Fund Perpetual Select Super Plan Perpetual Select Pension Plan Annual Report

Transcription

1 Perpetual s Select Superannuation Fund Perpetual Select Super Plan Perpetual Select Pension Plan Annual Report Annual Report Year ended Perpetual Superannuation Limited ABN AFSL RSE L

2 Directory Fund Perpetual s Select Superannuation Fund (Fund) ABN RSE R Products Perpetual Select Super Plan (Super Plan) SPIN/USI PER0138AU Perpetual Select Pension Plan (Pension Plan) SPIN PER0279AU (Term Allocated Pension) SPIN PER0405AU (Account Based Pension) Issuer and Trustee Perpetual Superannuation Limited (Trustee) ABN AFSL RSE L Contact details Perpetual Select GPO Box 4171 Sydney NSW 2001 Phone selectfunds@perpetual.com.au Website Important notes and disclaimer This Annual Report (Report) is a Fund Information Statement, as required to be issued under the Corporations Act, and has been prepared by the Trustee in October 2013 for members of the Fund. In this Report, we, us, our and Perpetual Superannuation are references to the Trustee. The Trustee is part of the Perpetual Group, which comprises Perpetual Limited and its subsidiaries. Although the Trustee believes the information in this Report is accurate and reliable as at the date of issue, no company in the Perpetual Group, nor any director or officer of any company in the Perpetual Group, makes any representation or warranty as to the accuracy, reliability or completeness of material in this Report. Except in so far as liability under any statute cannot be excluded, companies in the Perpetual Group and directors, officers, employees and consultants of companies in the Perpetual Group do not accept any liability (whether arising in contract, tort, negligence or otherwise) for any error or omission in this Report or for any loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this information or any other person. Some of the information in this Report is based on an interpretation of relevant laws that were current as at. None of the information in this Report constitutes financial product advice. No member or any other person should act on the basis of any statement, matter or thing in this Report without first obtaining independent advice. Neither we nor any company in the Perpetual Group guarantee that you will earn any return on your investment or that your investment will gain in value or retain its value. Investment in the Fund is subject to investment risk, including possible delays in repayment and loss of income and capital invested. Contents Directors message 1 Superannuation changes 2 Changes implemented during the year 2 Government announcements of proposed further changes affecting superannuation 3 Other proposed changes 3 Product update 4 Indexation of fee amounts 4 APRA levy 4 Financial assistance levy 4 Upcoming changes to fee titles 4 Member protection standards 4 MySuper update 4 Investment information 5 Trustee s investment objective 5 Trustee s investment strategy 5 Derivatives 5 Investment options 5 Specialist investment managers 5 Obtaining updated details on the investment options 6 Multi-asset class investment options 7 Single-asset class investment options 10 Underlying investments 14 Fund information 15 The Fund 15 The Fund s growth 15 Indemnity insurance 15 Trust Deed 15 Policy Committees (Super Plan only) 15 Inquiries and complaints 15 Eligible rollover fund 15 Lost members 16 Unclaimed super 16 Abridged financial information 16 Allocation of earnings 16 Interest earned on application and withdrawal accounts 16 Suspension of applications, switches and withdrawals 16 Appendix 1: Abridged financial statements 17

3 Directors message Dear Member On behalf of the Trustee of Perpetual s Select Superannuation Fund, we are pleased to present the Fund s Annual Report for the year ended. The Fund consists of the following products: Perpetual Select Super Plan (Super Plan) and Perpetual Select Pension Plan (Pension Plan). This Report should be read in conjunction with your Annual Statement for the year ended, which details your specific benefit entitlements under the Fund. This Report brings you up to date with relevant details relating to the Fund (including the investment options available to members) and recent product changes (see page 4 for details). It also provides information on important changes in the superannuation environment (see page 2 for details). The past financial year has seen an improvement in conditions for most investors, with strong rallies in global sharemarkets and greater stability in European government debt markets. While challenges remain for the domestic and global economy, investors with a clear strategy and balanced approach to risk and opportunity are likely to be better rewarded over the long term. The Super Plan and Pension Plan enable you to access a broad range of investment options that have been selected, diversified and blended by our Select investment team in keeping with our prudent investment philosophy. Each investment option s risk and return profile has been carefully constructed so you can choose the right one to suit your own circumstances and objectives. If you are a Super Plan member and have other superannuation accounts you may like to consider consolidating them into your Super Plan account. This should make it easier to keep track of your superannuation and may save you on total fees and costs. You can download a Transfer Authority form from our website at or phone us on to request a form. We recommend you speak with your financial adviser about whether this is appropriate for you. Thank you for entrusting us to look after your superannuation and retirement savings. Directors, Perpetual Superannuation Limited Perpetual s Select Superannuation Fund Annual Report_1

