IAG & NRMA Superannuation Plan Annual Report for the year ended 30 June 2015 S YOUR FINANCIAL POSITION Plan website: www.iagnrma.superfacts.com Plan Helpline: 1300 424 676 IAG & NRMA Superannuation Pty Limited (ABN 77 000 300 934, AFSL #439233) is the Trustee of the IAG & NRMA Superannuation Plan (ABN 58 244 115 920) and the issuer of this Annual Report. GPO Box 4303, Melbourne VIC 3001.
Table of contents page 1 page 3 Plan facts and figures Investment returns S page 4 Market round-up The Plan s investment objectives and strategy How the Plan s investments are managed How the Plan s assets are invested Large assets of the Plan Use of derivatives Plan Reserves FOR ACCUMULATION ACCOUNTS AND RETIREMENT INCOME STREAM ACCOUNTS page 8 Your benefit Your investment purchases units Recent investment returns YOUR page 9 Australian Shares Option Shares Option MySuper and Pension Growth Options Balanced and Pension Balanced Options Conservative and Pension Conservative Options Cash and Pension Cash Options page 16 Investment performance benchmarks FOR DEFINED BENEFIT MEMBERS page 16 Comparison of annual effective rates of net return and declared rates 1990 2015 Defined leaving during the year page 18 The Plan s financial statements Accounts as at 30 June 2015 Sub-plan reporting The Plan s financial position page 20 The Trustee Changes to the Trustee over the year Meeting attendance A chance to have your say Indemnity insurance Trust Deed and Rules Concessional tax treatment Management assistance page 22 Receiving your benefit as a lump sum Receiving your benefit as an allocated pension Receiving your benefit as a lifetime pension Eligible rollover fund and unclaimed money Contribution surcharge tax Restrictions on when you can access your benefits page 24 The following matters are now legislation Proposed changes page 26 Resolving disputes and complaints If you d like more information Questions? S YOUR FINANCIAL POSITION
A message from the Trustee Office Dear Member We are pleased to bring you the 2015 Annual Report for the IAG & NRMA Superannuation Plan. The past year has seen the recent changes in superannuation implemented within the Plan. Here is an overview of what has happened in the Plan over the year: S The Plan s investment performance The Plan s investment options produced healthy returns for the 2015 financial year despite negative returns for all but the Cash options in the June quarter. The Plan s largest option, the MySuper option, delivered a net investment return of 9.4% for the full financial year. Full details about the performance of each of the Plan s investment options starts on page 8 of this report. Remember you can see up to date information on the Plan website on the net investment returns under Benefits & investments. An online rollover tool The Plan has introduced an online rollover tool to enable you to consolidate any old super quickly and easily using our online function. It s a simple three step process: 1. Sign into your account at www.iagnrma.superfacts.com 2. Go to Start online rollover, select quick links on the far right of the Your Super page 3. Enter the name of your previous fund to search by fund name or search by ABN, then select that super fund. Provide your member number in your previous super fund and specify whether you want to make a full or partial rollover and confirm your request. You ll receive a confirmation and receipt number, so you know your request has been received. That s it, it s done! We ll confirm when your super has been rolled into your IAG & NRMA Superannuation Plan account. Please check with your previous fund if they charge any exit fees or if a rollover will impact any insurance cover. Concessional contribution limits The government s concessional contribution limits have remained unchanged for the 2015/16 financial year. If you turn 50 on or before 30 June 2016, the concessional limit for you is $35,000. For members under 50, the limit is $30,000 for the 2015/16 financial year. IAG & NRMA Superannuation Plan your Plan for life As a member of the IAG & NRMA Superannuation Plan, you have a Plan for life. If you change employer, you can stay with the Plan and have your new employer pay your superannuation contributions in to your Plan account. Download the Reserved member brochure, Leaving employment? Stay with the IAG & NRMA Superannuation Plan from the Plan website for more information, or call the Plan Helpline. The Plan offers allocated pensions, so we re here to help when you re ready to retire. Alternatively, you can also start a Transition to Retirement Income Stream, if you re over your preservation age and looking to ease into retirement. Download a copy of the Retirement Income Stream PDS from the Plan website to find out more, or call the Plan Helpline. Recent changes to insurance From 1 July 2015 the Funeral Benefit within the Plan increased to $15,000. This was the result of listening to our members and adjusting our benefits to better suit your needs. The cost of insurance for Death & Total & Permanent Disablement also decreased at this time. The Salary Continuance Insurance is now 85% of salary (75% of salary payable and 10% payable to super), which remains well above industry standard. The premiums did increase for Salary Continuance, however this increase was lower than increases that have been felt across the superannuation industry. YOUR FINANCIAL POSITION 1 IAG & NRMA Superannuation Plan Annual Report 2015
A non-lapsing death benefit nomination The Plan offers you the option of making a non-lapsing death benefit nomination. A non-lapsing death benefit nomination is binding on the Trustee to the extent that the nomination is in favour of one or more of your dependants or your legal personal representative. The Trustee is bound to act in accordance with a properly completed and signed non-lapsing death benefit nomination. However, if a portion of your death benefit is unable to be paid in accordance with your instructions (because the nominated person died before you or they cease to be a dependant) then that portion of your death benefit will be paid to your legal personal representative. If you nominate your legal personal representative, you should ensure that you have a valid, up-to-date will. To access the non-lapsing death benefit nomination form, please visit our website www.iagnrma.superfacts.com Access your super on the move To ensure you can access your super details even when you re on the move, you can view your account on your smart phone