Member Booklet Product Disclosure Statement

Transcription

1 mysuper.watsonwyatt.com/wwa Australia February 2008 Watson Wyatt Superannuation Fund Category A Member Booklet Product Disclosure Statement For defined benefit members who joined the Fund prior to 1 March 2005

2 This booklet is a guide to the benefits available under the Watson Wyatt Superannuation Fund (ABN , RSE Registration No. R ) to members who joined the Fund prior to 1 March 2005 who are defined under the Trust Deed to be Category A members. This booklet was issued by Watson Wyatt Superannuation Pty Ltd (ABN , AFSL , RSE Licence No. L ), as Trustee for the Fund. Preparation of this booklet was completed on 11 February This booklet and the documents listed below together form the Product Disclosure Statement (PDS) for the Fund: a copy of the most recent Annual Report a Nomination of Beneficiaries brochure. The Fund will also provide you with a Personal Statement of Benefits as at 30 June each year. Professional advice The information provided in the PDS is general information only and does not take into account your particular objectives, financial circumstances or needs. It is not personal advice. 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 contained in this document that is not materially adverse may be updated if it changes. Updated information can be found on the Fund s website at In addition, we will provide a hardcopy free of charge on request. If you do not have computer access, the updated information can be obtained by contacting the Fund Administrator (see page 5 for contact details). 2 Category A Member Booklet

3 Table of contents Section 1: Introduction 4 Section 2: Terms Used in this Booklet 6 Section 3: Fund Membership 8 Section 4: Contributions 9 Section 5: Accounts 11 Section 6: Benefits for Category A Members 12 Section 7: Part-Time Employee Benefits 15 Section 10: Benefits for Spouse Members 17 Section 11: Additional Voluntary Insurance 19 Section 12: Choice of Fund 21 Section 13: General Information 23 watsonwyatt.com 3

4 Section 1: Introduction About this Booklet This booklet is a guide to the benefits available to members of the Watson Wyatt Superannuation Fund who joined the Fund prior to 1 March 2005 who are defined under the Trust Deed to be Category A members. Please note that adjustments apply to the benefits payable to members who work part-time (see Section 7). You may set up a separate account for your spouse and your spouse may take out insurance. Details are provided in Section 8. 4 Category A Member Booklet

5 About the Fund The Watson Wyatt Superannuation Fund (ABN , RSE Registration No. R ) provides superannuation benefits to associates of Watson Wyatt Australia Pty Ltd (ABN ). The Fund is a Registered Superannuation Entity (RSE) under the Superannuation Industry (Supervision) Act. The operation of the Fund is governed by a legal document known as the Trust Deed. While this booklet summarises the main provisions of the Fund, it is not a substitute for the Trust Deed. The Trust Deed is available for inspection on request. The Trustee of the Fund is a company called Watson Wyatt Superannuation Pty Ltd (ABN , AFSL , RSE Licence No. L ), a company that is licensed to act as a trustee of superannuation funds by the principal regulator of superannuation funds, the Australian Prudential Regulation Authority (APRA). Watson Wyatt Superannuation Pty Ltd is a subsidiary of Watson Wyatt Australia Pty Ltd. There are four Directors of the Trustee company. They are appointed by Watson Wyatt Australia. The names of the Directors are advised in the Annual Report of the Fund at 30 June each year. The board of Directors meets regularly and is responsible for ensuring that the Fund meets the Government s standards for superannuation funds and that it is properly administered according to the Trust Deed. The key features of the Fund are: other than voluntary additional insurance benefits, the full cost of benefits is paid by the Company members are not required to contribute but may do so from pre-tax or after-tax salary insurance benefits may be payable on death or total and permanent disablement optional binding death benefit nominations members may contribute to a Spouse Account in the Fund members may split their voluntary pre-tax contributions and have them paid to a Spouse Account in the Fund or transferred to a different fund. Additional information Further information about the Fund or your benefits is available from the Fund Administrator: Jill Green Watson Wyatt Australia Pty Ltd Level 14, 60 Margaret Street Sydney NSW 2000 Phone: Fax: jill.green@watsonwyatt.com or the Fund website: A Policy Committee is appointed to be responsible for ensuring that the interests of members and Watson Wyatt are represented in the management of the Fund. The Committee comprises four members two are elected periodically by Fund members and two are appointed by Watson Wyatt Australia Pty Ltd. watsonwyatt.com 5

6 Section 2: Terms Used in this Booklet The following terms are used throughout this booklet: Accrued Retirement Benefit The Accrued Retirement Benefit (used in the calculation of your leaving service benefit) is calculated in the same way as the Retirement Benefit (see Section 6) but using only the period of Category A membership completed to the date of leaving service. Additional Accounts Additional Accounts means the total (as applicable) of your Member Account, Rollover Account and your Surcharge Account (the Surcharge Account is a negative account). If you originally joined the Fund as a Category B (accumulation) member, your Additional Accounts will also include your Company Account. Refer to Section 5 for more details about these accounts. Category A Member A Category A member is an employee who (as determined by the Company) is a permanent employee and commenced employment prior to 1 March Category B Member A Category B member is an employee who (as determined by the Company) is not a permanent employee. Generally, a Category B member is a casual employee. Company The Company is Watson Wyatt Australia Pty Limited (ABN ) and any other associated employer. Dependant A member s Dependants include: the member s spouse (including a de facto spouse or a person recognised as a spouse under superannuation law) children (including step, ex nuptial and adopted children) any person with whom the member is classified as having an interdependency relationship as defined under superannuation law any other person who is classified as a Dependant under superannuation law (generally this involves financial dependence on the member). An interdependency relationship is where: 1. two people have a close personal relationship, and 2. they live together, and 3. one or each of them provides the other with financial support, and 4. one or each of them provides the other with domestic support and personal care. However, if condition 1) is satisfied but the others are not satisfied because one or both suffers from a physical, intellectual or psychiatric disability, then the requirements of the definition will be met. When considering whether two people have met the definition of an interdependency relationship, the Trustee must also take into account any further guidance in superannuation law about how these conditions are to be interpreted. For example, the Trustee may consider the duration and nature of the relationship, the ownership and use of property, and the existence of a statutory declaration by a person attesting to an interdependency relationship. 6 Category A Member Booklet

