Announcement to Members of the Air New Zealand Superannuation Scheme

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Kristin Stevenson
6 years ago
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1 Date: 19 September 2016 Announcement to Members of the Air New Zealand Superannuation Scheme Dear Member Proposed transfer to the Air New Zealand Koru FlexiSaver Plan You are receiving this letter as a member of the Air New Zealand Superannuation Scheme (the Existing Plan ). The introduction of the Financial Markets Conduct Act 2013 (the FMC Act ) requires Air New Zealand Limited (the Company ) and the current trustees of the Existing Plan to make a choice as to the future of the Existing Plan, being to either comply with the new statutory requirements of the FMC Act, transfer the assets of the Existing Plan to a different superannuation scheme that is, or will become, compliant with the requirements of the FMC Act or wind the Existing Plan up. In particular, the FMC Act will have a substantial impact on the Existing Plan and will significantly change the way the Existing Plan is governed. The Company and the trustees believe that the best option is for the members of the Existing Plan to be transferred to the ANZSS category of the Company s Koru FlexiSaver employer plan (the New Plan ) within AMP s New Zealand Retirement Trust ( NZRT ). Set out in this letter is information on the reasons for this proposal and details of the proposed transfer. Proposal summary To transfer your accounts from the Existing Plan to the ANZSS category of the New Plan on or about 1 November 2016 Your funds will be transferred from the Existing Plan into investment fund/s within the New Plan that are very similar to the investment funds currently offered within the Existing Plan, and invested by the same investment managers as the Existing Plan You will receive the following additional advantages: o After the transfer to the New Plan, you will be able to stay in the investment fund/s or alternatively choose from 28 investment options within the NZRT

2 o You will benefit from reduced ongoing fees o You will be provided with $100,000 Life and Total and Permanent Disablement insurance cover, paid for by the Company (some conditions apply - see page 7 of the benefit comparison) You do not need to do anything at this stage. Background Currently we have two main superannuation plans, the Air New Zealand Superannuation Scheme (being the Existing Plan) in which you are a member and the Koru FlexiSaver employer plan within the NZRT (being the New Plan). The Existing Plan is a stand-alone superannuation plan with its own trust deed and Company appointed trustees. The New Plan was launched in 2007 and is established under AMP s NZRT, a master trust providing superannuation benefits to almost 600 different employers. There is an existing category within the Existing Plan (known as the ANZSS category) that was previously set up for members of the Existing Plan that wanted to transfer to the New Plan. Shortly after the ANZSS category of the New Plan was established, members of the Existing Plan were offered the opportunity to transfer to the ANZSS category of the New Plan, resulting in membership of the Existing Plan reducing from 3,800 to 1,100 members, or 30% of its original size. Attrition through resignations and retirements has subsequently reduced the number of members within the Existing Plan to less than 850. While the Existing Plan has remained viable to date, it has a finite lifetime both pursuant to the compliance requirements under the FMC Act and its competitive position deteriorating as the membership numbers decline. The increasing cost and complexity of maintaining the governance structures required under the FMC Act has meant that it is no longer practical to maintain the Existing Plan in its current form. As a result the trustees of the Existing Plan and the Company have conducted a review of the Company s existing superannuation arrangements. After considering a number of alternatives with the assistance of our Advisers, we have decided the ANZSS category of the New Plan provides the best options going forward for the remaining members of the Existing Plan, because being part of the NZRT provides additional economies of scale compared to the Existing Plan, plus the New Plan offers you additional benefits as described in this letter. The proposal It is proposed to transfer all members of the Existing Plan to the New Plan effective on or about 1 November We would like to keep this process as simple as possible for Members of the Existing Plan. You do not need to do anything. AMP, with the consent of your current employer, the trustees of the Existing Plan and the trustee of the NZRT, will shortly be applying to the Financial Markets Authority ( FMA ) for approval to transfer your membership to the New Plan under section 9BAA of the Superannuation Schemes Act 1989 (the SSA ). Under that provision, a transfer can only occur if the application is approved by the FMA.

3 In considering whether to approve the transfer, the FMA has to be satisfied that certain criteria set out in the SSA, are met. Those criteria are that: the terms and conditions of the New Plan are no less favourable to members than the terms and conditions of the Existing Plan; the transfer is otherwise reasonable in all the circumstances (including having regard to the value of the assets transferred from the Existing Plan to the New Plan); and the notice and other procedural requirements set out in the SSA have been followed. Reviewing the proposal If, after reading the enclosed communication material, you have any questions on the proposed transfer you can contact one of the trustees of the Existing Plan or the Company on and we will reply to you. Alternatively, you may wish to make a submission to the FMA. Written submissions can be made to: Manager KiwiSaver and Superannuation Schemes Financial Markets Authority P O Box 1179 Wellington 6140 Any submission must reach the FMA by 19 October Implications of the proposed transfer As mentioned above we have established the ANZSS category in the New Plan to provide improved benefits compared to the Existing Plan. We have made transfer offers in the past to members of the Existing Plan to transfer into the ANZSS category of the New Plan. Some members have indicated they did not want to transfer for various reasons (e.g. they preferred the investment funds offered within the Existing Plan), and some members did not reply to the previous offers. This offer is different as AMP has agreed to establish the Koru Balanced Fund for members of the ANZSS category of the New Plan. The Koru Balanced Fund will utilise the same investment strategy, invest in substantially the same assets and appoint the same investment managers as the Balanced Fund within the Existing Plan. This means that your savings, if invested within the Balanced Fund or the Cash Fund within the Existing Plan, will continue to be invested on a similar basis as they are now (eg your savings will be invested within the Koru Balanced Fund if currently invested in the Balanced Fund or the AMP Cash Fund if currently invested within the Cash Fund) and transferring to the New Plan will result in a different administrator (being AMP), with extra benefits available.

4 Following the proposed transfer to the New Plan, you will continue to have the same member benefits and contribution obligations by you and your employer as under the Existing Plan. You will also receive the following additional benefits: $100,000 insurance cover on transferring you will receive $100,000 of insurance cover for life and total and permanent disablement (some conditions apply see page 7 of the benefit comparison). The Company will pay the premium for this insurance cover. You can also apply for additional insurance benefits provided by Fidelity at very competitive rates. These include insurance cover for death, total and permanent disablement, income protection and crisis cover. Wider investment choice you will have a choice of 28 different investment options from 6 different investment managers. You will also be able to spread your investments over up to 7 different investment options if you wish. Lifesteps Investment Programme the New Plan offers you the opportunity to join an investment programme that automatically reduces investment risk as you get older. Choosing to invest in the Lifesteps Investment Programme reduces your need to continually reassess your investment strategy. Portability if you leave your current employment within the Air New Zealand group of companies you may be able continue your retirement savings in the NZRT by electing to become a Deferred Member, and continue to benefit from the reduced fees the Company has negotiated with AMP for members of the New Plan. Up to date information online - you will be able to view your personal records and account details online, through My AMP at and the My AMP App. The transfer process Following the expiry of the submission period (19 October 2016) the FMA will: consider the formal transfer application, enclosing certificates from the trustees of both the NZRT and the Existing Plan confirming that the terms and conditions of the New Plan are no less favourable than the Existing Plan; review any submissions; and advise whether the transfer has been approved. Provided the FMA approves the transfer, your membership in the Existing Plan will be transferred to the ANZSS category of the New Plan on or about 1 November Final accounts will be prepared and audited and funds transferred to the New Plan. Any costs of winding up the Existing Plan will be paid for separately by Air New Zealand. Once all funds are transferred to the New Plan, the Existing Plan will be wound up as it will no longer have any assets or members remaining.

5 Your balances will be transferred to your corresponding accounts in the New Plan as follows: Transfer From Existing Plan To New Plan Member contributions with Member s No 1 Account Member Account investment earnings Employer contributions with investment earnings Member s No 2 Account Employer Account On transferring, your funds will be invested in similar investment option/s as you had under the Existing Plan (at the date of transfer) as shown in the table below: Existing Plan Investment option Cash Fund Balanced Fund New Plan Investment option AMP Cash Fund Koru Balanced Fund You have the ability to change investment options at any time after the transfer has been affected. If you would like to choose a different investment fund, or review your options, within the New Plan, we recommend you contact the AMP in-house advisers in the AMP@Work team on A copy of a disclosure statement is available, on request and free of charge. Following the transfer to the New Plan, your interest in the Existing Plan will cease. Reserve Account The Existing Plan has the facility for a Reserve Account to be established into which funds not required to pay benefits are held. Consistent with previous years, any balance in the Reserve Account will be used to meet part of the costs of administering the Existing Plan. We do not expect there to be any balance in the Reserve Account following the transfer. Explanatory materials We wish members of the Existing Plan to be fully informed, so we have enclosed the following documents with this letter: A comparison of benefits table setting out the provisions of the Existing Plan compared to the New Plan; An NZRT Investment Statement; A Member Booklet for the ANZSS category of the New Plan setting out the benefits under the New Plan. Member meetings We would like to ensure you fully understand the New Plan and your options on transfer. We have therefore arranged for a series of meetings to be held which will provide more detail about the benefits of the New Plan and answer your questions. Details of the meetings will be provided separately.

6 What do you need to do now? Please read the information provided carefully and attend one of the member meetings. If you have any queries or require clarification on any point, please feel free to contact one of the trustees, or the team on or us your question at If you would like to make a written submission to the FMA, please contact the FMA at the address shown above by 19 October You do not need to do anything for the transfer to proceed. As required under the SSA, a copy of this transfer offer letter will be sent to the FMA. We are committed to continuing to help you save for retirement by providing you with a modern, flexible and attractive superannuation offering. Yours sincerely Jodie King Chief of People Air New Zealand Limited Stephen Jones Chairman of trustees Air New Zealand Superannuation Scheme

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