via our mobile friendly website. You can check your super balance and benefits, your personal details, investments contributions and your transaction history. Scan below, using your QR reader or go to www.iagnrma.superfacts.com on your phone or tablet. Educational webinars A number of short, easy to understand educational webinars are now available on the Plan website. In particular, Understanding market volatility focuses on how your super is affected by the share market, explaining the reasons behind market fluctuations and the impact on various asset types. There is also a short webinar which focuses on insurance, Why personal insurance? Other topics cover contribution strategies and transition to retirement pensions. You ll find the webinars under the Webinars & planning tools tab on the website. If you have any questions Please take time to read this Annual Report. It contains information about the Plan s investment performance for the year to 30 June 2015, the Plan s financial situation and an overview of what s new in super. If you have any questions about this Annual Report or super in general please call the Plan Helpline on 1300 424 676 to have your questions answered. Further information is also available on our website www.iagnrma.superfacts.com Sincerely, Troy Maguire Senior Manager, Superannuation IAG & NRMA Superannuation Pty Limited S YOUR 2 IAG & NRMA Superannuation Plan Annual Report 2015
The Plan at a glance This section provides a brief summary of the operations of the Plan during the year. Further details are set out later in the report. Plan facts and figures Plan membership as at 30 June 2015 Accumulation 9,437 Defined Benefit 351 Lifetime Pension 160 Reserved 5,798 Retirement Income Stream 150 Total 15,896 Net Plan assets as at 30 June 2015 were in excess of $1.7 billion. About your Plan In this report, a reference to: IAG means a company in the Insurance Australia Group; NRMA means the National Roads and Motorists Association Limited and its related bodies corporate. The Plan has two sub-plans: The IAG sub-plan for current and former employees and officers (and their eligible spouses) of companies in the Insurance Australia Group, and The NRMA sub-plan for current and former employees and officers (and their eligible spouses) of the National Roads and Motorists Association and its related bodies corporate. Generally, if you joined the Plan after 1 January 1999, you belong to the Accumulation section of the Plan. You will also be in the Accumulation section if you chose to transfer to this section. Otherwise, you belong to the Defined Benefits section. Some members who transferred from the SGIC Staff Superannuation Fund, the RACV Superannuation Fund, the CGU Superannuation Fund or the CGU-VACC Pension Fund are also Defined. In this Annual Report, unless noted otherwise, references to Accumulation members generally cover Reserved members, Retained members, Spouse members and Retirement Income Stream members. Separate investment performance information is provided for Retirement Income Stream members. It is important to understand that, while past performance is useful as a guide in reviewing the historical investment returns, it should not be relied upon as indicative of future performance and does not guarantee such performance. Investment returns The following is a summary of the net investment returns for the year as well as the average returns over the last five years and the last ten years (or last eight years for Retirement Income Streams). Accumulation members Investment option Annual net investment return* for the year ended 30 June 2015 (%) Compound average annual rate of net investment return* over the last five years (% p.a.) Compound average annual rate of net investment return* over the last ten years (% p.a.) Australian Shares 3.7 7.4 5.8 Shares 12.1 10.9 7.0 MySuper 9.4 9.3 6.1 Balanced 8.2 8.0 5.9 Conservative 6.9 6.4 5.5 Cash 2.2 3.1 3.9 * The net investment returns above are shown after the investment fee (which covers all investment expenses) and taxes on investment income. Retirement Income Stream Investment option Annual net investment return* for the year ended 30 June 2015 (%) Compound average annual rate of net investment return* over the last five years (% p.a.) Compound average annual rate of net investment return* over the last eight years** (% p.a.) Pension Growth 10.2 10.4 4.7 Pension Balanced 8.8 9.0 5.0 Pension Conservative 7.5 7.2 5.5 Pension Cash 2.5 3.5 4.2 * The net investment returns above are shown after the investment fee (which covers all investment expenses) and allowing for the effect of tax. ** These options were introduced on 1 July 2007, so longer term performance is only available since that date. Defined Credited to member accounts* Earned on Plan assets Annual net investment return* for the year ended 30 June 2015 (%) Compound average annual rate of net investment return* over the last five years (% p.a.) Compound average annual rate of net investment return* over the last ten years (% p.a.) 12.6 6.6 6.6 9.4 9.3 6.1 * This return is the effective rate of net return for compulsory account balances of Defined. Refer page 16 for further information. S YOUR 3 IAG & NRMA Superannuation Plan Annual Report 2015
Your Plan s investments Market round-up The 2015 financial year produced reasonable investment returns, although not as high as the previous two years. The return on the Australian share market for the year was a modest 5.6% (pre fees and tax). The international shares sector was the standout asset class, delivering 25.2%, buoyed by the rise in overseas currencies against the Australian dollar. Property also generated good returns. The fall in interest rates lifted the return on Australian fixed interest investments to 5.6%. However, the return on cash was 2.6%, reflecting the current low interest rate environment. The Reserve Bank reduced the official cash rate twice during the year. It now stands at the historically low level of 2.0% per annum. The Plan s MySuper option is the largest investment option and the default option for accumulation members who do not make a specific investment choice. The MySuper option delivered a net investment return of 9.4% for the year after investment fees and taxes. The corresponding returns for the Balanced and Conservative options, which have less exposure to shares and property than the MySuper option, were 8.2% and 6.9%, respectively. The Cash option returned 2.2% net of fees and taxes reflecting the low interest