7 Final Average Salary Final Average Salary means the member s average Salary during the last 36 months of employment, or the actual period of employment if this is less than 36 months. Equivalent full time Salary is used in this calculation for part time members. Membership Membership is the period during which you have been a member of the Fund and is counted in years and complete months, except in the calculation of Leaving Service Benefits when it is counted in years and days. Note that membership is adjusted for periods of part-time employment (see Section 7) and leave without pay (see Section 11). Normal Retirement Date Your Normal Retirement Date is the 30 June immediately following the date on which you reach age 65. Salary Salary is your normal rate of remuneration, as defined by the Company, expressed as an annual amount. It does not include overtime, bonuses, commissions or other similar payments. Spouse Spouse is the husband, wife or de facto partner of the opposite sex with whom a member is currently living. Trustee The Trustee of the Fund is Watson Wyatt Superannuation Pty Ltd (ABN , AFSL , RSE Licence No. L ). watsonwyatt.com 7

8 Section 3: Fund Membership An employee, with the consent of Watson Wyatt Australia Pty Ltd, will be enrolled in the Fund on the day the employee commences employment. The Company will determine your category of membership. This booklet describes the benefits applicable to Category A which is now closed to new members. The benefits applicable to other Categories of membership are described in the Member Booklet for members who joined the Fund post 28 February Rolling over You may roll over benefits into the Fund from other superannuation funds. There is no fee charged to roll over your super into your Rollover Account in the Fund however, you may wish to confirm whether you will be charged an exit fee for withdrawing your benefit from your previous fund. If your previous fund has not provided you with the forms necessary for requesting the rollover of your benefit, you may complete a Transfer Request form and send it to your previous fund. A copy of the Transfer Request form can be obtained from the Fund Administrator (see Section 1 for contact details) or the Fund website. Insurer s requirements Part of the benefits payable on death or disablement are met from an insurance policy arranged through the Fund s insurer. Evidence of health is not normally required if you join the Fund when first eligible. However, in certain circumstances you may be requested to submit evidence of your health and age to the Fund s insurer. If you elect not to provide this evidence, your insured benefits will be restricted. Depending on the evidence provided, the insurer may impose special conditions on your admission to membership or an adjustment to the insured part of your death and disablement benefits. You will be informed if this affects you. Details of the current insurer are included in the Trustee s latest Annual Report. Evidence of health is required if you or your Spouse elect to take out voluntary insurance (see Section 9 for more details). Risks of membership There are certain risks associated with joining any superannuation fund, and the Watson Wyatt Superannuation Fund is no different. For example, there is the risk that the employer will cease making contributions to the Fund at some time in the future. If that were to happen, the Trust Deed determines how the Trustee must react. There is also the risk that the Fund will lose its complying status and therefore lose its tax concessions. The Trustee manages this risk by ensuring that the Fund is administered professionally and that it operates in accordance with the requirements of the Trust Deed and law. Changes are frequently made to superannuation law, which may affect your benefits or your ability to access your benefits. For example, recent changes mean that a member s superannuation benefits may now be split by agreement or by Court Order, if the member and the spouse permanently separate. You will be advised of any changes that affect your benefits in the Fund. Changes can also occur to the taxation of superannuation, which may affect the value of your superannuation benefits. Other risks associated with the provision of insurance benefits in the Fund are set out in Section 6. Insurance benefits are not available to members who work less than 15 hours per week. 8 Category A Member Booklet

9 Section 4: Contributions Member contributions You are not required to contribute to the Fund. However, if you elect to take out voluntary insurance cover, you will be required to contribute amounts sufficient to cover the cost of this insurance. If you wish, and with the consent of the Company, you can elect to make monthly contributions to the Fund on a voluntary basis by salary sacrifice or from after tax-salary. You can also commence making contributions, change the monthly amount you contribute to the Fund, or cease making contributions at any time. The change will take effect from the following month. You may also apply (subject to Company consent) to make a payment of a one-off voluntary contribution. This contribution may be made by salary sacrifice or as an after-tax amount. A one-off after-tax contribution is made by writing a personal cheque made payable to the Watson Wyatt Superannuation Fund. If you wish to change your contribution amount or make a one-off contribution, you must complete an Application to Make Voluntary Contributions form, which is available from the Fund Administrator (contact details are in Section 1) or the Fund website. Contributions for your spouse You may make contributions on behalf of your spouse from your after-tax salary directly into a separate Spouse Account in the Fund. See Section 8 for details on spouse benefits. Any spouse contributions you make from your after-tax salary will count towards your spouse s nonconcessional contribution cap, rather than your own. Refer to Section 11 for more information about the cap on non-concessional contributions. Contributions splitting You may apply to have your voluntary salary sacrifice contributions transferred to your spouse by completing an Application to Make a Contributions Splitting Payment form. The payment may be made to your spouse s Spouse Account within the Fund or to another fund. More details are provided in Section 8. As a member of the Fund, you have the option of splitting up to 85% of your voluntary concessional contributions (or up to the concessional contributions cap, if lower) with your spouse. However, any concessional contributions you split will count towards your concessional contributions cap, not your spouse s see Section 11 for more information. You cannot split non-concessional contributions (unless these were made prior to 5 April 2007), or rollovers or transfers (e.g. from overseas funds) you have made into the Fund. Company contributions Other than voluntary member contributions and voluntary insurance cover, the Company finances the entire cost of the benefits provided by the Fund. The Fund s Actuary takes into consideration the benefits to be provided and the financial position of the Fund in order to determine the Company contribution rate required from time to time. Contributions and bankruptcy Voluntary contributions to super made by you, or on your behalf, may be recoverable by creditors in the event of your bankruptcy. This applies to contributions made on or after 27 July 2006 if these contributions are demonstrated to have been made with the specific intention of defeating creditors. You will be advised if this affects you. Spouse contributions can only be accepted if you (or your spouse) have provided the Fund with your spouse s Tax File Number. watsonwyatt.com 9