4 Superannuation changes Changes implemented during the year The following changes, which potentially impact some Fund members, were legislated during the financial year. Superannuation Guarantee (SG) contributions increased Employers are generally required to pay SG contributions on behalf of their employees based on a percentage of salary. The contribution amount increased from 9.00% to 9.25% from 1 July 2013 and will gradually increase further as shown in the following table. Financial year Superannuation guarantee Before 2013/ % 2013/ % 2014/ % 2015/ % 2016/ % 2017/ % 2018/ % 2019/ % SG age limit removed The SG age limit of 70 has been removed from 1 July 2013, so employers are now required to make contributions for all of their employees regardless of their age. Simplified higher concessional contributions cap The general concessional contributions cap is $25,000 for the 2012/2013 and 2013/2014 financial years. This amount will be indexed in future years in line with Average Weekly Ordinary Time Earnings (AWOTE) once the increase in the indexed amount is greater than $5,000. A higher concessional contributions cap of $35,000 (unindexed) applies from: 1 July 2013 for individuals aged 59 years or over on 1 July 2014 for individuals aged 49 years or over on 30 June The higher cap will cease once the general concessional cap reaches $35,000 by way of indexation. Additional tax on concessional contributions for high income earners Generally, a flat 15% tax applies to concessional contributions. However, tax of 30% will apply instead to concessional contributions (within the concessional contributions cap) made from 1 July 2012 if your income (including concessional contributions) is greater than $300,000. If your income excluding concessional contributions is less than the $300,000 threshold, but including the concessional contributions pushes you over the threshold, only that part of the contributions in excess of the threshold will be subject to tax at 30%. The ATO will issue an assessment to the member for the extra tax payable on the contributions, together with a release authority to allow the tax amount to be withdrawn from the fund. The member can either use the release authority or pay the tax from other sources. Additional tax on excess concessional contributions Prior to 1 July 2013, concessional contributions that exceed the concessional contribution cap are effectively taxed at the top marginal tax rate (plus Medicare levy). The ATO assesses the excess amount at 31.5% and you have the option to withdraw from your superannuation account an amount equal to the liability to pay the excess contributions tax. This is in addition to the 15% tax paid by the superannuation fund. If you breached the cap for the first time, by $10,000 or less, you may receive a one-off offer from the ATO to have 85% of these excess contributions refunded to you and taxed at your marginal tax rate rather than incur the 46.5% effective excess contributions tax rate. The Government has now passed legislation that will instead include the excess concessional contributions in the individual s assessable income and be taxed at their marginal tax rate. Individuals will also be able to elect to have up to 85% of any excess concessional contributions made from 1 July 2013 released from their superannuation fund. An interest charge is also imposed to recognise that the tax on excess contributions is collected later than normal income tax. Government co-contribution Members with a total income (assessable income plus reportable fringe benefits and reportable employer super contributions less allowable deductions for carrying on a business, where applicable) of less than the higher income threshold (see below) who are less than 71 years of age at the end of the financial year may be eligible for the Government co-contribution on personal non-concessional contributions up to $1,000 made during that year. 2

5 The co-contribution rate is now 50%, with a maximum $500 co-contribution applying for individuals with a total income up to the lower income threshold (see below), which reduces by cents for every $1 of total income up to the higher income threshold where it ceases to apply. For the 2012/2013 financial year, the lower income threshold is $31,920 with a higher income threshold of $46,920. For the 2013/2014 financial year, the lower income threshold is $33,516 with a higher income threshold of $48,516. The higher income threshold is now set at $15,000 above the (indexed) lower income threshold (down from $30,000). Taxation of interest on unclaimed super Income tax is not payable on interest accrued from 1 July 2013 which is paid by the Government on unclaimed super money reclaimed after this date, unless the payment relates to the return of unclaimed super to former temporary residents where tax at the rate of 45% applies. Cessation of pension drawdown relief The Government has ceased the pension drawdown relief that was granted in relation to minimum pension payment amounts for account-based pensions and term allocated pensions from the 2009/2010 to 2012/2013 financial years. Consequently, the minimum pension payment amount percentages have returned to the normal levels shown in the following table from 1 July Age range Percentage of account balance Under 65 4% % % % % % % Government announcements of proposed further changes affecting superannuation On 5 April 2013, the Federal Government announced the following proposed changes affecting superannuation (and reiterated them in its 14 May 2013 Budget) which, if implemented through the passing of appropriate supporting legislation, potentially impact some Fund members. Transfer of lost member accounts to the ATO Trustees are required to transfer certain small and insoluble lost accounts to the ATO as unclaimed super where you are a lost member under superannuation law and: the balance of the account is less than $2,000 1 or the account has been inactive for a period of 12 months and the trustee has insufficient records to identify the owner of the account. 1 The Government announced that this account balance threshold will be increased to $4,000 from 31 December 2015 and to $6,000 from 31 December Reforming the tax exemption for earnings on superannuation assets supporting income streams Investment earnings, including realised net capital gains, on superannuation assets supporting income streams (including account based pensions) currently are not subject to tax. The Government has proposed that, from 1 July 2014, earnings on superannuation assets supporting income streams will be tax free up to $100,000 for each individual. Earnings above $100,000 will be subject to the same concessional rate of 15% that applies to earnings in the superannuation accumulation phase. The $100,000 threshold will be indexed to CPI and will increase in $10,000 increments. Differing rules will also apply to capital gains, depending on whether assets were purchased before or from 1 July Extending the normal deeming rules to superannuation account-based income streams The Government has announced that: normal deeming rules for the purposes of the pension income test will be extended to superannuation accountbased income streams (including account based pensions) from 1 January 2015 such products held by pensioners before 1 January 2015 will continue to be assessed under existing rules for the life of the product. Other proposed changes Tax file number (TFN) The Government has also proposed that, from 1 July 2013, superannuation funds will have to report and forward employer contributions received for employees without a TFN to the ATO unless the employee s TFN is subsequently provided within a specified time from when the contribution is received. The Coalition s policy for superannuation The Coalition (now Federal Government) released in September 2013 a document covering its policy for superannuation that included the following issues, which have the potential to impact superannuation in the future: committing to increasing the SG from nine to 12 per cent, but with a two-year delay in the gradual increase developing an appropriate process that addresses inadvertent breaches of the contribution caps so that an individual making a genuine mistake is not disproportionately penalised revisiting concessional contribution caps and incentives, such as super co-contributions, for lower income earners paying superannuation contributions whilst a woman is on paid parental leave standardising reporting on matters such as fees, returns and definitions for asset classes and investments encouraging the development of more innovative income stream products reviewing the minimum payment levels from account based pensions for adequacy and appropriateness. Perpetual s Select Superannuation Fund Annual Report_3