rates applying over the year. The Plan s Shares and Australian Shares options delivered net investment returns of 12.1% and 3.7%, respectively. Details of longer term returns for all the Plan s superannuation and pension options are included on page 8 in this report. A combination of uncertainty around Greece s debt restructuring and its future within the Eurozone plus volatility of the Chinese share market and the response of the Chinese authorities have temporarily pushed aside consideration of longer term prospects for economic growth and monetary policy. Increases in US and UK interest rates that were expected during 2014/15 failed to materialise and are now forecast to start later this year or in early 2016. Inflation in major economies is below target ranges set by the central banks and deflation (i.e. falling prices) remains a risk. None of the major asset classes appears particularly attractive at the moment. Against this background, for the investment options that invest in multiple asset classes, the Plan has retained a small overweight position in international shares and to growth assets in general. Foreign currency exposure was brought back to the benchmark position during the year after the Australian dollar fell in value against other major currencies. The Plan provides members with a range of investment options to suit all levels of risk appetite. You can choose one or more of these investment options for your existing account balance and future contributions and can change these choices online at any time. However, before making any change to your investment choices, you should consider speaking to a licensed or appropriately qualified financial adviser. For further information about investment choices and for general advice, you can call the Plan Helpline on 1300 424 676. S YOUR 4 IAG & NRMA Superannuation Plan Annual Report 2015
Changes to the Plan s investment objectives and strategy Following its regular review of the investment objectives and strategies of each of the Plan s investment options, the Trustee has decided to make some changes, effective from 1 December 2015. The changes to the objectives reflect the Trustee s view that the current low return environment is likely to persist for some years making it less likely that the previous objectives will be achieved over that time. Please note that the objectives are not a forecast or guarantee of future performance. For the MySuper/Growth, Balanced and Conservative options, the opportunity has been taken to reduce the dependence on shares and fixed interest by broadening the property sector to include investments in infrastructure (e.g. ports, airports and toll roads) and to introduce a defensive alternatives sector that will concentrate on liquid investments that have a low correlation to both shares and fixed interest securities. These changes will be implemented over the next couple of years as suitable investment opportunities become available at a reasonable price. Members of the Plan will shortly receive further information on these changes. The Trustee regularly monitors each investment option s performance against its objective. There are different levels of investment risk associated with each of the Plan s investment options. Please refer to the Plan PDS or the Retirement Income Streams PDS and the relevant factsheets for more information. These documents and other Plan communications material will shortly be updated for the changes described above. You can download copies from the Plan website, www.iagnrma.superfacts.com or you can call the Plan Helpline on 1300 424 676. Although the Plan offers investment choice for members, the Trustee retains overall responsibility for the investment of the assets of the various options in line with their specific investment objectives. Members can choose the investment option/s that suit their individual needs and preferences. For defined benefit members, investment choice only applies in respect of any additional accumulation accounts in the Plan. How the Plan s investments are managed Specialist investment managers appointed by the Trustee invest in securities such as Australian and overseas shares, property trusts, infrastructure, fixed interest securities, cash and short-term securities or any other investments in line with their appointment. This can be done directly or through pooled funds. The Trustee, with the support of its asset consultants, monitors the activities and performance of all the external managers. S YOUR 5 IAG & NRMA Superannuation Plan Annual Report 2015
How the Plan s assets are invested This table shows the proportion of Plan s assets invested with each investment manager by asset class. Proportion of total assets as at 30 June Asset Class Investment Manager 30 June 2015 (%) 30 June 2014 (%) Cash IAGAM Cash Management Trust 10.39 11.19 Sub-total 10.39 11.19 Fixed Interest IAGAM Fixed Interest Trust 24.02 22.76 Sub-total 24.02 22.76 Australian Shares Alleron 5.10 5.52 Northcape Small Cap 2.00 2.34 Dimensional Australian Value Trust 4.94 5.37 Vinva 13.68 14.68 Sub-total 25.72 27.91 Overseas Shares World Equity Pooled Superannuation Trust 1,2 21.43 20.01 Generation IM Global Equity Fund 3.08 2.65 Investec Global Emerging Markets Equity Fund 2.73 2.66 Wells Fargo Emerging Markets Equity Fund 1.56 1.55 Sub-total 28.80 26.87 Property Invesco Global Property 3 3.65 3.77 APPF Retail Unlisted Property Trust 1.43 1.49 APPF Industrial Unlisted Property Trust 0.96 0.96 GPT Wholesale Office Fund 1.43 1.47 Sub-total 7.47 7.69 Alternative Investments IAGAM Sustainable Investments Trust 4 0.44 0.84 IAGAM Private Equity Trust 5 0.27 0.31 AQR Wholesale Delta Fund 0.99 1.02 GMO Systematic Global Macro Fund 1.33 1.41 H2 Special Opportunities Fund 0.57 0.00 Sub-total 3.60 3.58 Total 100.00 100.00 Notes: 1. On 20 August 2014 Equity Trustees Limited replaced IAGAM as the trustee of the World Equity Trust, which is now known as the World Equity Pooled Superannuation Trust. 2. The Trustee of the World Equity Pooled Superannuation Trust has appointed specialist international share managers to manage the trust s assets. These managers are: Arrowstreet Capital, T. Rowe Price Global Equity Fund and MFS. 3. Investment manager engaged by the Trustee to select and manage an investment portfolio across a range of global listed property investments. 4. The IAGAM Sustainable Investments Trust is invested in the Generation Climate Solutions Fund. 5. Horsley Bridge Partners has been appointed to manage the assets of the IAGAM Private Equity Trust. S YOUR 6 IAG & NRMA Superannuation Plan Annual Report 2015