10 Expenses and insurance premiums In addition to the Company contributions required to provide the benefits, the Company finances the cost of your Fund insurance except for any voluntary insurance. The Company also pays all the administration expenses, other than Family Law fees, incurred in operating the Fund. However, any taxes (including surcharge tax) applicable to you will be deducted from your benefits. If you elect to take out voluntary insurance, the premiums will be deducted from your Member Account (see Section 9 for more details). If your Spouse elects to take out voluntary insurance, the premiums will be deducted from your spouse s Spouse Account (see Sections 8 and 9 for more details). A fee will be charged for the supply of specific information relating to Family Law matters and for processing Family Law benefit splits. Details of these fees are provided in the Fees Section of the Annual Report. 10 Category A Member Booklet

11 Section 5: Accounts Types of accounts Up to three accounts are established in your name within the Fund. These are described as follows: your Member Account, into which your contributions (if any) are credited your Rollover Account, into which any amount you roll over into the Fund is credited your Surcharge Account, to which any surcharge assessments received by the Fund in respect of you are allocated. Note that this is a negative account, i.e. surcharge assessments received reduce your total benefit. If you originally joined the Fund as a Category B member, you may also have a Company Account. More details about the benefits applicable to Category B members are provided in the Member Booklet for members who joined the Fund post 28 February In this Booklet the total of these accounts is referred to as your Additional Accounts. Please note that the Additional Accounts total may be a negative amount if you have a Surcharge Account. If you elect to take out additional voluntary insurance, the premiums will be deducted from your Member Account. Your super is invested by professional investment managers appointed by the Fund s Trustee. Details of the current investments, as well as the Trustee s investment objectives and policy, can be found in the latest Annual Report. Investment earnings are applied to your accounts based on the investment return achieved on the Fund s assets (net of investment fees and taxes). Investment earnings may be positive or negative and so may increase or decrease your account from time to time. Tax may be payable on salary sacrifice contributions or rollovers, as appropriate. The way in which your accounts build up, including the components shown above and the investment earnings applied, are reported to you each year on your Personal Statement of Benefits. Build up of accounts Each account builds up in the following way: ACCOUNT = CONTRIBUTIONS* + - INVESTMENT EARNINGS - TAX (IF APPLICABLE) * Or rollovers or surcharge, as appropriate watsonwyatt.com 11

12 Section 6: Benefits for Category A Members Retirement benefit If you retire from the Company on or after age 55 but prior to your Normal Retirement Date, the benefit is calculated as: (a) (b) (c) 15% Period of Category A membership after 30 June 1993 Final Average Salary plus Past Service Multiple in respect of membership prior to 1 July 1993 Final Average Salary plus Additional Accounts (if any). Periods of membership are measured in years and complete months. If you retire from the Company after your Normal Retirement Date, the benefit is calculated as the retirement benefit payable as at your Normal Retirement Date, plus contributions made to the Fund by you and/or the Company in respect of your service after your Normal Retirement Date (if any) adjusted for tax, surcharge and investment earnings since your Normal Retirement Date. Example Consider a member who retires at age 65, who joined the Fund at age 40 and has been a Category A member of the Fund for exactly 25 years (all after 30 June 1993). This member has not made any contributions or rollovers to the Fund and has not been subject to any surcharge tax. Death benefit If you die while employed by the Company and prior to your Normal Retirement Date, a lump sum death benefit is payable which is calculated in the same way as the Retirement Benefit, but assuming that you had remained in employment with the Company up to your Normal Retirement Date and using Annual Salary instead of Final Average Salary*. * If you die within 3 years of the Normal Retirement Date the salary used for this calculation is your estimated Final Average Salary at the Normal Retirement Date, assuming no further salary increases after the date of death, rather than Annual Salary. Example Consider the member described in the example for retirement benefits. If the member dies at age 53, with an Annual Salary of $70,000, then the benefit would be: 15% 25 years (i.e. period from joining at age 40 to age 65) $70,000 = $70,000 = $262,500 If the member s Final Average Salary is $68,000, then the benefit would be: 15% 25 years $68,000 = $68,000 = $255, Category A Member Booklet

13 Total & permanent disablement benefit Total & Permanent Disablement is defined in the Fund s Trust Deed. The Trust Deed refers to the definition in the insurance policy effected by the Trustee, so the definition may change. However, under the current policy, you must have: (a) (b) been continuously absent from work for 6 months because of illness or injury and, in the opinion of the Insurer and the Trustee, be unlikely ever to engage in or work for reward in any occupation for which you are reasonably qualified by education, training or experience, or suffered the loss of two limbs or the sight of both eyes or the loss of one limb and the sight of one eye, where a limb means the whole hand or foot. Note that part or all of the benefit may be required to be preserved in this latter case. If you are determined by the Trustee to be Totally and Permanently Disabled during Membership of the Fund, a lump sum benefit is payable, and it is calculated in the same way as if you had died on the date you were first absent from work as a result of your disability. Insurance cover The Trustee uses an insurance policy to meet part of the benefit payable on death or total and permanent disablement. If the insurance company imposes restrictions or special conditions on your insurance or refuses to pay a claim, the Trustee has the power under the Trust Deed to adjust your benefits accordingly. As a result, there are a number of risks associated with the restrictions and special conditions which may be imposed by the insurance company. These include: The risk that you may suffer an injury or illness such that you cannot work, but are not sufficiently injured or ill to satisfy the Fund s definition of disablement. In this case, the TPD benefit will not be paid. The risk that, even if your claim is accepted, it may take some time for payment to be made. For example, it can take some time to obtain all the required information to assess the claim. The risk that the insurer may refuse to provide cover in certain circumstances, for example, if you commit suicide or intentionally injure yourself, or make a claim caused by war. The risk that you are not covered if you work less hours per week than the minimum required under the policy. For example, casuals, part-time employees or employees on leave without pay may not be covered. The risk that the maximum amount of cover allowable under the policy may be lower than the benefit calculated in accordance with the formula or is insufficient to meet your needs. The risk that the insurance company may decline (or defer) your cover, which may also affect your ability to obtain insurance cover in the future. The risk that the insurance company may not provide cover if you are required to work overseas or travel overseas for work purposes. watsonwyatt.com 13