6 Product update Indexation of fee amounts The following amounts have been increased in line with cumulative increases in the Consumer Price Index (CPI). Member fee With effect from 1 July 2013, the member fee has increased from $9.12 per month ($ annually) to $9.35 per month ($ annually). Management fee base fee rebates Historical management costs are outlined on pages 7-13 of this Report. Rebates on the fixed base management fee are available to members with large account balances. Qualifying levels have been increased from 1 July 2013, as follows: Value of investment Old qualifying level New qualifying level Rebate % pa (unchanged) $245,200 $251,300 Nil $572,300 $586, $817,500 $838, APRA levy Every year APRA charges a levy to each superannuation entity that it regulates to cover its costs of supervision. The APRA levy for each financial year is based on a percentage of the superannuation entity s net asset value as at the previous 30 June, which is charged to the entity during the following financial year. The APRA levy determined for 2013/2014 is shown in the following table, together with the levies for the previous two financial years for comparison purposes. APRA levies Component 2011/ / /2014 Restricted* Rate % % % Minimum $570 $590 $590 Maximum $260,000 $2,000,000 $1,786,000 Unrestricted* Rate % % % * These terms have no correlation and should not be confused with similar superannuation terms used to described the preservation status of a fund member s superannuation benefits. The higher amounts for 2012/2013 and 2013/2014 relative to the levy which applied for 2011/2012 largely represent additional funding required for the continued implementation of SuperStream, which is a package of reforms introduced by the Federal Government designed to make the superannuation system easier to use for members, employers and funds. It is estimated that the application of the APRA levy to the Fund will result in a cost of approximately 0.02% for each of the Fund s investment options when charged as an expense recovery during the 2013/2014 financial year. Financial assistance levy In April 2011, the Federal Government announced that they would provide financial assistance to members of the four superannuation funds that were formerly under the trusteeship of Trio Capital Limited (Trio) through a $55 million grant. This financial assistance grant came in the form of a special levy, the Financial Assistance Levy (FAL), payable by all trustees of APRA regulated super funds and approved deposit funds. As the Fund is an APRA regulated super fund we had to pay this levy. A further grant of financial assistance in relation to Trio resulted in an additional FAL of approximately $19 million in March Consequently, the amount of $36, (representing the Fund s share of this additional FAL) was recovered from the Fund as an abnormal operating expense. Upcoming changes to fee titles As part of legislative changes, titles of some of the fees and costs will change as at 2 January 2014, as shown in the table below. These changes do not affect overall fee amounts for the Super Plan and Pension Plan. Current fee name Withdrawal fee Annual member fee Investment switching fee New fee name Exit fee Administration fee Switching fee Member protection standards In accordance wth legislation, from 2 January 2014 member protection will no longer apply to the Super Plan. This will affect members with account balances less than $1,000 where the member protection standards aimed to ensure that the fees deducted from your account did not generally exceed investment returns. MySuper update The MySuper regulations affect members who have not made an investment choice and therefore have their super money invested in a superannuation fund s default investment option. From 1 January 2014, contributions for these members can only be accepted into MySuper compliant products. Superannuation funds holding balances for these members will have to transfer their balances into a MySuper product by 1 July If you think you are impacted by these changes, you should contact us to find out how you can ensure your super money remains in the Super Plan. We will be contacting members who are immediately impacted by the MySuper changes. 4