Large assets of the Plan Part of the Plan s assets are invested under mandates by investment managers appointed by the Trustee. The securities covered by these mandates remain in the Trustee s name. No individual security under the mandates represented more than 5% of the Plan s total assets. The remaining assets of the Plan primarily consist of units in unit trusts or other pooled funds. The Plan s holdings in the World Equity Pooled Superannuation Trust, the IAGAM Cash Management Trust, the IAGAM Fixed Interest Trust and the Dimensional Australian Value Trust each exceeded 5% of the Plan s total assets. Use of derivatives Derivatives are special contracts e.g. futures and forward exchange rate agreements which can be used to manage the risk of changes in the future value of investments. The investment managers are permitted to use derivatives in the management of the Plan assets. These instruments are typically used for the following purposes: hedging; seeking to protect against adverse changes in the market value of assets and movements in currency exchange rates to obtain prices that may not be available if assets are bought directly to reduce the costs of buying and selling assets directly to change the term of a fixed interest security or portfolio to manage cash flows efficiently to manage asset weightings for the different asset classes. Derivatives may not be used for speculative purposes The Plan held derivatives during the year ended 30 June 2015 in respect of its Australian shares, overseas shares and fixed interest investments. The Plan s exposure to derivatives is limited to 20% of the market value of the assets of the Plan. Within each asset class, exposure to derivatives is limited to 20% of the market value of the asset class. The Plan also holds derivatives to hedge part of the currency exposure in relation to its investment in international shares and alternative investments. Derivatives are not used for speculative purposes. Plan Reserves The Trustee has established an Operational Risk Reserve for the Plan as required by superannuation legislation and the prudential standards. The purpose of the Operational Risk Reserve is to provide funding to meet the costs associated with rectifying any loss caused by an operational risk event. The Trustee has a policy in relation to the establishment, management, investment, use of and, if required, replenishment of the Operational Risk Reserve. The Trustee has set a target funding level for the Operation Risk Reserve of 0.22% of Plan assets. The Operational Risk Reserve is invested in the Plan s Cash investment option to minimise the likelihood of negative investment returns. The Trustee commenced the Reserve from 1 July 2012 with an allocation from investment earnings with the aim of achieving the target funding level by 30 June 2016. This target funding level has been reached. The reserve levels for 30 June 2015 and preceding years are shown below. As at 30 June Reserve Balance ($,000) % of assets 2012 0 0.00 2013 332 0.02 2014 1,806 0.12 2015 3,864 0.23 S YOUR 7 IAG & NRMA Superannuation Plan Annual Report 2015
Investment information for Accumulation accounts and Retirement Your benefit For Accumulation members, your super benefit is your member account balance. For Retirement Income Stream members, it is your retirement income stream account balance. Your account is invested (after allowing for tax and expenses) according to your choice of investment option(s). So the amount you ultimately receive is directly linked to the investment performance of your selected option or mix of options. For Defined, your additional accumulation accounts are invested according to your choice of investment option(s). Your investment purchases units Your account balance is applied to buy what are known as units in your chosen investment option(s). The number of units bought depends on the unit price at the relevant time. For example, if your account balance is $1,000 and the unit price of your selected investment option is $1.00 at that time, then 1,000 units would be bought on your behalf. Alternatively, if the unit price was $1.25 then 800 units would be bought. Recent investment returns Accumulation accounts The following table shows the net investment returns for each investment option for the past five years ended 30 June plus the average over that period. The annual net investment return is earnings after taxes and investment related fees and expenses. Unit prices are generally calculated daily and will go up and down as investment markets shift, affecting the value of your units and consequently the value of your investment. The unit price for each option also takes into account tax, investment related fees and other expenses. (Investment earnings in the pension investment options are not taxed.) The value of your account balance at any time is simply the number of units you have multiplied by their unit price at that time. Net investment returns on your chosen investment options (which may be positive or negative) will be reflected via changes in unit prices. If the net investment returns for the option are positive, the unit price will increase. If the net investment returns are negative (a loss), the unit price will decrease. Daily unit prices are posted on the Plan s website. Retirement The following table shows the net investment returns for each pension investment option available to retirement income stream members for the past five years ended 30 June plus the average over that period. The annual net investment return is earnings after investment related fees and expenses. No tax is levied on allocated pension accounts. However, these accounts still received the benefit of franking credits attached to dividends on Australian shares. S YOUR Investment option Net investment return (%) Year ended 30 June Australian Shares 2011 2012 2013 2014 2015 Compound average rate of net return over the past five years (% p.a.) 9.4-7.4 17.1 16.0 3.7 7.4 Shares 9.6-5.3 21.8 18.3 12.1 10.9 MySuper 8.6 0.5 14.2 14.2 9.4 9.3 Balanced 7.4 2.5 10.8 11.3 8.2 8.0 Conservative 5.8 4.9 6.7 7.7 6.9 6.4 Cash 4.3 3.9 2.8 2.3 2.2 3.1 Investment option Net investment return (%) Year ended 30 June 2011 2012 2013 2014 2015 Pension Growth Pension Balanced Pension Conservative Compound average rate of net return over the past five years (% p.a.) 9.5 1.0 16.1 16.0 10.2 10.4 8.2 3.0 12.2 12.7 8.8 9.0 6.5 5.7 7.7 8.7 7.5 7.2 Pension Cash 4.8 4.5 3.2 2.7 2.5 3.5 Investment returns for an investment option may be positive or negative. The value of your investment depends on the performance of your chosen option(s). Each option bears a different level of risk, depending on the mix of asset classes that make up the portfolio. More information about the associated risks and allocation of asset classes for each option are detailed on the following pages of this report. 8 IAG & NRMA Superannuation Plan Annual Report 2015
Your investment options in detail Information in this section applies to Accumulation * Each of the Plan s investment options has a specific investment objective and strategy set by the Trustee. The objectives are not a forecast or guarantee of future performance. Each option has a different risk profile and the Trustee s aim is to achieve the best possible returns relative to the level of risk associated with investing in that option. Following its regular review of the investment objectives and strategies of each of the Plan s investment options, the Trustee has decided to make some changes, effective from 1 December 2015. The changes to the objectives reflect the Trustee s view that the current low return environment is likely to persist for some years making it less likely that the previous objectives will be achieved over that time. Please note that the objectives are not a forecast or guarantee of future performance. The benchmark asset allocation reflects the strategy for each option. The benchmark asset allocation is the proportion of that option that would ideally be invested in each asset class if the Trustee had no particular view that one asset class was likely to outperform any other asset class. However, within the ranges specified in this Annual Report, the Trustee may decide to invest more than the target allocation in an asset class it expects to outperform and less in one it expects to underperform. The new benchmark asset allocations to apply from 1 December 2015 will not be implemented immediately, but will be phased in over time as suitable investment opportunities become available at a reasonable price. The aim is to maintain the asset allocations for each investment option within the ranges stated in this Annual Report. Nevertheless, from time to time, market movements and/or cash flows into or out of an option may cause the actual allocation temporarily to fall outside these ranges. This will normally be addressed at the next available rebalancing opportunity. The investment returns for any option fluctuate depending on the volatility of investment markets and the performance of the underlying asset classes. The performance of each asset type is measured against a benchmark set by the Trustee which reviews this performance regularly. When considering the following information, please note that past performance for each investment option should not be relied upon as indicative of future performance and does not guarantee such performance. * Retirement Income Stream members can select from the Pension Growth, Pension Balanced, Pension Conservative and Pension Cash Options. S YOUR 9 IAG & NRMA Superannuation Plan Annual Report 2015
Australian Shares Option Strategy Aims to invest 100% of assets in Australian shares (apart from a small cash holding). Investment objective This option aims to achieve a net investment return that matches the return on the S&P/ASX 300 Accumulation Index over rolling three year periods*. * The objective prior to 1 December 2015 was to achieve a net investment return of at least 5% above inflation over rolling 10 year periods. Level of risk very high Likelihood of a loss in any one year period is approximately six in twenty. Because shares are market driven investments which respond quickly to changes in market conditions, shares are highly volatile and investors can expect performance to show periods of significantly high growth, as well as periods of poor or even negative returns. Over a longer period of time, shares generally can be expected to produce higher returns than any other asset class. The performance of the Australian Shares Option is measured against a benchmark portfolio, which consists of the asset allocation as shown below. Asset class Benchmark % Range % Australian shares 100 90 100 Cash 0 0 10 Where the assets were invested as at 30 June 2015: Australian shares 97.7% Cash 2.3% As at 30 June 2015, the Australian Shares Option had investment assets of $42.9M. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Net investment return (% p.a.) 2011 9.4 2012-7.4 2013 17.1 2014 16.0 2015 3.7 Five year compound average net investment return 7.4 S YOUR 10 IAG & NRMA Superannuation Plan Annual Report 2015
Shares Option Strategy Aims to invest approximately half the assets in Australian shares and half in overseas shares (apart from a small cash holding). By combining overseas shares with Australian shares, this option provides greater diversification across countries and industries than the Australian Shares Option. Investment objective This option aims to achieve a net investment return that matches the benchmark return over rolling three year periods*. The benchmark return will be calculated using the S&P/ASX 300 Accumulation Index (50%) and the MSCI World ex Australia (net dividends reinvested) in AUD (50%). * The objective prior to 1 December 2015 was to achieve a net investment return of at least 5% above inflation over rolling 10 year periods. Level of risk very high Likelihood of a loss in any one year period is approximately six in twenty. Because shares are market driven investments which respond quickly to changes in market conditions, shares are highly volatile and investors can expect performance to show periods of significantly high growth, as well as periods of poor or even negative returns. Over a longer period of time, shares generally can be expected to produce higher returns than any other asset class. Exposure to overseas shares means that there is also a currency risk although the Trustee has chosen to hedge part of this risk. The performance of the Shares Option is measured against a benchmark portfolio, which consists of the asset allocation as shown below. The Trustee may vary the actual asset allocation at any time either up or down within the below ranges. Asset class Benchmark % Range % Australian shares 50 40 60 Overseas shares 50 40 60 Cash 0 0 10 Where the assets were invested as at 30 June 2015: Australian shares 45.7% Overseas shares 54.1% Cash 0.2% As at 30 June 2015, the Shares Option had investment assets of $134.7M. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Net investment return (% p.a.) 2011 9.6 2012-5.3 2013 21.8 2014 18.3 2015 12.1 Five year compound average net investment return 10.9 S YOUR 11 IAG & NRMA Superannuation Plan Annual Report 2015
MySuper and Pension Growth Options The MySuper Option was formerly known as the Growth Option. Where the assets were invested as at 30 June 2015: Strategy Aims to invest the majority of the portfolio (70%) in growth assets, such as Australian and overseas shares and property trusts, and the remaining (30%) in less volatile assets such as fixed interest and cash. Investment objective These options aim to achieve a net investment return of at least 3.0% p.a. above inflation (as measured by the Consumer Price Index) over rolling ten year periods*. Whilst both the MySuper and Pension Growth Options are invested in the same pool of assets, returns will differ between them because earnings in the Pension Growth Option are not taxed. * The objective prior to 1 December 2015 was to achieve a net investment return of at least 4% p.a. above inflation. Level of risk high Likelihood of a loss in any one year period is approximately five in twenty. While a large portion of the assets is invested in the more volatile share markets, this is partially offset by the stability of the fixed interest and cash components of the portfolio. For this reason, some fluctuation from year to year can be expected. However this fluctuation is not expected to be as great as for the Australian Shares Option and the Shares Option. The performance of the MySuper Option and Pension Growth Option are measured against a benchmark portfolio, which consists of the asset allocation shown below. The Trustee may vary the actual asset allocation at any time either up or down within the below ranges. The revised asset allocations below applying from 1 December 2015 will be implemented over the next couple of years as suitable investment opportunities become available at a reasonable price. Asset class Asset Allocation prior to 1 December 2015 Revised Asset Allocation from 1 December 2015 Benchmark % Range % Benchmark % Range % Australian Shares 30 20-40 25 15-40 Overseas Shares 25 15-35 25 15-40 Property & Infrastructure * 10 0-20 10 0-20 Growth Alternatives 5 0-10 10 0-20 Defensive Alternatives n/a n/a 10 0-30 Fixed Interest 25 15-35 15 5-35 Cash 5 0-15 5 0-20 * This sector is currently a Property only sector. Australian shares 25.2% Overseas shares 31.6% Property 9.6% Alternatives 5.1% Fixed interest 24.7% Cash 3.8% As at 30 June 2015, these options had investment assets of, in total, $1,181.2M. This includes the assets in respect of Defined as explained on page 16. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Net investment return (% p.a.) MySuper Option Pension Growth Option 2011 8.6 9.5 2012 0.5 1.0 2013 14.2 16.1 2014 14.2 16.0 2015 9.4 10.2 Five year compound average net investment return 9.3 10.4 For Accumulation members, the MySuper Option is also the default option. This means that this option will apply to your superannuation investment if you do not choose an investment option. The Trustee has chosen this option as the default option because the Trustee views superannuation as a long-term investment. However, it s important that you individually assess your own situation and retirement planning strategy (for example, if you are near to retirement age), as the default option may not be appropriate for you. You are encouraged to make your own choice between the available options and to seek professional advice. S YOUR 12 IAG & NRMA Superannuation Plan Annual Report 2015
Balanced and Pension Balanced Options Strategy Aims to have 50% of the portfolio in growth assets which will participate in the higher returns expected from shares, property and alternative assets but will be cushioned from the associated high volatility by an equal allocation (50%) to defensive assets. Investment objective These options aim to achieve a net investment return of a least 2.0% p.a. above inflation (as measured by the Consumer Price Index) over rolling five year periods*. Whilst both the Balanced Option and the Pension Balanced Option are invested in the same pool of assets, returns will differ between them because earnings in the Pension Balanced Option are not taxed. * The objective prior to 1 December 2015 was to achieve a net investment return of at least 3% p.a. above inflation. Level of risk medium to high Likelihood of a loss in any one year period is approximately four in twenty. With greater levels of diversification and reduced risk, these options are not expected to experience as high a level of year-onyear volatility in investment returns as the Australian Shares Option, Shares Option or MySuper Option. The performance of the Balanced Option and Pension Balanced Option are measured against a benchmark portfolio, which consists of the asset allocation as shown below. The Trustee may vary the actual asset allocation at any time either up or down within the below ranges. The revised asset allocations below applying from 1 December 2015 will be implemented over the next couple of years as suitable investment opportunities become available at a reasonable price. Asset class Asset Allocation prior to 1 December 2015 Revised Asset Allocation from 1 December 2015 Benchmark % Range % Benchmark % Range % Australian Shares 23 15-35 18 15-35 Overseas Shares 17 5-25 18 15-35 Property & Infrastructure * 7.5 0-10 7.5 0-15 Growth Alternatives 2.5 0-10 6.5 0-15 Defensive Alternatives n/a n/a 15 0-25 Fixed Interest 35 25-55 20 10-55 Cash 15 0-30 15 0-30 * This sector is currently a Property only sector. Where the assets were invested as at 30 June 2015: Australian Shares 19.6% Overseas Shares 22.1% Property 6.5% Alternatives 2.2% Fixed Interest 39.8% Cash 9.8% As at 30 June 2015, these options had investment assets of, in total, $160.5M. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Net investment return (% p.a.) Balanced Option Pension Balanced Option 2011 7.4 8.2 2012 2.5 3.0 2013 10.8 12.2 2014 11.3 12.7 2015 8.2 8.8 Five year compound average net investment return 8.0 9.0 S YOUR 13 IAG & NRMA Superannuation Plan Annual Report 2015
Conservative and Pension Conservative Options Strategy Aims to invest mainly in fixed interest bonds and cash, which are stable investments producing a more predictable return than the Australian Shares, Shares, MySuper and Balanced Options in the longer term. The growth component of this portfolio is achieved by a relatively small investment in shares and property. Investment objective These options aim to achieve a net investment return of at least 1.0% p.a. above inflation (as measured by the Consumer Price Index) over rolling three year periods*. Whilst both the Conservative Option and the Pension Conservative Option are invested in the same pool of assets, returns will differ between them because earnings in the Pension Conservative Option are not taxed. * The objective prior to 1 December 2015 was to achieve a net investment return of at least 2% p.a. above inflation. Level of risk medium to low Likelihood of a loss in any one year period is approximately two in twenty. Investment returns are expected to remain more stable in the short-term than the returns of all the other options except the Cash Option. The performance of the Conservative Option and Pension Conservative Option are measured against a benchmark portfolio, which consists of the asset allocation as shown below. The Trustee may vary the actual asset allocation at any time either up or down within the below ranges. The revised asset allocations below applying from 1 December 2015 will be implemented over the next couple of years as suitable investment opportunities become available at a reasonable price. Asset class Asset Allocation prior to 1 December 2015 Revised Asset Allocation from 1 December 2015 Benchmark % Range % Benchmark % Range % Australian Shares 10 0-20 6.5 0-20 Overseas Shares 10 0-20 6.5 0-20 Property & Infrastructure * 5 0-10 7 0-15 Growth Alternatives 0 0 5 0-15 Defensive Alternatives n/a n/a 25 0-35 Fixed Interest 45 25-65 30 15-65 Cash 30 10-50 20 0-50 * This sector is currently a Property only sector. Where the assets were invested as at 30 June 2015: Australian Shares 8.0% Overseas Shares 12.9% Property 4.5% Fixed Interest 54.7% Cash 19.9% As at 30 June 2015, these options had investment assets of, in total, $101.8M. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Net investment return (% p.a.) Conservative Option Pension Conservative Option 2011 5.8 6.5 2012 4.9 5.7 2013 6.7 7.7 2014 7.7 8.7 2015 6.9 7.5 Five year compound average net investment return 6.4 7.2 S YOUR 14 IAG & NRMA Superannuation Plan Annual Report 2015
Cash and Pension Cash Options Strategy Invests solely in deposits in banks, bills of exchange, promissory notes and other short term securities. Cash is the most stable investment with very little risk of negative returns over the short term. However, the long term performance of cash has historically been lower than returns on the other investment options available under the Plan, particularly during periods of high inflation. Investment objective These options aim to provide capital stability and capital preservation by matching the return on the cash benchmark as measured by the S&P/ASX Bank Bill Index after allowance for tax. Whilst both the Cash Option and the Pension Cash Options are invested in the same pool of assets, returns will differ between them because earnings in the Pension Cash Option are not taxed. Level of risk low Likelihood of a loss in any one year period is very small, less than one in twenty. Investment returns are expected to remain more stable than the other options over both the short and long term. As this option is invested only in cash, its performance will be measured by the S&P/ASX Bank Bill Index, which is the index for cash. Asset class Benchmark % Range % Cash 100 100 Where the assets were invested as at 30 June 2015: Cash 100% As at 30 June 2015, these options had investment assets of, in total, $102.2M. Recent investment returns The annual net investment returns for the last five years were: Year ending 30 June Net investment return (% p.a.) Cash Option Pension Cash Option 2011 4.3 4.8 2012 3.9 4.5 2013 2.8 3.2 2014 2.3 2.7 2015 2.2 2.5 Five year compound average net investment return 3.1 3.5 S YOUR 15 IAG & NRMA Superannuation Plan Annual Report 2015
Measuring performance Investment performance benchmarks The investments are reviewed to monitor how they are performing against investment objectives. The following are the benchmarks used by the Trustee to measure the performance of each asset class. Asset class Australian shares Overseas shares Property and Infrastructure Alternatives Fixed interest Cash Performance benchmark S&P/ASX 300 Accumulation Index MSCI World (ex Australia) Accumulation Index with net dividends reinvested (50% hedged) Composite benchmark consisting of 50% of the FTSE EPRA/NAREIT Global REIT Index (100% hedged) and 50% of the Mercer IPD Unlisted Property Index Composite benchmark consisting of 50% of the S&P/ASX Bank Bill Index and 50% of the MSCI World (ex Australia) Accumulation Index with net dividends reinvested (unhedged) S&P/ASX Australia Fixed Interest 0+ Index S&P/ASX Bank Bill Index Investment information for Defined Information in this section applies to Defined As Defined, some of your benefits may be based on your salary and period of service, and some on your account balances in the Plan. The compulsory account balances of Defined are credited with a declared earning rate. The Trustee has chosen to invest the assets supporting the entitlements of Defined in the MySuper Option refer page 12. The Trustee has generally determined the declared earning rate by averaging actual returns over three years. The declared earning rate of 12.6% for the year to 30 June 2015 represents the average of the return for the last three years. This approach is known as smoothing and results in less fluctuation in the rate of interest being applied to members accounts than would apply if the actual earnings were applied each year. However, over longer periods, the difference in overall result is substantially reduced. Any additional voluntary account balances are invested in the Cash Option or such other option as chosen by the member. Prior to 1 June 2011, the smoothed rate also applied to these account balances. S YOUR 16 IAG & NRMA Superannuation Plan Annual Report 2015
Comparison of annual effective rates of net return and declared rates 1990 2015 The Plan s annual net investment returns and declared earning rates since 1990 for account balances of Defined Benefit members are as follows: Year ended 30 June Net investment return (% p.a.) Declared earning rate (% p.a.) 1990 11.30 18.10 1991 17.30 12.50 1992 21.40 7.50 1993 18.80 11.30 1994 10.80 13.50 1995-0.50 15.60 1996 10.20 10.20 1997 21.90 8.30 1998 11.70 7.00 1999 13.70 9.20 2000 15.00 15.00 2001 6.00 11.50 2002-5.10 5.30 2003-0.40 0.20 2004 13.60 2.70 2005 12.40 8.50 2006 15.60 13.90 2007 13.80 14.00 2008-11.30 6.00 2009-10.30 0.01 2010 11.10 0.01 2011 8.60 0.01 2012 0.50 3.70 2013 14.20 7.60 2014 14.20 9.40 2015 9.40 12.60 Five year compound average rate of return (% p.a.) Ten year compound average rate of return (% p.a.) Twenty year compound average rate of return (% p.a.) Twenty-six year compound average rate of return (% p.a.) Note: past performance is not an indicator of future performance 9.26 6.57 6.12 6.59 7.86 7.15 9.02 8.48 Defined leaving during the year For Defined leaving the Plan during the year, before a final earning rate is available, benefits are calculated using an interim rate. The Trustee sets interim rates each quarter. S YOUR 17 IAG & NRMA Superannuation Plan Annual Report 2015
The Plan s financial details The Plan s financial statements A summary of the Plan s audited accounts for the 2014 and 2015 years is shown below. Copies of the audited accounts and the auditor s report are available by contacting the Plan Helpline on 1300 424 676. Accounts as at 30 June Statement of change in net assets 2015 ($,000) 2014 ($,000) NET ASSETS AT START OF YEAR 1,510,185 1,329,086 Plus Contributions 122,865 105,401 Transfers from other funds 73,253 20,908 Insurance proceeds, rebates and other income 2,448 1,638 Investment income 51,534 47,407 Realised investment gains (losses) (23,009) 4,879 Unrealised investment gains (losses) 94,245 130,523 Total revenue 321,336 310,756 Less Benefits paid 101,208 93,209 Administration expenses 4,630 4,550 Insurance premiums 3,984 3,661 Contribution surcharge tax 2 Income tax expense 7,206 28,235 Total outflows 117,028 129,657 NET ASSETS AT END OF YEAR 1,714,493 1,510,185 Statement of net assets ASSETS 2015 ($,000) 2014 ($,000) Investments 1,720,090 1,515,822 Investment income receivable 7,026 13,083 Other receivables 228 301 Deferred tax asset 158 Total assets 1,727,344 1,529,364 Less LIABILITIES Benefits payable 704 Provisions for income tax 8,475 17,385 Derivatives contracts 1,779 9 Other (including share creditors) 1,893 1,785 Total liabilities 12,851 19,179 NET ASSETS AT END OF YEAR 1,714,493 1,510,185 S YOUR 18 IAG & NRMA Superannuation Plan Annual Report 2015
2015 Sub-plan reporting In accordance with the Plan s Trust Deed, from 1 December 2003, the Plan has been administered as two sub-plans, the IAG sub-plan and the NRMA sub-plan. The following secondary sub-plan report has been prepared for the financial year to 30 June 2015. Statement of change in net assets IAG sub-plan ($,000) NRMA sub-plan ($,000) NET ASSETS AT START OF YEAR 1,319,735 188,644 Transfers between sub-plans 3,179 (3,179) Transfer to Operational Risk Reserve (2,058) Plus Contributions 110,339 12,526 Transfers from other funds 69,172 4,081 Investment revenue and changes in net market value of investments 107,820 14,950 Insurance proceeds and rebates 2,313 135 Total revenue 289,644 31,692 Less Benefits paid 91,100 10,108 Administration expenses 4,168 462 Insurance premiums 3,574 410 Income tax expense 6,677 529 Total outflows 105,519 11,509 NET ASSETS AT END OF YEAR 1,504,981 205,648 Statement of net assets Total assets 1,515,800 207,284 Less Total liabilities 10,819 1,636 NET ASSETS AT END OF YEAR 1,504,981 205,648 The Plan s financial position As noted earlier, the Plan is administered as two sub-plans, the IAG sub-plan and the NRMA sub-plan, each with separate accounts. The Plan s actuary determines how much each employer needs to contribute to ensure that the respective sub-plans have sufficient assets to pay Defined Benefit entitlements in the future. The required level of employer contributions will vary over time depending on how the value of Defined entitlements compares with the assets attributed to each sub-plan to support those entitlements. The market value of the assets attributed to the IAG sub-plan as at 30 June 2015 covered 101.7% of the value of benefits that would have been paid to members registered in that sub-plan if they all left their employment with IAG on that day. For the NRMA sub-plan, the corresponding percentage coverage was 102.5%. The Trustee, together with the Plan s actuary, continues to carefully monitor the Plan s financial position on an ongoing basis. The Trustee confirms that employer contributions have been paid into the Plan as recommended by the actuary. S YOUR 19 IAG & NRMA Superannuation Plan Annual Report 2015
How your Plan is managed The Trustee The Trustee, IAG & NRMA Superannuation Pty Limited, manages the Plan. The Trustee Board normally has nine directors. Two directors are appointed by Insurance Australia Group Services Pty Limited. Two directors are appointed by National Roads and Motorists Association Limited. Four directors are elected by members of the Plan for a period of three years. One member representative director is elected by NRMA Road Service Patrols and three directors are elected by other employees who are members of the Plan. As at 30 June 2015, there was also one independent director, Michelle Tredenick, who was appointed by the other Trustee directors. The directors of the Trustee company as at 30 June 2015 were: Chair and Independent director Michelle Tredenick Company-appointed directors Melanie Willis NRMA Lisbeth Rankin NRMA Dennis Fox IAG David McClatchy IAG Member-representative directors Veronica Atley IAG Christopher Hutchinson IAG Nicholas Mowat NRMA Jonathan Street NRMA Road Service Patrol Changes to the Trustee over the year On 1 January 2015 Veronica Atley was appointed to the Trustee Board as a Member-representative director, following the resignation of Francis Costigan. On 26 March 2015 Ainsley Lee was appointed to the Trustee Board following Tom Mooney s resignation as a Companyappointed director. On 11 June 2015 Ainsley was subsequently replaced in this role by Melanie Willis. Meeting attendance During the year, five Board meetings were held, together with five meetings of the Audit Risk Management and Compliance Committee, five meetings of the Investment Committee and three meetings of the Renumeration Committee. Attendances were as follows: Board ARMCC Investment Committee Renumeration Committee Michelle Tredenick 4/5 - - - Dennis Fox 5/5-5/5 - David McClatchy 4/5 4/5-3/3 Lisbeth Rankin 5/5 5/5-3/3 Melanie Willis 1/1 - - - Christopher Hutchinson 4/5-4/5 - Nicholas Mowat 3/5 5/5-3/3 Veronica Atley 1/2 1/1 - - