level of service meets your expectations, sometimes problems may arise. If you have an enquiry or complaint, you should contact the Fund Administrator (see page 17 for contact details). Privacy-related enquiries should also be directed to the Fund Administrator. The Trustee has a formal process for reviewing enquiries and complaints if you are not satisfied with the response you receive. To make a formal enquiry or complaint, please obtain an Enquiry or Complaint form from the Fund Administrator. The Trustee will respond to you within 90 days. You can request the Trustee s reasons for its decision on your complaint. A copy of the Trustee s Enquiries and Complaints Policy is also available from the Fund Administrator and on the website at

17 If you are not happy with how the Trustee handles your enquiry or complaint, you may contact the Superannuation Complaints Tribunal, an independent body set up by the Federal Government to settle your concerns in such cases. The Tribunal can be contacted by phone on or by at The Tribunal, however, cannot consider some complaints, for instance, those that concern the management of the Fund as a whole. Time limits also apply to certain complaints that are related to total and permanent disability claims as well as to complaints about objections to the payment of death benefits. If your complaint is regarding any of these issues, please contact the Fund Secretary or refer to the Tribunal s website on as soon as possible for further information. You can direct complaints about your privacy that have not been resolved to your satisfaction to the Office of the Australian Information Commissioner (OAIC). The OAIC can be contacted at or enquiries@oaic.gov.au. What will happen if you leave? If you leave your employer or choose another superannuation fund, the Fund Administrator will get in touch to find out how you would like to receive your superannuation benefit. If you have more than $5,000 in the Fund, your superannuation will be transferred automatically into an account in your name in the Retained Benefits Division of the until you provide the Fund Administrator with alternative instructions. If you have less than $5,000 in the Fund, you will have 90 days to provide transfer instructions to the Fund Administrator. The Trustee may roll your benefit over to an Eligible Rollover Fund (ERF) if: You fail to give the Fund s Administrator instructions within 90 days of receiving details of your benefit; or The Fund you nominate won t accept your benefit. The ERF is: Once your benefit is transferred to the ERF, you cease to be a member of the Fund and no longer have any rights under the Fund. You will then need to contact the ERF directly about your benefit. You can also obtain the ERF s Product Disclosure Statement using the contact details to the left. The investment and crediting rate policy of the ERF will differ from those that applied in the Fund. Also, the ERF will not offer any insurance cover. You should seek advice from a licensed Financial Adviser about whether the ERF is the best suited investment for you. Do you need to provide proof of identity? Before you withdraw a benefit from the Fund, you may need to establish your identity by providing certified copies of certain documents. The Trustee may also require additional identification information to verify your identity from time to time. In some cases, the Trustee may have to disclose information about you to the Australian Transaction Reports and Analysis Centre (AUSTRAC). Due to the sensitive nature of the information, the Trustee is not permitted to inform you when this happens. Superannuation surcharge The surcharge was abolished with effect from 1 July 2005; however, the Fund may still receive assessments from the ATO for members affected by the surcharge for prior years. If so, any surcharge amounts will be applied to your accounts in the Fund. Need to know more? Other information about your benefits such as your choices for contributions, investments and insurance levels are available at Refer to your Product Disclosure Statement. A number of Fund documents are also available on the website including the Trust Deed and various Trustee policies. The Administrator AMP Eligible Rollover Fund PO Box 300 Parramatta NSW 2124 Phone: Annual Report

18 Financials A summary of the Fund s unaudited financial accounts for the year to 30 June 2017 is set out below. The audit is expected to be finalised by 30 September The audited financial accounts and auditor s report will be available on request from after this date from the Fund Administrator on Change in net assets during the year Net assets at the beginning of the year 60,799,707 Plus income Contributions 4,408,314 Rollovers 1,365,944 Net investment income 6,812,222 Other 167,029 Less outgoings Benefit payments (5,552,103) Insurance premiums (159,000) Tax due (886,387) Expenses and charges (587,676) Net assets at the end of the year 66,368,050 Statement of net assets Investments Vanguard Conservative Index Fund 25,202,651 27,075, $ $ 2017 $ Schroder Australian Equity Fund 8,197,498 9,517,612 Vanguard Australian Shares Index Fund 8,321,527 9,269,730 Wellington Global Research Equity Portfolio 7,608,642 BlackRock Hedged International Indexed Equity Fund 6,368,820 7,966,627 BlackRock Wholesale Indexed International Equity Fund 8,183,538 SSGA Australian Cash Trust 1,313, ,327 Current assets 4,248,755 4,263,884 Current liabilities Benefits payable Taxation payable (369,744) (713,641) Other (91,502) (124,964) Net assets at the end of the year 60,799,707 66,368,050 Current assets include amounts in the Fund s bank account. All contributions due at 30 June 2017 have now been paid to the Fund.

19 Contact us General enquiries: Contact the Fund Administrator with questions about your superannuation or any of the information in this Annual Report. The Fund Administrator PO Box 1442 Parramatta NSW The Trustee and complaints: Contact the Fund Secretary to direct an enquiry to the Trustee if you have a complaint. You can also refer to page 15 for contact details of the Superannuation Complaints Tribunal. Peter Hansen Fund Secretary and Complaints Officer Nantilla Road Clayton VIC 3168 (03) (03) phansen@elphinstonegroup.com.au Annual Report

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