7 Investment information Trustee s investment objective The Trustee s investment objective is to provide a comprehensive and suitable range of investment options from which all members can select investments that are suitable for their personal circumstances at any particular time. Trustee s investment strategy The Trustee s investment strategy is to provide a range of investment options with different risk/return profiles. The variety of investment options offers members diversification across different asset classes, regions and markets. Most investment options also offer further diversification across a range of specialist investment managers. Derivatives Perpetual s multi-manager investment team and some of the investment managers with which the Fund invests may use derivatives to reduce risks in the share, bond and currency markets and to increase or decrease their exposure to particular investment sectors or markets. While derivatives may be used for trading purposes, they are generally not used to gear investments. Investment options Relevant details for each of the investment options available to Fund members are provided on pages 7-13 of this Report, including: investment objective risk level investment guidelines option size historical management cost investment performance asset allocations. Full details of the investment options that are currently available to all members are contained in the current Product Disclosure Statement (PDS) for the Super Plan and Pension Plan, which is available at our website or by calling us. The latest available performance figures (updated each month) may be obtained at our website or by calling us. Investment performance has been calculated net of any management fees and costs and (for the Super Plan) income tax of up to 15%. No allowance has been made for contribution fees, the member fee or any fee rebates. Care should be exercised in relying on past performance. Historical performance is not a reliable guide to future performance. The asset allocations shown on pages 7-13 are based on the Super Plan, which may in some cases differ marginally from asset allocations for the Pension Plan. The Trustee may add, vary or withdraw investment options at its discretion. Specialist investment managers The specialist investment managers appointed by the Trustee to manage the various asset classes within the investment options are shown in the following table. Visit our website for further information. The Trustee may add, delete or replace specialist investment managers at its discretion. Select specialist investment managers as at Asset class Investment manager(s) Capital Perpetual Investments guaranteed Cash Perpetual Investments Fixed income Perpetual Investments PIMCO Schroders Real estate Perpetual Investments Resolution Capital Australian shares Cooper Investors Kaplan Funds Management Perpetual Investments Renaissance Asset Management International Acadian Asset Management shares Bedlam Asset Management Gryphon International Investment Corporation Johnston Asset Management Perpetual Investments SouthernSun Asset Management Income Bentham Asset Management alternatives 1 Hastings Funds Management Perpetual Investments Westbourne Capital Growth American Securities alternatives 1 APN Funds Management Archer Capital Franklin Templeton Real Estate Advisors Hamilton Lane Hastings Funds Management H.I.G. Capital Intermediate Capital Group Magellan Asset Management Oaktree Capital Management Palisade Partners Wellspring Capital Management 1 There are also tailored mandates for income and growth absolute return fund investments. Perpetual s Select Superannuation Fund Annual Report_5

8 Obtaining updated details on the investment options Investment details From time to time, some of the information in the PDS about the investment options may change. This includes details such as their: investment objective investment approach investment guidelines (eg asset allocation ranges). Visit our website for up-to-date investment option information, together with the latest available investment performance details. Alternatively, such information may be accessed by contacting us. Buy/sell spreads We will not increase fees or charges without providing you with 30 days written notice except in respect of government fees and charges. Transaction costs are normally reviewed at least annually. This review may result in changes to the buy/sell spreads on various investment options. The current buy/sell spreads as at October 2013 are as follows. Investment option Buy/sell spread Conservative 0.16%/0.00% Diversified 0.24%/0.00% Balanced 0.26%/0.00% Growth 0.28%/0.00% High Growth 0.30%/0.00% Geared High Growth 0.46%/0.00% Cash Nil Fixed Income 0.13%/0.00% Real Estate 0.36%/0.00% Australian Share 0.34%/0.00% Geared Australian Share 0.68%/0.00% Limited Share 0.30%/0.00% International Share 0.40%/0.00% Capital Guarantee Nil Visit our website (or contact us) for details of the current buy/sell spreads at any time. 6

9 Multi-asset class investment options Investment option name Conservative Diversified Investment objective Stable returns through investment in a diversified portfolio with an emphasis on fixed income and cash and enhanced cash investments. Long-term growth through investment in a diversified portfolio of assets. Risk level 1 3 Low to medium 4 Medium Investment guidelines Cash and enhanced cash % Fixed income (including mortgages) % Income alternatives 0-20% Real estate % Australian shares 0-20% International shares % Growth alternatives 0-15% Cash and enhanced cash % Fixed income (including mortgages) % Real estate % Australian shares 25-55% International shares % Option size as at $41.0 million $49.4 million $66.7 million $46.2 million Historical management cost for year ended 2.22% % % % 5 Investment performance (net earnings) % pa (see page 5 for further information) Asset allocations (Super Plan) % -4.1% % 9.3% % 7.2% % 3.1% % 10.6% 5 years 4.1% 5.1% 10 years 4.7% 5.4% Since inception 5.0% 5.8% Australian shares 15% 9% International shares 10% 10% Real estate 6% 5% Growth alternatives 5% 5% Fixed income 30% 25% Income alternatives 10% 10% Cash and enhanced cash 24% 36% 2009 n/a n/a 2010 n/a n/a 2011 n/a n/a % 0.9% % 14.3% 5 years n/a n/a 10 years n/a n/a Since inception 5.9% 6.9% Australian shares 40% 35% International shares 9% 10% Real estate 5% 5% Fixed income 41% 40% Cash and enhanced cash 5% 10% You should refer to page 14 for details of footnotes. Perpetual s Select Superannuation Fund Annual Report_7

10 Investment option name Balanced Growth Investment objective Long-term growth through investment in a diversified portfolio with an emphasis on Australian and international share investments. Long-term growth through investment in a diversified portfolio with a strong emphasis on Australian and international share investments. Risk level 1 5 Medium to high 6 High Investment guidelines Cash and enhanced cash % Fixed income (including mortgages) % Income alternatives 0-15% Real estate % Australian shares 15-40% International shares % Growth alternatives 0-20% Cash and enhanced cash % Fixed income (including mortgages) % Real estate % Australian shares 20-45% International shares % Growth alternatives 0-25% Option size as at $330.9 million $238.3 million $248.1 million $233.8 million Historical management cost for year ended 2.51% % % % 5 Investment performance (net earnings) % pa (see page 5 for further information) Asset allocations (Super Plan) % -10.9% % 10.3% % 8.4% % 0.0% % 17.5% 5 years 3.7% 4.6% 10 years 5.1% 5.7% Since inception 5.6% 6.6% Australian shares 31% 24% International shares 23% 25% Real estate 7% 6% Growth alternatives 11% 10% Fixed income 15% 24% Income alternatives 6% 5% Cash and enhanced cash 7% 6% % -15.5% % 10.6% % 8.9% % -1.1% % 20.3% 5 years 3.0% 3.9% 10 years 5.0% 5.7% Since inception 5.7% 6.0% Australian shares 38% 31% International shares 27% 29% Real estate 7% 6% Growth alternatives 17% 15% Fixed income 8% 14% Cash and enhanced cash 3% 5% You should refer to page 14 for details of footnotes. 8

11 Investment option name High Growth Geared High Growth (Super Plan only) Investment objective Long-term growth through investment in a diversified portfolio with a strong emphasis on Australian and international shares, as well as growth alternative investments. Enhanced long-term growth through borrowing (gearing) to invest in a diversified portfolio with a strong emphasis on Australian and international shares, as well as growth alternative investments. Risk level 1 6 High 6 High Investment guidelines Cash and enhanced cash % Australian shares 35-60% International shares % Growth alternatives 0-25% Cash and enhanced cash % Australian shares 35-60% International shares % Growth alternatives 0-25% Gearing level 0-50% Option size as at $68.5 million $5.0 million $7.5 million Historical management cost for year ended 2.65% % % 5 Investment performance (net earnings) % pa (see page 5 for further information) Asset allocations (Super Plan) % -15.6% % 11.5% % 8.6% % -3.7% % 21.0% 5 years 2.8% 3.6% 10 years n/a n/a Since inception 4.6% 5.8% Australian shares 47% 46% International shares 35% 36% Growth alternatives 16% 15% Cash and enhanced cash 2% 3% Year ended Super 30 June Plan % % % % % 5 years -0.3% 10 years n/a Since inception -5.3% Australian shares 47% 47% International shares 33% 35% Growth alternatives 20% 15% Cash and enhanced cash 0% 3% Gearing level 33% 32% You should refer to page 14 for details of footnotes. Perpetual s Select Superannuation Fund Annual Report_9

12 Single-asset class investment options Investment option name Cash Fixed Income Investment objective Capital stability through investments in deposits, money market and fixed income securities. Capital stability through investment in a diversified portfolio of Australian and international fixed income investments (including mortgages). Risk level 1 1 Very low 5 Medium to high Investment guidelines Cash 100% Fixed income (including mortgages) % Cash 0-10% Option size as at $31.1 million $11.2 million $13.1 million $11.2 million Historical management cost for year ended Investment performance (net earnings) % pa (see page 5 for further information) Asset allocations (Super Plan) 1.71% 1.70% % 1.8% % 3.3% % 3.3% % 3.1% % 1.8% 5 years 2.1% 2.6% 10 years 2.6% 3.3% Since inception 3.0% 3.7% Cash 100% 100% 1.88% 1.86% % 7.1% % 9.5% % 5.0% % 9.0% % 2.2% 5 years 5.5% 6.5% 10 years 4.3% 5.1% Since inception 5.2% 6.2% Fixed income (including mortgages) 99% 99% Cash 1% 1% You should refer to page 14 for details of footnotes. 10

13 Investment option name Real Estate Australian Share Investment objective Income and long-term growth through investment in a diversified portfolio of Australian and international real estate investment trusts and unlisted property trusts. 6 Long-term growth and income through investment in a diversified portfolio of Australian shares. 7 Risk level 1 6 High 6 High Investment guidelines Real estate % Cash 0-10% Australian shares % Cash 0-10% Option size as at $9.6 million $3.6 million $32.9 million $21.4 million Historical management cost for year ended Investment performance (net earnings) % pa (see page 5 for further information) Asset allocations (Super Plan) 2.21% 2.20% % -37.1% % 16.5% % 20.0% % 4.2% % 19.9% 5 years 0.3% 1.9% 10 years 1.6% 2.2% Since inception 4.5% 5.2% Real estate 99% 100% Cash 1% 0% 2.61% % % -14.9% % 13.9% % 13.6% % -5.8% % 20.8% 5 years 3.7% 4.6% 10 years 8.0% 9.2% Since inception 8.3% 9.6% Australian shares 100% 100% You should refer to page 14 for details of footnotes. Perpetual s Select Superannuation Fund Annual Report_11

14 Investment option name Investment objective Geared Australian Share (Super Plan only) Enhanced long-term growth through borrowing (gearing) to invest in a diversified portfolio of Australian shares. 7 Limited Share Long-term growth and income through investment in quality industrial and resource shares and other securities. Risk level 1 7 Very high 6 High Investment guidelines Australian shares % Cash 0-10% Gearing level 0-60% Australian shares % Cash 0-10% Option size as at Historical management cost for year ended $4.0 million $12.7 million $7.2 million 5.33% % 2.04% Investment performance (net earnings) % pa (see page 5 for further information) Asset allocations (Super Plan) Year ended Super 30 June Plan % % % % % 5 years -0.1% 10 years n/a Since inception -5.0% Australian shares 100% 94% Cash 0% 6% Gearing level 50% 49% % -16.2% % 17.8% % 13.8% % -1.7% % 29.3% 5 years 6.6% 7.4% 10 years 10.0% 11.2% Since inception 8.1% 9.5% Australian shares 100% 93% Cash 0% 7% You should refer to page 14 for details of footnotes. 12

15 Investment option name International Share Capital Guarantee (closed to new members) Investment objective Long-term growth through investment in a diversified portfolio of international shares. 9,10 Returns and security through investment in a deposit or product issued by an Approved Deposit taking Institution (ADI) or cash funds, or other pooled structured funds that are supported by a guarantee. Risk level 1 6 High 1 Very low Investment guidelines International shares 9, % Cash 0-10% Bank deposits or cash funds supported by a guarantee 100% Option size as at $11.7 million $6.0 million $40.9 million $1.5 million Historical management cost for year ended 2.29% % 2.28% % Investment performance (net earnings) % pa (see page 5 for further information) Asset allocations (Super Plan) % -19.7% % 7.0% % 3.2% % -6.5% % 27.9% 5 years 0.6% 1.2% 10 years 2.1% 2.6% Since inception 2.7% 3.1% International shares 100% 100% % 4.5% % 2.2% % 3.4% % 3.1% % 1.7% 5 years 2.1% 3.0% 10 years 2.9% 3.5% Since inception 3.8% 4.3% Cash 100% 100% You should refer to page 14 for details of footnotes. Perpetual s Select Superannuation Fund Annual Report_13

16 Footnotes to investment options profile tables 1 The risk level represents the Standard Risk Measure (SRM), which is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20 year period, as follows. Risk band Risk label Estimated number of negative annual returns over any 20 year period 1 Very low Less than Low 0.5 to less than 1 3 Low to medium 1 to less than 2 4 Medium 2 to less than 3 5 Medium to high 3 to less than 4 6 High 4 to less than 6 7 Very high 6 or greater The SRM is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of the negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the risks and potential losses associated with their chosen investment option/s. 2 Enhanced cash investments include cash investments (which include discount securities (eg bank bills), short-term deposits and money market funds which may invest in fixed income instruments and loans), fixed income instruments, hybrids, loans and other income generating securities. The maturity dates of investments are typically longer than cash and they may have a lower credit rating than those in a money market fund, however, they are usually managed to short interest rate exposures. 3 Fixed income instruments are securities issued by an issuer for a pre-determined period. The issuers may include governments, banks, corporations and asset backed trusts. The instruments when issued usually provide a return in the form of defined periodic income payments and the return of principal at maturity. These income payments are either fixed when issued or set periodically against a benchmark. Fixed income includes both Australian and international assets. This exposure is gained through underlying investment into Perpetual Select Fixed Income Fund. The maximum exposure to international fixed income assets in that underlying fund is 30%. Currency exposure in the underlying fund is monitored and hedging strategies are employed (using derivatives) with the aim of reducing the impact of adverse currency movements. The underlying fund may also invest up to 10% in high yield assets (fixed income assets which have a higher risk profile but higher potential for return). 4 The currency exposure of international assets in the underlying funds is monitored and hedging strategies may be implemented (using derivatives) with the aim of reducing the impact of adverse currency movements. 5 These multi-asset class investment options have varying exposure to underlying funds where a performance fee may be payable to the specialist investment managers. The performance fee payable to specialist investment managers is included in the management costs of the underlying Perpetual Select Australian Share Fund and Perpetual Select International Share Fund, which form a component of the total management costs of the multi-asset class investment options. 6 Also permitted to be included are company shares, unit trusts and other securities that are expected to have a return related to property investments or management as their dominant underlying assets. 7 Securities listed on overseas exchanges may be purchased subject to limits agreed by the Trustee. 8 Performance fees are part of the specialist investment manager remuneration. The total performance fee component payable to the specialist investment managers was 0.44%. 9 Securities listed on the Australian Securities Exchange may be purchased subject to limits agreed by the Trustee. 10 The currency exposure of international assets is monitored and hedging strategies may be implemented (using derivatives) with the aim of reducing the impact of adverse currency movements. 11 Performance fees are part of the specialist investment manager remuneration. The total performance fee component payable to the specialist investment managers was 0.04%. Underlying investments The following table provides details of the Fund s underlying investments in unlisted managed investment schemes that had a value in excess of 5% of the Fund s total assets as at. Underlying investments Perpetual Select Australian Share Fund Perpetual Select International Share Fund Perpetual Select Fixed Income Fund Perpetual Growth Alternatives Pool Fund Perpetual High Grade Treasury Fund Perpetual Select Real Estate Fund Value of investment ($m) Percentage of total Fund assets $ % $ % $ % $ % $ % $ % Sub-total $1, % All other $ % Total Fund assets $1, % 14

17 Fund information The Fund The Fund is a regulated superannuation fund under the Superannuation Industry (Supervision) Act 1993 (SIS). The Trustee operates, and intends to continue to operate, the Fund as a complying superannuation fund. The Fund s growth The Fund commenced in May The number of members and participating employers and funds under administration as at are shown in the following table. Number of personal members Number of employer sponsored members Super Plan Pension Plan Total 13,347 1,517 14,864 11,753 n/a 11,753 Total members 25,100 1,517 26,617 Participating employers Funds under administration 2,093 n/a 2,093 $918.7 m $634.8 m $1,553.5 m Indemnity insurance Professional indemnity insurance has been effected by the Trustee. Trust Deed The Trust Deed dated 1 March 1989 (as amended) is a legal document that sets out the provisions governing the operation of the Fund and the rights and obligations of members and the Trustee. The Trustee is responsible for ensuring that the Fund operates according to the Trust Deed and the accompanying Rules, and that the Fund complies with all relevant laws. Members may inspect the Trust Deed at any time by arrangement with us. Policy Committees (Super Plan only) For the Super Plan, a Policy Committee consisting of equal numbers of member and employer representatives is required to be established for each employer-sponsored arrangement of more than 49 standard employer-sponsored members with the same standard employer-sponsor, and for each employer-sponsored arrangement with up to 49 members if at least five members write to the Trustee. The Policy Committee must meet at least once a year to discuss various business such as investment returns, benefit design and administration issues. For relevant employer sponsored arrangements in the Super Plan, elections are held at regular intervals to select member representatives for the Policy Committee. The sponsoring employer will advise all members in their plan the names of all Policy Committee members for the ensuing period (including employer appointed representatives) shortly after the completion of each election process. Inquiries and complaints The Trustee has established procedures for dealing with member inquiries and complaints. If you have an inquiry or a complaint, you can either phone us on during business hours (Sydney time) or write to: The Manager, Service & Operations Perpetual Select GPO Box 4171 Sydney NSW 2001 We will endeavour to respond to your inquiry within 30 days and must respond to complaints within 90 days. If you are dissatisfied with a decision of the Trustee which affects you, and your complaint has not been resolved to your satisfaction, you may have a right to lodge a complaint about the decision with the Superannuation Complaints Tribunal (SCT). The SCT is an independent body established by the Commonwealth Government to review certain types of trustee decisions. You can phone the SCT from anywhere in Australia on Eligible rollover fund The Trustee reserves the right to transfer Super Plan accounts of less than $1,000 to an eligible rollover fund (ERF) where the member has not contributed to that account in the previous two years. The Trustee will pay any money it decides to pay to an ERF into the Australian Eligible Rollover Fund (AERF). The trustee of the AERF is Perpetual Superannuation Limited. Being transferred to the AERF may affect your benefits because: you will cease to be a member of the Fund and will no longer have any insurance benefits you will become a member of the AERF and be subject to its governing rules the AERF will invest your benefit according to its investment strategy. Contact details for the AERF are as follows: Australian Eligible Rollover Fund Locked Bag 5429 Parramatta NSW 2124 Phone: Perpetual s Select Superannuation Fund Annual Report_15

18 Lost members You will be considered a lost member in the Fund if either: the Fund has never had an address for you or at least one written communication has been sent to your last known address and returned unclaimed and we have not received a contribution or rollover for you within the last 12 months. Members who are classed as lost may also have their investment transferred to the AERF, unless your account is required to be paid to the ATO as unclaimed super (see Unclaimed super below). Unclaimed super Your superannuation may be treated as unclaimed money if you: have reached age 65 and we have not received an amount on your behalf for at least two years and five years have passed since we last had contact with you or were a temporary resident who has permanently departed Australia and you did not claim your benefits within six months of the later of the date of your departure or your visa ceasing to be effective (except if you are an Australian or New Zealand citizen). We will make all reasonable efforts to contact you in such circumstances, however, it is important that you notify us of any changes to your details. Where your benefits become unclaimed money, we are required to pay them to the ATO within certain time frames. After payment to the ATO, we are discharged from any further liability for payment of the benefit and you may claim your benefit by contacting the ATO. In some circumstances, tax may be payable. We are also required to transfer certain small and insoluble lost accounts to the ATO as unclaimed super where you are a lost member (see above) and: the balance of the account is less than $2,000 1 or the account has been inactive for a period of 12 months and we have insufficient records to identify the owner of the account. 1 The previous Government announced that this account balance threshold will be increased to $4,000 from 31 December 2015 and to $6,000 from 31 December Abridged financial information The general purpose financial report for the Fund has been prepared in accordance with the requirements of the Trust Deed, the accounting and disclosure requirements of Australian Accounting Standard AAS 25 Financial Reporting by Superannuation Plans, other applicable Accounting Standards, the requirements of SIS and other relevant legislative requirements. Abridged financial statements are provided in Appendix 1 for the information of members. Copies of the full audited financial statements and auditor s report are available upon request. Allocation of earnings All income, including realised and unrealised capital gains, losses and expenses, are brought to account for each investment option and are fully reflected in the unit price of that investment option. Provision for income tax, as appropriate, is allowed for in the unit price for each investment option. Interest earned on application and withdrawal accounts Application money and proceeds of withdrawal requests (including pension payments) are held in trust accounts before they re processed. A member of the Perpetual Group retains any interest earned on these accounts. Suspension of applications, switches and withdrawals In certain emergency situations which impact on the effective and efficient operation of a market for an asset in an investment option or in circumstances where we otherwise consider it to be in the interests of members, we may choose to suspend the processing of all applications, switches or withdrawals for that investment option until we are able to properly ascertain the value of that asset. If this occurs, in determining the value of an asset, we will use the asset values determined when the suspension is lifted. The investment option may suspend withdrawals when the underlying fund suspends applications and withdrawals, according to the underlying fund s constitution. Interest will be paid at a rate equivalent to CPI inflation from 1 July 2013 on all lost superannuation accounts reclaimed from the ATO. 16

19 Appendix 1: Abridged financial statements Operating statement for the year ended Statement of financial position as at 2013 $ $ $ $000 Income Contributions employer 55,740 66,014 Contributions member 17,460 24,334 Other contributions 81,692 70,659 Transfers from other funds 146, ,236 Dividends/distributions 41,975 48,975 Interest 1, Changes in net market value of investments 191,063 (58,283) Other income 8,642 8,108 Total income 543, ,437 Expenses Trustee fees 7,339 6,114 Other expenses 7,246 6,724 Total expenses 14,585 12,838 Assets Cash and cash equivalents 14,216 44,216 Investments 1,511,288 1,383,295 Distributions receivable 10,710 16,880 Interest receivable Deferred tax asset 14,295 21,308 Other receivables 6,698 1,323 Total assets 1,557,230 1,467,075 Liabilities Derivative liabilities Sundry creditors and accruals 2, Current tax liabilities 1,370 3,513 Total liabilities 3,748 5,145 Net assets available to pay benefits 1,553,482 1,461,930 Benefits accrued as a result of operations before income tax 529, ,599 Income tax expense 11,937 6,887 Benefits accrued as a result of operations 517, ,712 Benefits and pensions paid (425,849) (408,706) Liability for accrued benefits at beginning of year Liability for accrued benefits allocated to members accounts 1,461,930 1,563,924 1,553,482 1,461,930 Perpetual s Select Superannuation Fund Annual Report_17

20 New South Wales Angel Place Level Pitt Street Sydney NSW 2000 Victoria Rialto South Tower Level Collins Street Melbourne VIC _SSAFAR_1113 Queensland Central Plaza 1 Level Queen Street Brisbane QLD 4000 South Australia Level Grenfell Street Adelaide SA 5000 Western Australia Exchange Plaza Level 29 2 The Esplanade Perth WA