14 Leaving service benefit If you leave the Company s service for any reason other than retirement, death or disability, the benefit is calculated as: (a) (b) the Basic Benefit equal to the sum of: Years of Category A 9% membership on or after 1 July 2002 plus Years of Category A 7% membership from 1 July 1998 to 30 June 2002 plus Years of Category A 6% membership from 1 July 1993 to 30 June 1998 plus Accrued Resignation Multiple in respect of membership prior to 1 July 1993 plus a Vested Benefit equal to: Final Average Salary Final Average Salary Final Average Salary Final Average Salary (Accrued Retirement Benefit Early Leaving Factor Basic Benefit) Vesting Factor where the Early Leaving Factor is 1 less 1½% times (55 less your age), with a minimum factor of 2/3rds and a maximum factor of 1. Age is calculated in years and months (rounded up to the higher month) the Vesting Factor is 10% times years of Category A membership in excess of five, with a maximum factor of 100% after 15 or more years of Category A membership. Years of Category A membership is calculated in years and days for the purpose of (a) and (b). plus Example Assume a member left the Company at age 44, having been a Category A member for exactly ten years (all after 1 July 2002) with a Final Average Salary of $55,000. This member had not made any member contributions or rollovers and had not been subject to any surcharge tax. (a) (b) (c) (d) Basic Benefit 9% 10 years $55,000 = $49, Accrued Retirement Benefit 15% 10 years $55,000 = $82, Early Leaving Factor = ½% (55 44) Vesting Factor = 50% 10% (10 5) years The benefit would be equal to the total of: plus Basic Benefit = $49, Vested Benefit (0.835 $82,500 $49,500) 50% = $ 9, Total Leaving Service Benefit = $59, (c) Additional Accounts (if any). 14 Category A Member Booklet

15 Section 7: Part-Time Employee Benefits Fund membership conditions for part time employees are generally the same as for Category A members but some adjustments are made to the benefits for periods of part-time employment. In summary: all benefits are based on the equivalent full time salary periods of part time employment accrue membership on a proportionate basis, relative to full time membership for death and TPD benefits, the member is assumed to have returned to full-time employment on the date of death or TPD, and insurance benefits are not available for part-time employees working less than 15 hours per week. The examples below demonstrate how the adjustments are made. Example 1 Retirement Benefit Consider a member who retires on the Normal Retirement Date and who joined the Fund at age 40. If the member worked 20 years as a full time member and 5 years as a part time member working 3 days per week, and their full time Final Average Salary was $68,000, then the retirement benefit would be: Example 2 Death Benefit Consider the member in Example 1 above. If the member dies at age 53 with an equivalent full-time Annual Salary of $70,000 having been working 3 days per week for the past 3 years at the date of death, then the death benefit would be: 15% (22 years + 3 years 60%) $70,000 = 3.57 $70,000 = $249,900 Note that in respect of the period of future membership, it is assumed that the member reverted to full-time membership on the date of death. That is why in the above example there are 22 years at the full-time rate, i.e. 25 years of potential membership from age 40 to age 65 less the three years of part-time employment. For part-time employees working less than 15 hours per week, the death benefit is the same as the leaving service benefit (see Example 3). The total and permanent disablement benefit is calculated in the same manner as the death benefit. 15% (20 years + 5 years 60%) $68,000 = 3.45 $68,000 = $234,600 watsonwyatt.com 15

16 Example 3 Leaving Service Benefit Assume a member left the Company at age 44 having been a member for 10 years (all after 1 July 2002) of which 3 years were as a part time member working 3 days per week. The member s full-time Final Average Salary is $55,000. This example is the same as for the full-time employee in Section 6 apart from period of part-time employment. More details of the calculation of the Early Leaving Factor and Vesting Factor are given in Section 6. The benefit is equal to the total of: (a) Basic Benefit 9% (7 years + 3 years 60%) $55,000 = $55,000 = $43,560 plus (b) Vested Benefit [0.835 (15% (7 years + 3 years 60%) $55,000) $43,560] 50% = ( $55,000 $43,560) 50% = ($60,621 $43,560) 50% = $8, The total leaving service benefit is therefore equal to $52, Note, the vesting factor (50% in the example) is calculated using all years of membership. There is no adjustment for periods of part-time employment. 16 Category A Member Booklet

17 Section 8: Benefits for Spouse Members Making spouse contributions As a member of the Fund, you can set up a separate Spouse Account in the Fund in order to provide a benefit for your spouse. Your spouse may also take out insurance for a death benefit. Under tax law, your spouse is a married or de facto partner of the opposite sex who lives with you. Spouse contributions or transfers can be made to the Spouse Account in four ways: a regular deduction from your own after-tax salary lump sum contributions from your own after-tax salary by rollovers from other funds by transfer of a contributions-splitting payment from your voluntary contributions to your spouse. The Fund cannot accept regular contributions directly from your spouse or their employer. You can start making contributions on behalf of your spouse at any time. You and your spouse first need to complete a Spouse Member Application form available from the Fund Administrator (contact details are in Section 1). Contributions splitting You can arrange to make a contributions-splitting payment from your voluntary contributions at any time after 30 June 2006 by completing an Application to Make a Contributions Splitting Payment form available from the Fund Administrator (contact details are in Section 1). The payment may be made to the Spouse Account within the Fund or to another fund. The following conditions apply to these payments: only salary sacrifice contributions paid after 31 December 2005 may be split the maximum amount that may be split is 85% of your salary sacrifice contributions. After-tax contributions cannot be split only one split payment may be made in respect of contributions paid during the previous financial year and the application must be submitted prior to the following 30 June if you are leaving service or have applied under Choice of Fund to transfer all your benefit out of the Fund, you may apply to split the voluntary contributions paid during the current financial year. When you first make a contribution or wish to change your spouse contribution amount or make a one-off contribution, you must complete an Application to Make Spouse Contributions form. Under current tax rules, you may be entitled to claim a rebate if you make spouse contributions and your spouse earns a low income. For more information about tax, you should seek the advice of a licensed financial adviser. You can start making contributions on behalf of your spouse at any time. Investment earnings are applied to the Spouse Account based on the investment return achieved on the Fund s assets (net of investment fees and taxes). Investment earnings may be positive or negative and so may increase or decrease the Spouse Account from time to time. watsonwyatt.com 17

18 Payment of spouse benefits The money in the Spouse Account can only be paid to your spouse. Your spouse s benefit cannot be transferred to you. Any contributions that you make on behalf of your spouse, and the earnings on them, have to be kept in the superannuation system until: your spouse reaches age 65 if they haven t ever worked, or your spouse reaches their preservation age if they have worked (see Section 11 for more information about preservation). At that time, the benefit is paid as a lump sum. Any request to have the money in the Spouse Account paid from the Fund must come from your spouse in writing. Spouse insurance benefits Your spouse can purchase insurance for death only (not for total and permanent disablement) under the same scale of cover that applies to Fund members (see Section 9). The cost of one unit of cover is 35 cents per week for a female spouse and 55 cents per week for a male spouse. Your spouse may choose the number of units of cover required to achieve the desired level of insurance. The insurance premiums will be deducted from the Spouse Account in the Fund at the beginning of each month. A sufficient balance must be maintained in the spouse s Spouse Account to meet the cost of their life insurance cover. Your spouse will be required to provide evidence of health to the Fund s insurer before the initial cover or increases in cover can be provided. Your spouse can also choose to transfer their benefit into another complying super fund at any time. In the following situations, the balance in the Spouse Account must be paid out of the Fund (subject to the Preservation requirements see Section 11): if you leave the Company, or if you die if you and your spouse separate or divorce. See Section 11 for more details on the payment of Death Benefits. 18 Category A Member Booklet

19 Section 9: Additional Voluntary Insurance The Trustee recognises that employees and their spouses may have different insurance needs at various stages of life. To give employees maximum flexibility, we have negotiated a voluntary insurance contact with the Fund s current insurer. Voluntary insurance for employees is available on death only or death and TPD, but for spouses it is available on death only. You can elect to take out voluntary cover based on a unit scale. The scale is shown on the following page. The cost of one unit of cover is as follows: Employees Death and Total & Permanent 40 cents per week Disablement Employees Death only 30 cents per week Female spouse Male spouse Death only Death only 35 cents per week 55 cents per week So, if for example, you are aged 39 (40 next birthday) and wanted to top up your death and TPD benefit by about $100,000, you would apply for five units of $19,400 each (giving total extra cover of $97,000) and the cost of this insurance would be $2 per week. The amount of insurance changes each following year in line with the scale. In the example above, in the following year, for a member aged 41 (42 next birthday) the level of cover costing $2 per week will be $89,500. How to apply for additional cover You will need to satisfy the medical requirements of the insurer when you take out or increase voluntary cover. You will be required to complete a Personal Statement, however more detailed medical evidence may be required, especially for higher levels of cover. The same requirements apply to spouse insurance. If you would like to apply for voluntary insurance cover, please contact the Fund Administrator (see Section 1 for contact details). The Fund Administrator will determine the medical evidence that is required and send the necessary information for you to complete, and will send you a letter confirming the amount of insurance that has been accepted and the date that cover commences. In certain circumstances, the insurer may apply a loading to the cost of voluntary insurance cover. In this event, you will be given the option of accepting the loaded premium or withdrawing your application for voluntary cover. While your medical evidence is being assessed the insurer will provide accident cover for a maximum of $500,000 (including your existing Fund cover) for a maximum period of 30 days. The accident cover commences from the date your Personal Statement is received by the insurer. There is no limit to the number of units you can apply for, except that the total insurance under the Fund may not exceed $5 million for death and $2 million for TPD. The cost of the units of voluntary cover will be deducted at the beginning of each month from your Member Account in the Fund or the Spouse Account in the case of Spouse Insurance. You can apply to change your number of units or cancel your voluntary insurance at any time. watsonwyatt.com 19

20 Unit based scale of insurance cover Age Next Birthday Amount of Cover $ per unit Age Next Birthday Amount of Cover $ per unit 25 or less 50, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,200 Policy exclusions The following exclusions/restrictions will apply to this cover. Death: Suicide within 13 months of commencement of cover or any increase in cover. TPD: Active participation in militant activities. Intentional self-inflicted injury or attempt at suicide. War whether declared or not, military activity or insurrection. Active participation in militant activities. When you leave service On leaving service, any voluntary insurance cover will cease. The continuation option (described in Section 11) does not apply to voluntary insurance. Any life insurance cover on your spouse s life will automatically cease when any of the following occurs: (a) (b) (c) your leave employment with the Company you separate from or divorce your spouse, or your spouse turns 65 years of age. 20 Category A Member Booklet

21 Section 10: Choice of Fund The Choice of Fund laws allow the majority of super fund members to select the super fund into which their employer pays their superannuation. You have the option to choose to have your own super contributions paid into another complying super fund rather than the Watson Wyatt Superannuation Fund. If you choose to have the Company s contributions paid to another superannuation fund, the following applies to the benefits you have in the Watson Wyatt Superannuation Fund: Watson Wyatt will contribute 9% of your superannuation salary to your chosen fund. You will be responsible for everything involved with your membership of that other fund, including any insurance and administration costs, as the Company will have no involvement with your chosen fund (other than paying contributions to it). You will not be able to make any contributions to the Watson Wyatt Fund and nor will you be able to make contributions to the Watson Wyatt Fund in respect of your spouse. Your accrued super will remain in the Watson Wyatt Fund unless you choose to transfer your benefit to another fund (see next page for details). Your leaving service or retirement benefit will be calculated under the normal rules of the Fund except that your period of membership while you have contributions paid to another fund will be excluded from the membership used to calculate your Watson Wyatt Fund leaving service or retirement benefit. You may choose to transfer your accrued super to another fund see the next page for details. Watson Wyatt will continue to provide, at its own cost, death and total and permanent disablement insurance for you through the Watson Wyatt Fund. Should you die or become totally and permanently disabled, the amount payable will be your leaving service or retirement benefit, as appropriate, plus an insurance amount. The way in which insurance amount is calculated will change. If you choose another fund for your future super, your insurance amount in the Watson Wyatt Fund will be determined as: 15% Period to Age 65* Salary * The period to age 65 is calculated in years and complete months (as a fraction of a year). This amount may be lower than your current insurance amount. What you need to do if you want to choose another fund? If you decide to join another fund, you will need to complete and return the Standard choice form defined benefit member, together with written evidence of your chosen fund s eligibility as specified on this form. Your choice will be effective within two months of the date your form is received by the Company. watsonwyatt.com 21

22 Transfer of your accrued super to your chosen fund? If you wish to transfer your accrued super to another fund, you can apply to do so. Your accrued super is your leaving service benefit, or retirement benefit if you are over age 55. The Trustee retains the right to refuse to transfer out your accrued super in order to protect the security of entitlements of the remaining members of the Watson Wyatt Fund. If the Trustee determines that the Watson Wyatt Fund is in a sufficiently healthy financial state, and the transfer out of your accrued benefit will not adversely impact on the security of other members benefits, then the Trustee may agree to your request to transfer your accrued super to another fund. If you would like to apply to transfer out your accrued super to another fund, you need to complete the Choice of Fund Transfer Request form which is available from the Fund Administrator (contact details are in Section 1). If you do transfer out your accrued super, then you will have no entitlement to a defined benefit from the Watson Wyatt Fund. You will become a Category I member. Details of the benefits provided for Category I members are provided in the Member Booklet for Members who joined the Fund post 28 February What if you change your mind? If you later change your mind and wish to rejoin the Watson Wyatt Fund, you will not be able to backdate your membership in the Watson Wyatt Fund. You will need to start afresh as a new member of the Watson Wyatt Fund at your re entry date and you will be entitled to whatever benefits are available from that date for new employees. Where you can find more information? To find out more about Choice of Fund, you may find it helpful to refer to the Federal Government s Choice website. You can access the website at If you re considering exercising choice, the Federal Government s Choice website contains tips for comparing superannuation funds including a booklet produced by the Australian Securities & Investments Commission to help you understand more about super and make better super choices. If you have any queries about Choice of Fund, please contact Human Resources. Please note that neither the Trustee nor Watson Wyatt can provide you with information or advice about which is the best fund for you. 22 Category A Member Booklet

23 Section 11: General Information What taxes apply to my super? A number of taxes may apply to your super. These are: 1. Contributions tax Contributions tax at the rate of 15%, which is deducted from all concessional contributions that is, employer contributions and any contributions you make from your before-tax salary (by salary sacrifice). If you have not provided your Tax File Number to your super fund, the rate of tax that applies to concessional contributions increases substantially to the top marginal personal tax rate (plus the 1.5% Medicare Levy). However, the Fund may be able to recover this excess tax in certain circumstances if you subsequently advise your TFN to the Fund. If you were a member prior to 1 July 2007, the higher tax rate only applies if your concessional contributions are in excess of $1,000 pa. 2. Tax on investment earnings Tax on investment earnings at the rate of 15% less any applicable deductions that may be available to the investment managers of the Fund. This tax is deducted from the Fund s investment earnings before being applied to your account(s). 3. Excess contributions tax Excess contributions tax may apply if your contributions exceed certain caps set by the Government. See below for more information. 4. Tax on benefits that are paid in cash The amount of tax payable depends on a number of factors including: your age when you receive the benefit. For example, if you are aged 60 or over, all lump sum payments and pension amounts paid to you from a taxed super fund (such as the Watson Wyatt Superannuation Fund) will be tax free. If you are less than age 60, any lump sum amounts paid to you will consist of only two tax components a tax-free exempt component and a taxable component. 5. The superannuation surcharge An additional tax of up to 15% levied against the employer and before-tax (salary sacrifice) contributions of high-income earners. This surcharge was abolished with effect from 1 July 2005, however the Fund may still receive assessments from the Australian Taxation Office for members affected by the surcharge for prior years. If so, any surcharge amounts will be allocated to your Surcharge Account. Note, this is a negative account which reduces your total benefit. For more information about the surcharge, contact the Fund Administrator (contact details are in Section 1). Tax limits A number of limits which are indexed annually as at 1 July affect how super contributions and benefits are taxed. The limits that apply for the period 1 July 2007 to 30 June 2008 are given below. what type of benefit is paid (retirement, disability or death) who receives the benefit how you receive the benefit (e.g. lump sum amount or pension), and watsonwyatt.com 23

24 Cap on employer and before-tax contributions. A flat $50,000 pa cap applies to concessional contributions, including employer contributions and any contributions you make to super from your before-tax salary (i.e. by salary sacrifice). Contributions in excess of the cap will be taxed at the top marginal personal tax rate (45%) plus the Medicare Levy (1.5%). A higher transitional limit of $100,000 pa (not indexed) applies for the period 1 July 2007 to 30 June 2012 to anyone who attains age 50 during that period (i.e. the higher limit applies from the year in which a member reaches age 50). The Australian Taxation Office (ATO) determines whether any excess tax applies and if so, will forward a tax assessment and a release authority directly to the affected member. It is then up to the member to either pay the excess tax directly to the ATO, or arrange with their super fund to pay the tax on their behalf and deduct it from their benefit by giving the release authority to the Fund. Time limits apply to the payment of the tax. The tax cannot be paid from any part of your super that is in defined benefit form. Cap on after-tax contributions Any non-concessional contributions you make to super are subject to a cap of $150,000 pa. Nonconcessional contributions include any amounts you contribute from your after-tax salary. They also include: any contributions made for you by your spouse amounts you transfer from overseas funds (except to the extent an election applies for them to be taxed in the Fund) excess concessional contributions, and certain other less common amounts. Contact the Fund Administrator for more information. If necessary, limits for the following two years can be brought forward to enable members under age 65 to make larger one-off payments to a maximum limit of $450,000. Superannuation funds are unable to accept individual lump sum amounts in excess of the maximum limits ($450,000 if you are aged less than 65, $150,000 if not), and any such payments will be returned to you. If you exceed the cap, the excess will be taxed at the top marginal personal tax rate (45%), plus the Medicare Levy (1.5%). The same ATO assessment process applies as for concessional contributions (see above for more information). However the excess non-concessional contributions tax must be paid from a super fund. Providing your Tax File Number Providing your Tax File Number (TFN) to your super fund is not compulsory. However, doing so ensures that you do not pay any more tax on your contributions than you need to. Significant consequences apply to members of super funds who have not advised their super fund of their Tax File Number (TFN). These include: taxing the taxable part of their concessional (employer and before-tax) contributions at the top marginal tax rate of 45% (plus the 1.5% Medicare Levy), and prohibiting super funds from accepting any nonconcessional contributions from these members. If you have not previously provided your TFN to your employer and you wish to do so, contact the Fund Administrator (contact details are in Section 1) to obtain the appropriate form. On receipt of your completed form, your employer will then pass this information onto the Fund within 14 days. 24 Category A Member Booklet

25 Government s co-contribution If you make voluntary after-tax contributions, the Government will make a co-contribution of up to $1.50 for every dollar you contribute up to a maximum of $1,500 a year, subject to an income test. The co-contribution payment may be available to you if you earn less than $58,980 (for the 2007/8 year, indexed). Before-tax contributions do not count for co-contribution purposes. The maximum co-contribution of $1,500 applies for incomes up to $28,980 but will gradually reduce for incomes above $28,980 until it phases out altogether for those on incomes above $58,980. The co-contribution scheme is managed by the Australian Taxation Office (ATO). The Fund will report any voluntary contributions you have made to the ATO at the end of each year. The ATO will then determine your eligibility to receive the co-contributions when they receive your tax return. Any co-contributions received by you will go into an accumulation account in your name in the Fund. If you earn less than $58,980 and believe you might benefit from the co-contribution, the Trustee recommends you consider talking to a licensed financial adviser. Payment of benefits In accordance with Government requirements, a member cannot generally receive any benefits from the Fund while still employed by the Company. A payment may be made to a member in the following circumstances: A non-preserved component of a benefit rolled over to the Fund after 30 June 1994 may be withdrawn at any time. In circumstances of severe financial hardship or on compassionate grounds (see more details under Preservation over) and subject to any Government imposed limits. A member over age 65 may withdraw part or all of their accrued benefit subject to the consent of the Trustee. A payment may be made to another fund in the following circumstances: Part or all of the balance in your Additional Accounts (provided the total is not negative) may be rolled over to another fund that meets the preservation requirements. If you exercise Choice of Fund, you may elect to have all your accrued super rolled over to another fund (see Section 10 for more details). watsonwyatt.com 25

26 Preservation Government requirements mean that part or all of your superannuation benefits cannot be paid in cash but must be preserved (or held in trust) until one of the following events occurs (or the preserved benefit is less than $200): Leaving the Fund When you leave the Fund, you will be contacted by the Fund Administrator and asked how you want to receive your benefit and to nominate the fund or funds you have chosen to receive any part of your benefit which is to be rolled over. permanent retirement from the workforce after your Preservation Age: Date of Birth Preservation Age Before 1 July Between 1 July 1960 and 30 June 1961 Between 1 July 1961 and 30 June 1962 Between 1 July 1962 and 30 June 1963 Between 1 July 1963 and 30 June On or after 1 July reaching age 65 retirement from the Company after age 60 death Total and Permanent Disablement payment of the benefit in the form of a pension If you do not give the Fund Administrator instructions within 90 days of leaving the Fund, the Trustee can automatically roll over your benefit to the eligible rollover fund (ERF) chosen by the Trustee. If your benefit is transferred to the ERF, you will no longer be a member of, or have any rights under, the Fund. Details of the Trustee s chosen ERF are given in the Annual Report. You should note that the fees, investment policy and crediting rates of the ERF may be different to those which apply under the Fund. In addition, the ERF does not provide insured death or disablement benefits. The ERF may not be suitable as a long term vehicle for your super, as the investment returns may be lower than those available from other products. in the case of temporary residents, on permanent departure from Australia (subject to recovery of any tax concessions previously received) release of part or all of the benefit on grounds of severe financial hardship as defined in the superannuation legislation (with the approval of the Trustee) release of part or all of the benefit on compassionate grounds as defined in the superannuation legislation (with the approval of the Australian Prudential Regulation Authority and the agreement of the Trustee). Your Personal Statement of Benefits shows how much of your benefit is preserved. 26 Category A Member Booklet

27 Possible continuation of insurance cover after you leave service If you leave the Company, the insurance cover you have under the Fund generally stops immediately. However, you may be eligible for extended death cover for up to 30 days if you satisfy the terms and conditions of the insurance policy. Contact the Fund Administrator if you require further information. When you leave the Company, you have the opportunity of continuing the death cover you had as a member of the Fund by purchasing a personal insurance policy at your own expense (for an amount not more than your standard insurance cover under the Fund and subject to a maximum of $750,000). As the Fund s current insurer does not offer private insurance policies, the policy will be provided through another insurer. The premiums for this policy will be based on the insurer s current retail premium rates. The continuation option does not apply to voluntary insurance. To be eligible to take advantage of this continuation option, you must satisfy the following conditions: you must have ceased employment with your employer for reasons other than illness or accident you must not have joined the armed forces prior to the date that you take out the personal policy with the insurer you must satisfactorily complete an AIDS declaration you must meet the insurer s underwriting requirements for occupations and pastimes, and satisfy the insurer s minimum premium requirements. If you take out a personal policy with the Fund s insurer, no evidence of good health will normally be required (other than in relation to AIDS, as discussed above). However, any restrictions, loadings or other special terms that applied to your cover while you were a member of the Fund will continue to apply to the personal policy. For more information on continuing your insurance cover when you leave the Company, contact the Fund Administrator. you must apply and pay your insurance premium within 30 days of leaving the Company you must be less than 60 years of age at the time your cover ends under the Fund policy you must not have an insurance benefit payable to you as a member of the Fund or intend to lodge a claim watsonwyatt.com 27

28 Payment of death benefits The Watson Wyatt Superannuation Fund allows members to decide who should receive their benefit in the event of their death. This can be done in two ways: members can make a binding nomination which the Trustee will be legally bound to follow if it is valid at the time of your death, or members can provide guidance (in the form of a non binding nomination) to the Trustee, but leave the final decision up to the Trustee based on the member s circumstances at the date of death. Under legislation and the Fund s Trust Deed, death benefits can generally only be paid to your Dependants or your legal personal representative. Dependants are defined in Section 2. Your legal personal representative is the person responsible for administering the distribution of your estate. If you have a Will, it is the person named as executor of your Will. The Nomination of Beneficiaries brochure contains more information on nominating people to receive your death benefit. This form is included in the FastStart Kit for new employees or a copy is available from the Fund Administrator (contact details are in Section 1) or the Fund website. Some points to note regarding your nomination are: If you wish to make a binding nomination, it must satisfy all the conditions listed in the Nomination of Beneficiaries brochure, both at the time it is signed and at the time of your death. If it does not do so, then it will not be binding and the Trustee must decide who should receive your benefit. It is therefore very important to keep your nomination up to date. Binding nominations must be renewed every three years under law. You cannot nominate someone who is neither a Dependant nor your legal personal representative using a binding nomination. If you would like a non dependant to receive your benefit, you can either: make a non binding nomination to that person (in which case the Trustee will take your wishes into account but will retain discretion to distribute your benefit), or you can make a binding nomination to your legal personal representative. The benefit will then form part of your estate and be distributed in accordance with your Will. The Trustee encourages members to consider making a Will and to ensure that their Will and Nomination of Beneficiaries form do not contradict each other. Nomination forms should be updated if your personal circumstances change or every three years if you want the nomination to be binding. Complying superannuation fund The Fund is a complying superannuation fund. This means that: the Fund is regulated under the Superannuation Industry (Supervision) Act 1993 and Regulations and satisfies the prudential standards of the superannuation legislation the Fund s activities are regulated by the Australian Prudential Regulation Authority (APRA) and the Australian Securities & Investments Commission (ASIC), and the Fund receives favourable tax treatment. It is the Trustee s intention that the Fund will continue to operate as a complying superannuation fund. 28 Category A Member Booklet

29 Assignment of benefits A member cannot use any entitlement or benefit in the Fund as security for a loan, nor can a member sell, give away or in any other manner assign a prospective entitlement or benefit under the Fund. Complying superannuation funds are not permitted to make loans to members. Future changes to the Fund The Company is committed to helping employees provide for retirement and therefore intends that the Fund will continue indefinitely. However, the Company reserves the right to close or change the Fund if, for example, it becomes impractical to continue. Members will be notified of any change as soon as practicable. Except with each member s consent or unless permitted by law, any changes will not adversely affect accrued benefits secured by contributions made up to the date of closure or change. Leave without pay and parental leave If a member is granted leave without pay or parental leave, the Company s contributions to the Fund on the member s behalf normally cease and the period of absence is not counted in determining the member s benefit. Payment of voluntary contributions would normally also cease during this period. Enquiries and complaints procedure Any enquiries or complaints should first be directed to the Fund Administrator (see Section 1 for contact details). If you are not satisfied with the response you receive, there is a formal process by which the Trustee reviews enquiries and complaints. To make a formal enquiry or complaint, please obtain an Enquiry or Complaint form from the Fund Administrator. The Trustee will respond within 90 days. If you are not happy with the Trustee s handling of your complaint, you may then contact the Superannuation Complaints Tribunal (other than for privacy-related complaints, see below for more information). The Tribunal is an independent body set up by the Federal Government to deal with enquiries or complaints that the Trustee has not dealt with to your satisfaction. You can phone the Superannuation Complaints Tribunal on or visit their website: Please note that a time limit may apply to the submission of a complaint relating to the distribution of a death benefit or acceptance of a TPD benefit claim. More details are provided on the SCT website. The Trustee will make arrangements to continue the insurance of death and disablement benefits for up to a year for members granted parental leave. For members on leave without pay, continuation of insurance is subject to the agreement of the Company and insurer. Insurance is not available for a member who goes on leave without pay to join the armed forces. watsonwyatt.com 29

30 Privacy The Trustee of the Fund believes that your privacy is important and, in accordance with the revised Privacy Act, has developed a privacy policy to protect your personal information. You can view the Fund s privacy statement, outlining how the Fund collects and manages your personal information, on the Fund website or request a copy from the Fund Administrator (see Section 1 for contact details). If you wish to make an enquiry or complaint regarding the privacy of your superannuation information, you should contact the Fund Administrator in the first instance. The Fund s enquiries and complaints procedure also applies to privacy related complaints. If your concerns are not resolved to your satisfaction, you may contact the Federal Privacy Commissioner on Family Law adjustments to benefits If the Trustee makes a payment or transfer to your spouse based on a Family Law agreement or Court Order, then the Trustee will reduce your benefits or your spouse s benefits in the Fund accordingly, including your death and disablement benefits. If this affects you, you will be advised of how your benefits will be adjusted. The Trustee may charge fees for the provision of Family Law information to members or other eligible persons, and for effecting splits of benefits under Family Law. The fees may be varied from time to time. Details of the current fees are available from the Fund Administrator and are disclosed in the Annual Report each year. 30 Category A Member Booklet

31 watsonwyatt.com 31

32 mysuper.watsonwyatt.com/wwa Further information about the Fund or your benefits is available from the Fund Administrator: Jill Green Watson Wyatt Australia Pty Ltd Level 14, 60 Margaret Street Sydney NSW 2000 Phone: Fax: or the Fund website: This report was prepared on 11 February The information in this publication is for general interest. No action should be taken on the basis of any article without seeking specific advice. Watson Wyatt Worldwide, Inc. February 2008 Issued by Watson Wyatt Superannuation Pty Ltd (ABN , AFSL , RSE Licence No. L ) as Trustee of the Watson Wyatt Superannuation Fund (RSE Registration No. R )