DuluxGroup Employees. Your DuluxGroup Super Annual Report

Transcription

1 DuluxGroup Employees Superannuation Fund Your DuluxGroup Super Annual Report 2016

2 In this issue Features Navigating the retirement maze 5 Super news: 2016 Federal Budget and your super 17 Inside Note from your Trustee /16 performance and returns 6 Our investments 9 More about DuluxGroup Super 19 Financials 21 Contact us Your Annual Report Back page This Annual Report has been prepared for members of the DuluxGroup Employees Superannuation Fund (ABN ). It reviews the Fund s performance and super developments for the past 12 months and covers how the Fund is managed. Call the DuluxGroup Super helpline on if you have a question Note from your Trustee We are pleased to present the 2016 Annual Report for DuluxGroup Super which includes an overview of the Fund s investment performance for the year to 30 June 2016 and reflects on key events over the past year. 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 Towers Watson Superannuation Pty Ltd (ABN , AFSL ), as Trustee of the DuluxGroup Employees Superannuation Fund (ABN ), MySuper Authorisation number Preparation of this Annual Report was completed on 14 September

3 Your 2015/16 super performance It s been a difficult year for investment markets which were volatile over the year to 30 June Both the Australian and international share markets experienced dramatic swings throughout the year and ended the year virtually unchanged. The weakness of share markets dragged on the returns for DuluxGroup Super s Assertive Plus, Assertive and Active Balanced options, which have a significant proportion of assets invested in shares. However, the modest gains acheived by these options other assets such as direct property, alternative investments, fixed interest and cash contributed favourably to the overall results for these options. The Fund s investment returns for the year were above those of peer funds (see page 4). Remember though that super is generally a long-term investment, so returns over longer periods are a better indicator of performance than over a shorter period of one or two years. Since the Fund s commencement in 2011, DuluxGroup Super s Assertive Plus, Assertive and Active Balanced have delivered solid returns (see page 6). If you are a Defined Benefit member, the defined benefit part of your super is generally not affected by investment returns, but instead is linked to your salary. Any additional voluntary contribution and rollover accounts will be affected by investment returns. See the table on page 4 for how each option performed during the year. More details on your returns are on page 6. To see how DuluxGroup Super invests its assets, see pages 9 to 16. Try the retirement maze Among all the goals you are working towards, where do your retirement goals feature? Try out the maze on page 5, and consider the actions you can take to achieve your super goals. Super news: 2016 Federal Budget proposals The 2016 Federal Budget contained a number of super-related proposals. These will generally start from 1 July 2017 and only if the necessary legislation is passed. Read pages 17 and 18 for a summary of what is proposed and what it could mean for you. Many people develop an interest in super when they are nearing retirement. However, the long-term nature of super means it s important to understand super at every stage of your life and not just leave it until you are nearing retirement. We encourage you to take the time to read this year s Annual Report to see how DuluxGroup Super is supporting your retirement journey. As Trustee, our role is to manage DuluxGroup Super for your benefit. As always, we welcome your questions and feedback. Our contact details are on the back page. The Trustee DuluxGroup Employees Superannuation Fund 2016 Annual report 3

4 A reflection on 2015/16 DuluxGroup Super s performance Past performance is not necessarily a reliable indicator of future performance. DuluxGroup Super snapshot Our membership* at 30 June Pre-packaged investment options and asset class options Investment returns for the year to 30 June 2016 Assertive Plus 3.19% Assertive 3.53% Peer fund comparison # 2. Active Balanced* 3.41% Peer fund comparison # 2.81% Conservative 3.72% Peer fund comparison # 3.36% Australian Shares 3.92% International Shares -1.34% Diversified Fixed Interest 4.86% Cash 1.78% Account-Based Pension section Aggressive 2.49% Assertive 4.21% Balanced 3.19% Cautious 3.48% Conservative 3.18% Cash 2.19% Defined Benefit section** 3.58% ,031 *Includes Retained and Spouse members. Our Fund size at 30 June 2016 $299,128, , $284,398,006 Note: Investment returns are after tax, investment fees and indirect costs and an administration fee that has varied over time but is currently 0.15% p.a. plus, from 1 July 2013 to 30 June 2016, an allowance to build up the Fund s Operational Risk Financial Requirement (ORFR) reserve. However, no tax is payable on the income from investments in the Account-Based Pension section. No allowance for the Fund s ORFR has been made from the investment returns of the Defined Benefit section. To learn more about the ORFR reserve, see page 11. * This is the option for MySuper members. ** If you are a Defined Benefit member, see page 8 to learn how investment performance affects your benefits in DuluxGroup Super. # Based on SuperRatings Pty Ltd s Fund Crediting Rate Survey, median returns (SR50 Growth (77-90) Index, SR50 Balanced (60-76) Index and SR50 Capital Stable (20-40) Index), published on 20 July 2016, compared with DuluxGroup Super s Assertive, Active Balanced and Conservative options respectively), SuperRatings statistics are not financial product advice; independent professional advice should be obtained before making any financial decisions. 4

5 Navigating the retirement maze Try out the maze and find out if you are taking the right steps to achieving your retirement goals no matter which stage of life you are in. The journey to retirement is a continuous one. Use the tools at to estimate how much money you are likely to have from super and the age pension on retirement. For Accumulation members, the Fund s Retirement Planner tool in the online Member Centre lets you model how different contributions, investment choices or retirement ages can affect your estimated super balance. START HERE 1. Review your investments When looking at returns, remember: Each investment option has a different potential risk and return. Generally, the higher the potential return in the long term, the higher the risk that there will be losses in the short term. Super is generally a long-term investment, so your focus should generally be on long-term returns. Short periods of negative performance are a normal part of investing. To learn more about DuluxGroup Super s investments, read pages 9 and Rollovers If you have super in more than one fund, think about consolidating your super in one fund. This could save you paying additional fees. However, check that you won t be losing any valuable insurance or charged exit fees before you transfer out of your other fund. YOUR RETIREMENT! 3. Extra contributions The earlier you start putting extra into your super, the more time you will have to benefit from the compounding effects of investment earnings before your retirement. Tax concessions are available on contributions, but remember the Government has caps on contributions you may make before extra tax may apply (see page 18 for more information). 4. Your beneficiaries Make and keep your death benefit nomination up to date. Don t leave it for later. 5. Protect yourself Protect yourself and your loved ones make sure you have enough insurance cover. 6. Open a pension account Upon retirement, consider the Fund s Account-Based Pension. This way, you can keep investing your super savings in DuluxGroup Super after retirement and withdraw a regular income. Pensions received after age 60 are generally tax free. Are you lost? You don t have to go it alone. If you have questions about the Fund, call the DuluxGroup Super helpline on Should you wish to speak to a financial adviser, see page 18 on how to locate one Annual report 5

6 2015/16 performance and returns The table below shows DuluxGroup Super s investment returns. Your super performance will fluctuate each year depending on how the investment markets perform. Super returns can be either positive or negative. In most cases though, super is a long-term investment. The investment returns since the Fund commenced in 2011 are likely to better indicate your super s performance. Detailed returns are also provided on your Benefit Statement and the most recent returns are available by logging into the Member Centre at A snapshot of DuluxGroup Super s returns Past performance is not necessarily a reliable indicator of future performance. Pre-packaged investment options and asset class options 1 July 2015 to 30 June July 2014 to 30 June July 2013 to 30 June July 2012 to 30 June July 2011 to 30 June 2012 Five-year compound average net return (per year) Assertive Plus 3.19% 11.39% 16.28% 19.90% -2.8% 9.27% Assertive 3.53% 9.63% 14.52% 16.75% -1.0% 8.48% Active Balanced* 3.41% 8.81% 13.08% 15.31% 0.0% 7.97% Conservative 3.72% 5.34% 7.60% 8.23% 4.2% 5.80% Australian Shares 3.92% 7.18% 17.74% 20.43% -4.8% 8.50% International Shares -1.34% 22.45% 18.91% 26.06% -4.6% 11.55% Diversified Fixed Interest 4.86% 4.32% 6.03% 4.40% 8.6% 5.63% Cash 1.78% 2.12% 2.61% 3.29% 4.0% 2.76% Account-Based Pension section Aggressive 2.49% 11.96% 19.07% 24.23% -2.7% 10.55% Assertive 4.21% 9.65% 17.09% 20.87% -1.0% 9.87% Balanced 3.19% 10.13% 15.46% 18.72% 0.2% 9.31% Cautious 3.48% 8.26% 11.96% 14.39% 2.6% 8.04% Conservative 3.18% 6.41% 9.18% 9.71% 5.0% 6.67% Cash 2.19% 2.57% % 4.6% 3.26% Defined Benefit section** 3.58% 7.17% 10.57% 12.27% 1.90% 7.03% Note: Investment returns are after tax, investment fees and indirect costs and an administration fee that has varied over time but is currently 0.15% p.a. plus, from 1 July 2013 to 30 June 2016, an allowance to build up the Fund s Operational Risk Financial Requirement (ORFR) reserve. However, no tax is payable on the income from investments in the Account-Based Pension section. No allowance for the Fund s ORFR has been made from the investment returns of the Defined Benefit section. To learn more about the ORFR reserve, see page 11. * This is the option for MySuper members. ** If you are a Defined Benefit member, see page 8 to learn how investment performance affects your benefits in DuluxGroup Super. 6

7 Investment market update The 2015/16 financial year was one of increasing global economic uncertainty. This was primarily caused by economic and geopolitical risks in the Eurozone (the potential Grexit and eventual Brexit), uncertainty and volatility surrounding the Chinese economy, a fall in global commodity prices and concerns about Japanese deflation. These lower expectations also occurred despite indications of a potential US economic recovery, the end of 10 years of US interest rate reductions and predominantly positive signals for the Australian economy. Returns for global share markets suffered, with the MSCI World ex Australia (unhedged) Index returning just 0.4%, compared to 25.2% and 20.4% for the last two financial years, respectively. The Australian dollar depreciated relative to the basket of currencies included in the MSCI World ex Australia (AUD hedged) Index, falling in value by 1.4%. Despite mixed signals from the US, signs of a continued recovery were apparent as the Federal Reserve (Fed) increased interest rates for the first time in almost a decade. The US unemployment rate fell to 4.7%, an even more significant low than the previous year, before finishing flat at 4.9%. Uncertainty surrounding the US election also weighed on the US economy. The US dollar strengthened throughout the year against major currencies. While concerns around Greece s potential exit from the Eurozone faded early in the year (as an agreement between Greece and its creditors was reached in July 2015) and confidence began to pick up, uncertainty around Brexit led to a mixed year for the European Union (EU). Britain s vote to leave the EU at the end of the financial year shocked financial markets (which had become increasingly confident that Britain would remain), increasing economic and financial risks. This uncertainty contributed to negative performance for the Eurozone share market, with the Euro Stoxx 50 Index returning -16.3% over the financial year (in local currency terms). Over the year the Bank of Japan remained committed to quantitative easing and low interest rates, moving to a negative and record low interest rate of -0.1%, as it fought to promote economic growth and prevent deflation. It was also a volatile year for China, which experienced a continued decline in growth. The Shanghai Stock Exchange Composite Index began the year at a high (following a 150% rise in under 12 months), crashing during the year and ending the year 43.3% below its June 2015 high. Indicators for the Australian economy were mixed, with global economic uncertainty having an impact on stability, coupled with the lead up to the federal election. The Australian economy still managed to outperform its forecast driven by a slight recovery in commodities (and therefore mining), as well as continued positive contributions from the services sector. The manufacturing sector continued to lessen overall performance. The Reserve Bank of Australia decided to cut the official cash rate even further during the year, to a then record low of 1.75%, in a bid to improve growth in the Australian economy to a more desirable level and support further growth in household consumption. In line with the poor performance of global shares, the Australian share market experienced meagre returns. The S&P/ASX 300 Index returned 0.9%, compared to 5.6% and 17.2% for the previous two financial years, respectively. While overall share market returns were low, the performance of various sectors differed greatly. The energy and resources sectors delivered returns of -21.8% and -10.6%, respectively. Utilities was the most positive contributor returning 24.4%, followed closely by the health care and consumer discretionary sectors which each returned 21.1% and 19.7%. The Australian dollar fell over the year, despite some late recoveries to end at US cents (down from US cents). The fall was largely attributed to slowing demand from China, a subsequent fall in commodity prices and an increase in optimism towards the US economy. Over the same period the Australian dollar also fell against the currencies of its major trading partners, with the Trade Weighted Index ending the year at 62.5 (down from 63.8 at the start of the year). With falling bond yields, fixed interest provided investors with solid returns. Australia fixed interest, measured by the Bloomberg AusBond Bank Bill Index, returned 2.2% for the year, down from 2.6% last year. On the other hand, the Bloomberg AusBond Composite Index returned 7.0%. Global fixed interest outperformed Australian fixed interest, with the Barclays Global Aggregate Index (hedged to AUD) returning 9.3% for the financial year. Australian cash reflected the low cash rates and returned 2.2% for the 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 7

8 Returns on your super Accumulation members Your accounts receive the actual investment return for your chosen option(s) after allowing for tax, investment fees and indirect costs, and an administration expense allowance (currently 0.150% per year). A small deduction was also made from 1 July 2013 to 30 June 2016 to build up the Fund s ORFR reserve. If you are an Account-Based Pension member, your actual returns are calculated in the same way, except there is no tax on the investment returns earned by Account-Based pensions. Investment returns can be positive or negative. Defined Benefit members Your defined benefit is generally not affected by investment returns. This benefit is instead linked to your salary at or near retirement. Investment returns are applied to your additional voluntary contribution and rollover accounts. Your accounts receive the actual investment return for your chosen option after allowing for tax, investment fees and indirect costs, and an administration fee (currently 0.150% per year). A small deduction was also made from 1 July 2013 to 30 June 2016 to build up the Fund s ORFR reserve. If you joined the Orica Defined Benefit Super Fund before 1 July 1992, you have an Accumulation Guarantee. The benefit you receive is therefore the greater of a defined benefit or accumulation benefit. For the purposes of calculating your accumulation benefit, investment returns at the declared rate of the Fund s defined benefit assets apply. The Trustee sets the declared rate for DuluxGroup Super s defined benefit assets applicable to Accumulation Guarantee benefits after considering the net investment return for the year and the Fund s crediting rate policy. The current policy is to set the declared rate as equal to the net investment return earned by the Fund s defined benefit assets after allowing for investment fees and indirect costs, taxes, and an allowance of 0.150% per year for administration fees. Rates may be positive or negative. The Defined Benefit section of DuluxGroup Super is closed to new members. Note: Surcharge payments (if any) are deducted from members benefits. If you leave during the year Investment returns are calculated each month. If your super needs to be paid out before monthly investment returns have been calculated, or if you switch investment options, an interim earning rate will be used. The interim earning rates are based on the daily unit price of each of DuluxGroup Super s investment options. These interim rates will cover the period from the previous date that investment earnings were declared until the date your benefit is paid (or your transfer request is processed). Defined Benefit members: When you leave employment, all of your benefit will be transferred to DuluxGroup Super s Retained Benefits section. Here, the defined benefit component of your benefit will be invested in the Cash option while your additional voluntary contributions and rollovers (if any) will continue to be invested in your chosen investment option (or Active Balanced option if you have never made an investment choice). Your benefit will continue to be invested in this manner until you change your investment option, transfer your benefit from DuluxGroup Super or are paid your benefit from the Fund. Super spotlight 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 will 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. 8

9 Our investments DuluxGroup Super has a number of investment options for you to choose from, each with its own investment objective and strategy. There are four pre-packaged investment options (Assertive Plus, Assertive, Active Balanced and Conservative) and four asset class options (Australian Shares, International Shares, Diversified Fixed Interest and Cash). If you don t choose an option, your super will be invested in DuluxGroup Super s Active Balanced option, which is the MySuper option. For Account-Based Pension members, there are six investment options for you to choose from (see pages 14 to 15). If you are an Accumulation member, you can choose how your entire super is invested. If you are a Defined Benefit member, you only have investment choice for your additional voluntary contributions and rollover accounts. We know that it is important for you to find the most appropriate investment choice for your circumstances. If you wish to change how the Trustee invests your super, you should go to www. duluxgroupsuper. com. au and log into the Member Centre to make the change. Alternatively, you can download either the Application & Change Form: Accumulation Members, the Defined Benefit Super Choices Form or the Account-Based Pension Application & Change Form, as appropriate for your category of membership. Consider obtaining financial advice before making any changes see page 18 on how to find a financial adviser. Super spotlight Trust Deed: This legal document sets out the rules relating to the establishment and operation of the Fund. 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 DuluxGroup Super s assets prudently as permitted by the Trust Deed and by superannuation law; Invest across a diverse range of assets; Ensure that DuluxGroup Super 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 12 to 16 to learn more about the specific investment objectives for each investment option. 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. See pages 12 to 16. Investment managers The Trustee appoints professional investment managers to manage DuluxGroup Super s investments. These managers and their products may be changed from time to time without prior notice to, or consent from, members. DuluxGroup Super s investment managers at 30 June 2016 are listed on page 10. JANA Investment Advisers Pty Ltd (JANA) (ABN , AFSL ) is the investment adviser to DuluxGroup Super. Part of the National Australia Bank Group, JANA is a specialist provider of tailored investment advice to major superannuation funds and other institutional investors. JANA s role is to assist the Trustee in establishing appropriate long-term investment objectives and strategies for DuluxGroup Super and to implement these strategies. This includes appointing, monitoring and where appropriate, terminating, the investment management companies who look after DuluxGroup Super s assets. The Trustee currently invests DuluxGroup Super s assets across a number of unit trusts. Each trust covers a specific investment sector. The majority of trusts adopt a multi-manager approach whereby the trust comprises a number of specialist investment managers. The table on page 10 lists the trusts, the individual managers and the Fund s holding in each. The Trustee also has direct holdings in three unlisted property funds and an infrastructure fund. These are also listed Annual report 9

10 DuluxGroup Super s investment managers at 30 June 2016 Investment managers % of Fund Australian Shares 23.64% JANA Core Australian Share Trust 14.35% Balanced Equity Management Pty Ltd Solaris Investment Management Ltd Concise Asset Management Limited FIL Limited JANA High Alpha Australian Share Trust 7.35% Cooper Investors Pty Ltd Ubique Asset Management Pty Ltd BT Investment Management (Institutional) Limited JANA Small Caps Australian Share Trust 1.94% Fairview Equity Partners Pty Ltd Invesco Australia Limited Paradice Investment Management Pty Ltd International Shares 21.21% JANA Passive Global Share Trust 5.00% Vanguard Investments Australia Ltd JANA Passive Global Share Trust (Hedged) 4.78% Vanguard Investments Australia Ltd JANA Core Global Share Trust 0.28% Acadian Asset Management LLC Janus Capital Management Ltd Schroders Investment Management Australia Limited JANA Core Global Share Trust (Hedged) 0.28% Acadian Asset Management LLC Janus Capital Management Ltd Schroders Investment Management Australia Limited JANA Emerging Markets Trust 3.19% Delaware Investments Australia Neuberger Berman Australia Pty Limited JANA High Alpha Global Share Trust 7.68% Carnegie Asset Management Fondsmaeglerselskab A/S Harding Loevner LLC Pzena Investment Management LLC Sands Capital Management LLC Tweedy, Browne Company LLC Investment managers % of Fund Investment managers % of Fund Property 13.13% PIMCO Australia Pty Limited JANA Global Property Trust 0.13% UBS Asset Management (Australia) Limited Morgan Stanley Investment Management Limited Wellington Management Company, LLP Resolution Capital Limited JANA Short-Maturity Diversified Debt Trust 0.67% AMP Capital Diversified Property Fund 6.18% Antares Capital Dexus Wholesale Property Fund 5.29% Fischer Francis Trees & Watts Inc Charter Hall Prime Office Fund 1.53% Insight Investment Management (Global) Limited Alternatives 15.21% JANA Select Opportunities Trust 7.91% BlackRock Inc RARE Infrastructure Limited Fischer Francis Trees & Watts Inc Insight Investment Management (Global) Limited Loomis Sayles & Company LP Oaktree Capital Management, L.P. Shenkman Capital Management Inc JANA Low Correlation Strategy Trust 6.32% JANA Investment Advisers Pty Ltd AMP Capital Community Infrastructure Fund 0.98% Diversified Fixed Interest 12.31% JANA Diversified Fixed Income Trust 11.18% PIMCO Australia Pty Limited UBS Asset Management (Australia) Limited Franklin Templeton Investments Australia Limited Fischer Francis Trees & Watts Inc Insight Investment Management (Global) Limited Loomis Sayles & Company LP Wellington Management Company, LLP JANA All-Maturity Diversified Debt Trust 0.46% Amundi Asset Management Antares Capital Franklin Templeton Investments Australia Limited Fischer Francis Trees & Watts Inc Insight Investment Management (Global) Limited Goldman Sachs Group Inc Loomis Sayles & Company LP Goldman Sachs Group Inc Loomis Sayles & Company LP UBS Asset Management (Australia) Limited Wellington Management Company, LLP Cash 14.50% JANA Cash Trust 14.50% Antares Capital Total % Super spotlight 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, a 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). 10

11 Other investment information Derivatives The Trustee does not invest directly in derivatives. DuluxGroup Super does, however, invest in the JANA Select Opportunities Trust. Within this trust, one or more of the underlying managers may use derivatives to assist them in achieving DuluxGroup Super s investment objectives. DuluxGroup Super s other investment managers only use derivatives for risk-control purposes or to more efficiently shift asset allocations. 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 JANA that the managers have complied with their risk management processes. JANA also has a comprehensive Derivatives Policy. Deferred tax assets Super funds normally pay tax on capital gains. If the Fund experiences capital losses (which can arise, for example, due to falls on share markets), super funds are allowed to accumulate the tax benefits associated with those losses and use them to offset the tax on future capital gains. Australian Accounting Standards require that future tax benefits will be 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 manager the Fund s tax position, the Trustee has imposed a limit on the level of taxation benefits arising from these capital losses. At 30 June 2016, the level of the Fund s tax losses was within the limit set by the Trustee. The Trustee is therefore recognising the whole of the Fund s tax losses as a Fund asset. Actuarial review DuluxGroup Super s financial position is reviewed by the actuary at least every three years. The actuary then makes recommendations to the Company on the appropriate level of future contributions needed to maintain members benefits. The most recent review at 1 July 2014 showed that the Fund was in a satisfactory financial position at the valuation date and it was also in a satisfactory financial position at 30 June The next review is scheduled for 1 July The Company continues to contribute in line with the actuary s recommendations. Reserves The Trustee does not maintain investment reserves. However, it does maintain an Operational Risk Financial Requirement (ORFR) reserve as described below. Operational Risk Financial Requirement (ORFR) reserve From 1 July 2013, super funds have been required to set aside financial resources to address operational risks. The Trustee has established an ORFR reserve equal to 0.25% of the value of members vested benefits for this purpose. The reserve has been funded in two ways. For accumulation-based benefits, the reserve was funded by setting aside a small portion of the Fund s investment earnings at the rate of % per year. The amount is invested in the Active Balanced option. For defined benefits, the reserve was funded by setting aside amounts from the Fund s defined benefit assets. These amounts are invested in the same as the Fund s defined benefit assets. 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 reserve As at 30 June ORFR reserve % of vested benefits % ($737,400) % ($354,338) % ($109,089) 2016 Annual report 11

12 DuluxGroup Super s pre-packaged investment options Accumulation members About the option Assertive Plus Assertive Investment objective Achieve an expected rate of return (net of investment fees and tax) that exceeds the rate of inflation (CPI) by at least 4% per year over each seven-year period. Achieve an expected rate of return (net of investment fees and tax) that exceeds the rate of inflation (CPI) by at least 3.5% per year over each seven-year period. Investment strategy Invests mainly in Australian and international shares and property. Invests mainly in Australian and international shares and property, with around 15% in defensive alternatives and fixed interest investments. How the option was invested at 306% June 16% 38% 40% % 2% 4% 2% 3% 4% 3% 4% 3% 4% 16% 9% 15% 9% 6% 31% 6% 30% 6% 31% 38% 39% 40% 15% 16% 15% 40% 6% 31% 31% 31% 14% 25% 27% 6% 9% 11% Benchmark and asset allocation ranges C FI DA GA P IS AS Benchmark Asset allocation range 51% 36% to 66% 34% 24% to 44% 12% 0% to 20% 3% 0% to 0% 0% to 5% 0% 0% to 5% 0% 0% to 5% C FI DA GA P IS AS Benchmark Asset allocation range 42% 27% to 57% 28% 18% to 38% 12% 0% to 20% 3% 0% to 7% 0% to 15% 8% 0% to 20% 0% 0% to 15% C FI DA GA P IS AS Likelihood of a negative return 4 to less than 6 years out of every 20 years 4 to less than 6 years out of every 20 years Australian shares International shares Property Growth alternatives Defensive alternatives Fixed interest Cash 12

13 About the option Investment objective Investment strategy How the option was invested at 30 June Benchmark and asset allocation ranges Likelihood of a negative return Active Balanced (option for MySuper members) Achieve an expected rate of return (net of investment fees and tax) that exceeds the rate of inflation (CPI) by at least 3% per year over each five-year period. Invests mainly in Australian and international shares and property, and has around 30% in defensive alternatives, fixed interest and cash investments. 6% Conservative Achieve an expected rate of return (net of investment fees and tax) that exceeds the rate of inflation (CPI) by at least 2% per year over each three-year period. Invests mainly in fixed interest, cash and defensive alternative investments, with about 30% in shares and property % 9% 14% 25% 27% 6% 9% 11% 14% 25% 25% Benchmark Asset allocation range 36% 25% to 55% 24% 5% to 30% 0% to 20% 3% 0% to 7% 0% to 15% 15% 5% to 40% 5% 0% to 25% 8% 8% Benchmark Asset allocation range 12% 5% to 25% 8% 0% to 20% 0% to 20% 3% 0% to 7% 0% to 15% 40% 20% to 60% 20% 0% to 40% 4 to less than 6 years out of every 20 years 1 to less than 2 years out of every 20 years 31% 25% 7% 7% 11% 12% 7% 31% 26% 11% 6% DuluxGroup Super s asset class options Accumulation members Asset class option Australian Shares International Shares Diversified Fixed Interest Cash Investment objective Achieve a long-term (net of tax and fees) rate of return that exceeds the S&P/ASX 300 Index measured over rolling four-year periods. Achieve a long-term (net of tax and fees) rate of return that exceeds the net of tax return of the MSCI World (excluding Australia) Index, over rolling four-year periods Achieve a long-term (net of tax and fees) rate of return that exceeds the net of tax return of the composite benchmark (comprising 50% UBSA Composite Bond Index/50% Barclays Capital Global Aggregate Index [Hedged]), over rolling two-year periods. Outperform the net of tax return of the UBS Bank Bill Index each year. Investment strategy (at 30 June 2015 and 30 June 2016) Invests 100% in Australian shares. Invests 100% in international shares. This option has full currency exposure i.e. there is no currency hedging. Invests 100% in fixed interest investments in both domestic and international markets. All international fixed interest is fully hedged to the Australian dollar. Invests 100% in cash. Australian shares International shares Property Growth alternatives Defensive alternatives Fixed interest Cash 2016 Annual report 13

14 Your investment options Account-Based Pension members About the option Aggressive Assertive Balanced Investment objective Achieve a return (net of investment fees) that exceeds the rate of inflation (CPI) by at least 6% per year over rolling five-year periods. Achieve a return (net of investment fees) that exceeds the rate of inflation (CPI) by at least 4.5% per year over rolling five-year periods. Achieve a return (net of investment fees) that exceeds the rate of inflation (CPI) by at least 3.5% per year over rolling three-year periods. Investment strategy How the option was invested at 30 June Invests mainly in Australian and international shares, with around in property and 11% in growth alternatives. Invests mainly in Australian and international shares, property and growth alternatives, with around 20% in defensive alternatives and fixed interest investments. Invests mainly in growth assets like shares, property and growth alternatives (70%), with the remainder (30%) invested in income assets like fixed interest, cash and defensive alternatives % 5% 5% There was 6% 7% 9% x% 12% 9% no money in 16% 26% 15% 22% this option at 32% 26% 42% 30 June % 15% 11% 23% 41% 28% 28% 31% 4% Benchmark and asset allocation ranges Benchmark Asset allocation range 46% 30% to 60% Benchmark Asset allocation range 30% 15% to 45% Benchmark Asset allocation range 26% to 40% 33% 15% to 45% 23% to 40% 18% 5% to 35% 0% to 20% 0% to 20% 0% to 20% 11% 0% to 30% 17% 0% to 30% 16% 0% to 30% 0% 0% to 15% 12% 0% to 25% 12% 0% to 30% 0% 0% to 20% 8% 0% to 30% 18% 0% to 40% 0% 0% to 15% 0% 0% to 20% 0% 0% to 25% Likelihood of a negative return 4 to less than 6 years out of every 20 years 3 to less than 4 years out of every 20 years 2 to less than 3 years out of every 20 years Australian shares International shares Property Growth alternatives Defensive alternatives Fixed interest Cash 14

15 About the option Cautious Conservative Cash Investment objective Achieve a return (net of investment fees) that exceeds the rate of inflation (CPI) by at least 2% per year over rolling three-year periods. Achieve a return (net of investment fees) that exceeds the rate of inflation (CPI) by at least 1% per year over rolling three-year periods. To outperform, after fees, the UBS Bank Bill Index. Investment strategy How the option was invested at 30 June Invests around 50% in growth assets like shares, property and growth alternatives, and around 50% in income assets like fixed interest, cash and defensive alternatives. 24% 18% Invest mainly in fixed interest, cash and defensive alternatives, with the remainder (30%) in shares, property and growth alternatives. Invests 100% in cash % 17% 4% 28% 14% 14% 14% 34% 26% 8% 9% 9% 4% 19% 40% 7% 9% 8% 12% 5% 100% 100% Benchmark and asset allocation ranges Benchmark Asset allocation range 17% 0% to 30% Benchmark Asset allocation range 0% to 20% Benchmark Asset allocation range 100% 100% 11% 0% to 30% 7% 0% to 20% 0% to 20% 5% 0% to 15% 12% 0% to 30% 8% 0% to 20% 15% 0% to 30% 13% 0% to 30% 35% 0% to 50% 47% 0% to 60% 0% 0% to 30% 0% to 40% Likelihood of a negative return 1 to less than 2 years out of every 20 years 0.5 to less than 1 year out of every 20 years 0% in any particular year. Note that your account balance is not guaranteed Australian shares International shares Property Growth alternatives Defensive alternatives Fixed interest Cash 2016 Annual report 15

16 DuluxGroup Super s Defined Benefit section JANA, as DuluxGroup Super s investment adviser, assists the Trustee to determine how the Fund s defined benefit assets are invested by nominating a long-term neutral or benchmark asset allocation position for these assets. Depending on how investment markets are performing, the investment outlook and DuluxGroup Super s financial position (among other considerations), JANA and the Trustee may agree on a short-term asset allocation that differs from the long-term benchmark. The current long-term benchmark and the short-term target allocation for DuluxGroup Super s defined benefit assets are shown in the table below. Asset class Long-term benchmark Short-term target allocation Australian shares 30% 20% International shares 15% 20% Property 15% 13% Growth alternatives 0% 4% Defensive alternatives Fixed interest 20% 15% Cash 18% Investment objective The key investment objective of the defined benefit pool of assets is to achieve a return (net of investment fees and taxes) that exceeds the rate of inflation (CPI) by at least 3% per year over each five-year period. Actual asset allocation At 30 June % 15% 2% At 30 June % 24% 16% 16% 19% 19% 13% 19% Australian shares International shares Property Growth alternatives Defensive alternatives Fixed interest Cash 4% 16

17 Super news: 2016 Federal Budget and your super In outlining a number of super-related proposals in the 2016 Budget, the Government confirmed that the purpose of superannuation is to provide income in retirement to substitute, or supplement, the Age Pension. Changes will generally only start from 1 July 2017, and only if Parliament passes the necessary legislation. Most of the measures are aimed at reducing tax concessions available to higher income earners. Some other measures assist low income earners and families and increase workplace flexibility. Here is a brief summary of what is proposed and what they mean. Helping low income earners and increasing flexibility Financial support will continue to be made to low income earners (for those on a $37,000 adjusted taxable income or less) who make contributions to super. Qualifying individuals can effectively receive a refund of the contributions tax of up to $500 on Superannuation Guarantee and other before-tax (e.g. salary sacrifice) contributions to super after 1 July This will replace a similar scheme which is due to wind up on 30 June In another measure to assist families to support each other to accumulate super, the level of income to qualify for the Spouse Tax Rebate will increase from $10,800 to $37,000. If you make after-tax contributions on behalf of your spouse whose income is less than $37,000, you can qualify for a tax rebate of up to $540 per year (that is, an 18% rebate on contributions up to $3,000). The Government proposes to make it easier for anyone up to age 75 to make superannuation contributions. Currently there are rules that apply after age 65 that may restrict some older workers from taking advantage of growing their super while working. Reductions to tax concessions There will be a new $1.6 million cap on the total amount individuals can transfer into retirement pension accounts. This will apply to current retirees as well as those still to enter retirement. Existing retirees would have until 1 July 2017 to either withdraw the excess from super or transfer it back to an accumulation account where investment earnings would be taxed at a maximum of 15%. From 1 July 2017, there will be a lower limit of $25,000 per year on the amount of concessional contributions that can be made to super. Concessional contributions include employer contributions (or notional contributions for defined benefit members) and any before-tax contributions. Currently the limit is $30,000 per year if you are under 50 and $35,000 per year if you are over 50. If you have less than $500,000 in super, the Government proposes that you will be able to carry forward any unused concessional contribution cap, so that you can make greater contributions later on. Unused amounts will be able to be carried forward on a rolling basis for a period of five consecutive years. This may assist members to balance family responsibilities by topping up their super in later life. The total amount of non-concessional contributions you can make in your lifetime, taking into account contributions made from 1 July 2007, will be limited to $500,000. Currently, the limit is $180,000 per year (or $540,000 over a three-year period if you are under 65). This will limit the amount of lump sum contributions you can make to super from, for example, the sale of a property or the receipt of an inheritance, and is intended to prevent super being used for estate planning and tax avoidance. The Government plans to make this change from Budget night (3 May 2016). Currently, high income earners pay a higher rate of tax on their superannuation contributions of 30% (instead of 15%). From 1 July 2017, this tax will apply to anyone whose adjusted taxable income exceeds $250,000 per year (currently $300,000 per year). The tax treatment of transition to retirement pensions will be tightened by removing the tax-free status of investment earnings on assets invested in these pensions where the member has not retired from the workforce. The investment earnings will be taxed at a maximum of 15% rather than being tax free. Transition to retirement pensions may feature in the retirement planning of anyone over their preservation age and are a complex product. If this proposal becomes law, members in this position may wish to discuss their options with their financial adviser Annual report 17

18 What are the latest super thresholds? Super thresholds are usually set by the Government from 1 July each year. Below are some key thresholds for the 2016/17 year. Government co-contributions Under the co-contribution scheme, the Government pays up to fifty cents for every dollar of after-tax contributions you make to your super if you earn less than $36,021 a year. The maximum co-contribution is $500 per year, which reduces by 3.33 cents for every dollar of income above $36,021, with no co-contribution payable once your income reaches $51,021. If you qualify for the co-contribution, the ATO automatically pays it to your account in the Fund after processing your annual tax return. Contribution caps Contribution caps are limits the Government sets on the amount of super contributions each year which can receive concessional tax rates. The caps have not changed since last year and are shown in the table below. Changes to these caps announced in the Federal Budget are proposed to take effect from 1 July Age on 30 June 2016 Concessional contributions Non-concessional contributions Under age 49 $30,000 $180,000* Age 49 or over $35,000 $180,000* * If you are under age 65, you can generally bring forward two years of caps to make total non-concessional contributions of up to $540,000 over three years from 1 July 2016 (but with reduced or nil contributions in the following two years). What are concessional and non-concessional contributions? If you re an Accumulation member, concessional contributions include any contributions you make from your before-tax salary (by salary sacrifice), including the Company s compulsory contributions. If the Company pays any fees for you, these are also classified as concessional contributions. If you re a Defined Benefit member, concessional contributions must include notional contributions in respect of your defined benefit (rather than the Company s actual contributions) which the Fund Administrator reports to the ATO. The notional contribution includes your regular member contribution to your defined benefit if this contribution is made from your before-tax salary (by salary sacrifice). Any additional contributions that you pay from your before-tax salary also count towards your concessional contributions. If you have any questions about your notional contribution in respect of your defined benefit, please contact the DuluxGroup Super helpline on For all members, contributions you make from your after-tax salary are an example of non-concessional contributions. Need financial advice? What happens if I exceed the caps? If you exceed the caps, the ATO will forward you a tax assessment. Members who exceed the concessional contributions cap can elect to release up to 85% of the excess contributions from the superannuation system. If you choose to do so, the amount will be paid by the Fund to the ATO, where it will first be used to meet any outstanding tax liabilities you may have (including the tax on the excess contributions) with the remainder then paid back to you. Excess contributions withdrawn do not count towards your non-concessional cap. If you exceed the non-concessional cap, you can elect to release the excess contributions from super, together with an amount of associated earnings. The ATO will send you a form to enable you to do this. The associated earnings will be included in your taxable income and taxed at your marginal tax rate. If you don t elect to withdraw all the excess contributions, they may be taxed at up to 49%. What are associated earnings? An amount that the ATO calculates using a prescribed interest rate. It may not reflect the actual earnings on the contributions in the Fund. If you could do with some guidance to help you make decisions about planning 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) You can also locate a financial adviser in your area by downloading the Government s guide, Financial advice and you, from gov. au. Click on Publications, then scroll down to the Investing category. Alternatively, you can contact the Financial Planning Association of Australia at or by calling

19 More about DuluxGroup Super How is DuluxGroup Super managed? A Trustee, with input from the Policy Committee, manages DuluxGroup Super and uses several advisers who provide their services to the Fund. Half of the members of the Policy Committee are elected by members of the Fund. Who is your Trustee? A Trustee company, Towers Watson Superannuation Pty Ltd (ABN , AFSL ) is responsible for managing the Fund. It has been licensed to act as a Trustee by the Australian Prudential Regulation Authority (APRA), the prudential regulator of super funds in Australia. Towers Watson Superannuation Pty Ltd is a subsidiary of Towers Watson Australia Pty Ltd (ABN , AFSL ) who also acts as Administrator (via an outsourced arrangement), actuary and secretary to the Fund. See Who advises DuluxGroup Super? to the right for more information. How to contact the Trustee DuluxGroup Super C/- Mr Andrew Hawthorn Towers Watson Superannuation Pty Ltd Level 23, 55 Collins Street Melbourne VIC 3000 (03) (03) andrew.hawthorn@willistowerswatson.com What is a Policy Committee? A Policy Committee ensures that the interests of members and the Company are represented in the management of the Fund. The Committee comprises eight members half appointed by the Company and half elected periodically by members. The next Policy Committee election will be held in August At 30 June 2016, the Policy Committee members were: Company-appointed Jevan Dickinson Michelle Durkin Bruce Watkins John Watt Member-elected Daniel Adams Peter Helm Rod Vockler Ollie Wynhoven Indemnity insurance Retail Business Group Finance Group Remuneration Independent Rocklea, Queensland Glynde, South Australia Clayton, Victoria Clayton, Victoria 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. Who advises DuluxGroup Super? The following organisations provide specialist services to the Trustee. Consultant and actuary Administrator Investment consultant Investment custodian Legal adviser External auditors Insurer Super spotlight Towers Watson Australia Pty Ltd Towers Watson Australia Pty Ltd (outsourced to Link Super Pty Limited (ABN ) a Corporate Authorised Representative (No ) of Pacific Custodians Pty Limited (ABN , AFSL )) JANA Investment Advisers Pty Ltd National Australia Bank Limited Lander & Rogers Deloitte, KPMG MetLife Insurance Limited Policy Committee: The Policy Committee monitors the overall management of a super fund. It provides members with an avenue to have their issues raised with the trustee and a means for member feedback to filter through to the trustee. The Policy Committee is made up of equal representation from the employers and members Annual report 19

20 How can you resolve any problems or concerns? Although our aim is to ensure that DuluxGroup Super 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 the back page 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 or from www. duluxgroupsuper. com.au. 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 DuluxGroup Super s website. 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 info@ sct. gov. au. 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 Administrator 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 super fund, the Fund Administrator will get in touch to find out how you would like to receive your super benefit. In the meantime, your super will be transferred to DuluxSuper s Retained Benefits section automatically when you cease employment, where it will remain invested in your chosen investment option(s) or the Active Balanced option if you are a MySuper member and did not make an investment choice. Your benefit will stay in the Retained Benefits section until you provide the Fund Administrator with instructions for payment of your benefit. If you re a former Defined Benefit member, the defined benefit portion of your benefit will be invested in the Cash option. It will remain invested in the Cash option until you provide the Fund Administrator with alternative investment instructions. Your additional accounts (containing any additional voluntary contributions and rollovers you have made) will continue to be invested in your chosen investment option (or the Active Balanced option if you did not make an investment choice). Investment returns applied to your additional accounts may be positive or negative. You can roll over your super into another fund of your choice, providing it is a complying superannuation fund under law. If you choose this option, the Fund Administrator will ask you details of your new fund. If the fund you have nominated won t accept your benefit, the Trustee may roll your benefit over to an Eligible Rollover Fund (ERF). The ERF nominated by the Trustee is: AUSfund PO Box 543 Carlton South VIC 3053 Phone: admin@ausfund.net.au Contact: The Administrator Once your benefit is transferred to the ERF, you stop being a member of DuluxGroup Super 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 above. The investment and crediting rate policy of the ERF will be different to those that applied in DuluxGroup Super. Also, the ERF will not offer any insurance cover. You should seek advice from a licensed financial adviser about whether the ERF is a suitable investment for you. Do you need to provide proof of identity? Before you withdraw a benefit from DuluxGroup Super, you will 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. Need to know more? Other information about your benefits such as your choices for contributions, investments and insurance levels are available at www. duluxgroupsuper.com.au. Refer to your Product Disclosure Statement. A number of documents, such as the Trust Deed and various Trustee policies are also available on the website or by calling the DuluxGroup Super helpline on Super spotlight Product Disclosure Statement (PDS): The PDS is the main disclosure document for new members of superannuation funds.

21 Financials A summary of DuluxGroup Super s unaudited financial accounts for the year to 30 June 2016 is set out to the right. The audit is expected to be finalised by 30 September The audited financial accounts and auditor s report will be available on request from the DuluxGroup Super helpline on after that date. Current assets include amounts in the Fund s bank account. All contributions due at 30 June 2016 have now been paid to the Fund. Change in net assets during the year $ Net assets at the start of the year (30 June 2015) 284,398,006 Plus income Contributions 18,002,047 Net investment income 10,281,149 Investment fee rebates 174,459 Interest 27,767 Rollovers 6,228,970 Proceeds from insurance policies 716,685 Other income Less outgoings Benefits paid and payable (16,651,912) Insurance premiums (765,850) General expenses and charges (1,065,270) Income tax expense (2,217,739) Net assets at the end of the year (30 June 2016) 299,128,312 Statement of net assets Investments JANA Assertive Plus option 11,284,643 JANA Assertive option 15,219,225 JANA Active Balanced option 87,225,865 JANA Conservative option 4,471,459 JANA Cash option 4,858,742 JANA Australian Shares option 3,952,525 JANA Diversified Fixed Interest option 1,835,538 JANA International Shares option 2,318,578 JANA Defined Benefit Unit 137,369,278 JANA Pensions Balanced 13,215,324 JANA Pensions Cautious 696,278 JANA Pensions Assertive 219,495 JANA Pensions Conservative 527,031 JANA Pensions Cash 201, $ 2016 $ 2016 Annual report 21

22 AMP Capital Community Infrastructure Fund 2,778,946 AMP Capital Diversified Property Fund 17,592,052 Dexus Wholesale Property Fund 15,034,682 Charter Hall Prime Office Fund 4,356,022 JANA Global Property Trust 372,288 JANA All-Maturity Diversified Debt Trust 1,309,345 JANA Diversified Fixed Income Trust 31,795,235 JANA Short-Maturity Diversified Debt Trust 1,916,054 JANA Cash Trust 41,254,592 JANA Core Australian Share Trust 40,827,719 JANA Small Caps Australian Share Trust 5,509,720 JANA High Alpha Australian Share Trust 20,895,472 JANA High Alpha Global Share Trust 21,837,242 JANA Passive Global Share Trust 14,216,054 JANA Passive Global Share Trust (Hedged) 13,582,100 JANA Core Global Share Trust 804,962 JANA Core Global Share Trust (Hedged) 800,270 JANA Select Opportunities Trust 22,486,536 JANA Emerging Markets Share Trust 9,065,062 JANA Low Correlation Strategy Trust 17,988,535 Current assets Cash and cash equivalents 744,149 2,978,884 Contributions receivable 1,928,161 1,982,345 Investment income receivable 10,874,962 Deferred tax assets 51, ,712 Other assets 46,318 35,430 Current liabilities Benefits payable Taxation payable (1,383,025) (1,780,867) Trade and other payables (384,544) (294,042) Net assets at the end of the year (30 June) 284,398, ,128, $ 2016 $ 22

23 Contact us If you have any queries about DuluxGroup Super or any of the information in this Annual Report, contact: Mail: The Fund Administrator DuluxGroup Super PO Box 1442 Parramatta NSW 2124 Phone: Website: