Freedom to choose my own super fund. Does that mean I can choose to do nothing?

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1 A guide for members to the new Choice of Superannuation Fund legislation November 2004 Freedom to choose my own super fund. Does that mean I can choose to do nothing? Integra Super for Members

2 A new law giving more choice for super? Don t I have that already? >> That s right, Choice of Superannuation Fund legislation has been introduced to give employees the freedom to choose their own super fund, putting them in control of their retirement savings. As an ING Integra member, you are already in control, with a super plan that offers you choice. 2

3 It would be easier to make my mind up if someone put the facts down. >>Want the facts? Here they This material was prepared on 5 November 2004 and reflects the legislation which was operational at this date, but this may be subject to change. What is Choice of Superannuation Fund and why has it been introduced? You may be aware that Choice of Superannuation Fund legislation has been passed by the Federal Government which will allow employees, with some exceptions, to choose an eligible employer superannuation choice fund into which their employer Superannuation Guarantee contributions are paid. Choice of Superannuation Fund has been introduced to provide employees with the freedom to select their own superannuation fund and encourage them to take control of, what for many will be, their biggest source of retirement savings. The ability to choose a superannuation fund will commence on 1 July Who will Choice of Superannuation Fund legislation apply to? The government has estimated that Choice of Superannuation Fund legislation will affect 4.82 million employees and 654,000 employers in the Australian workforce. (Source: The Association of Superannuation Funds of Australia (ASFA)). As indicated above, this legislation will only apply to those making or receiving Superannuation Guarantee contributions after 1 July 2005, having no bearing on contributions paid before this time or to future employer contributions outside of the Superannuation Guarantee (e.g. salary sacrifice). Some employees subject to certain Victorian government employment agreements Employees who currently have all or part of their contributions made under, or in accordance with, a State industrial award Some employees who participate in a defined benefit scheme Employees whose contributions are made under a law of the Commonwealth, of a State or of a Territory To find out if Choice of Superannuation Fund will apply to you, speak to your employer or financial adviser. What do you need to do under Choice? Under Choice, you can do one of two things: Do nothing and stay in your employer s default eligible choice fund, or Choose an alternative eligible choice fund (the chosen fund ) to which your employer will need to contribute Superannuation Guarantee contributions for your benefit. If you do not exercise choice, then your employer can choose a complying superannuation fund/scheme or Retirement Savings Account (RSA) to contribute your Super Guarantee benefit to. Given this, it is expected that initially this default eligible choice fund will be the existing employer sponsored superannuation fund your employer is using as at 30 June 2005 (providing this is an eligible Choice fund as outlined in the legislation). To choose your own superannuation fund on or after 1 July 2005, you will have to provide written notice to your employer. Your Super Guarantee Contributions should be directed to your chosen fund within two months. Who will Choice of Superannuation Fund NOT apply to? Generally, Choice of Superannuation Fund may not apply to: Some employees whose contributions are made to unfunded public arrangements Some public sector employees Some employees of workplaces that are covered by Certified Agreements or Australian Workplace Agreements 3

4 So now the law gives us all more choice, what s ING going to do? For one, we want to remind you of the features and benefits of your current super fund, and two, consider some impacts you could face if you change >>funds before you do anything! Your existing ING superannuation fund already gives you choice. As an ING employer superannuation plan member you can feel confident that you are supported by one of the world s largest wealth managers and one of the largest and most highly respected providers of superannuation and insurance in the Australian marketplace. Integra Super for Employers (Integra), ING s small to medium business superannuation solution, is one of the largest funds of its kind in the market, managing growing and protecting over 28,000 super funds, on behalf of 460,000 employees. Integra is a fully featured employer super solution based on 5 key principles: stability and security, competitive pricing, integrated member benefits, consistent and reliable servicing and choice ensuring you are well placed in the Choice of Superannuation Fund environment. Have a look, the choice is all yours! Choice of 50 individual investment options, with varying levels of risk, across all major markets and asset classes Choice of over a dozen of the world s leading investment managers, including ING and OptiMix Choice of convenient insurance options that can include Death Only cover, Death and TPD, and Group Salary Continuance Choice to roll-over your super on retirement into a selection of pension products, ensuring significant tax benefits Choice to learn more about super and investing at any time at no extra cost, through ING s integrated online and seminar based member education program Choice to gain support through dedicated online or telephone member servicing For more information about the choice available to you through ING s Integra, you should consult a copy of the PDS, available at or call , or speak to your financial adviser. 4

5 There are some potential impacts that could arise as a result of changing super funds So far, most media attention regarding Choice of Superannuation Fund legislation has focussed on investment choice, performance and fees as being the leading criteria members will most likely consider when reviewing their super fund. Another important factor is the insurance cover you have within your current fund. Most plans have some level of Death Only, Death and Total and Permanent Disablement or Salary Continuance cover which is important to protect you and your family from unforseen circumstances. The availability of cover, health evidence requirements and cost of cover should all be considered alongside other criteria as part of your total superannuation package review. How could changing super funds impact insurance coverage? When reviewing your super arrangements you should familiarise yourself with what insurance you have within your existing super fund. If you are considering moving funds you should consider the impact on the level and cost of cover, as well as the amount of health evidence you may need to provide in order to obtain insurance coverage through another superannuation arrangement. Insurance terms and conditions vary from provider to provider and may be complex. You need to ensure that the terms and conditions of any new insurance arrangements are equal to or better than your existing arrangements so you are not disadvantaged in the event of a claim. What are the advantages of being in an employer plan when it comes to insurance? By having your insurance through an employer sponsored superannuation fund you are often benefiting from a lower premium, as you may have access to group premium rates rather than retail or individual rates. new fund, you should be aware that there may be a number of difficulties in obtaining the same level of cover. Some of these include: If you move to a new fund as a personal member it is likely you will need to provide health evidence. Providing health evidence can be a complex and time consuming task. This process involves answering questions regarding your health and pastimes and making a declaration to the insurer. You may also need to undergo a number of medical tests and provide details about your financial circumstances, depending on the level of cover you require. You should be aware that cover may be declined or issued on non-standard terms. When choosing to move to a new fund as a personal member you will also face retail premium costs, which, in most cases, will be higher than those group rates offered by your employer super fund. To find out how your insurance coverage may be impacted as a result of any new fund choice, you should speak to your financial adviser. Another advantage of an employer plan is that you are generally offered cover up to a certain level without the need to provide any health evidence. What happens to my insurance if I move to another fund of my own choice? If you cease to be a member of your employer plan your cover will cease (unless you have the option of moving to the personal division of your super fund, where the same or similar coverage can often be maintained). To establish cover within an entirely 5

6 OK, I get it now. But what if I don t tomorrow? >>It s OK. ING is going to keep you up to date. ING, together with your adviser, is committed to supporting you through the introduction of Choice of Superannuation Fund and to helping you make the most of your superannuation. 6

7 We are introducing a series of regular Choice of Superannuation Fund updates that will keep you up >> to speed with various Choice of Superannuation Fund issues. These communications are designed to help explain the legislation in plain English, outline the legislation s potential impacts, highlight what ING is doing to prepare for Choice commencement, as well as other useful information. In addition, ING s existing online and seminar based member education package, L-earn financial education@work (L-earn), is already working to support you. We have recently upgraded L-earn and it can be accessed right now. L-earn provides you with: An overview of Australia s superannuation system; An understanding of the tax advantages of investing via the superannuation framework; An explanation of the benefits of salary sacrifice; and Other relevant information pertaining to co-contributions and other government schemes. You can access L-earn in two ways: L-earn online L-earn online provides education on a range of topics including investing, super, saving/budgeting and insurance. The program also includes case studies and graphical examples all at your preferred pace and at the click of a button. L-earn seminars L-earn workplace seminars have been designed by ING s investment and technical experts, and allow employees to access even more financial education at no extra cost. Seminars are organised at a time that suits you and your employer. To access the Choice of Superannuation Fund Updates and L-earn financial education@work, simply visit the ING website at 7

8 If I need you, where do I find you? To find out more about your current Integra arrangements and the features and benefits it provides, simply visit the ING >>website at or speak to your financial adviser. CUSTOMER SERVICES Phone enquiries address customer@ing.com.au Postal address Integra GPO Box 5306 Sydney NSW 2001 Internet address The Trustee is ING Custodians Pty Limited ABN AFSL Kent Street, Sydney NSW 2000 This material was prepared on 5 November 2004 and reflects the legislation which was operational at this date but may be subject to change. This material has been prepared without taking into account an investor s objectives, financial situation or needs. Before making a decision based on this material, a potential investor should consider the appropriateness of the advice, having regard to their objectives, financial situation and needs. M1387/1104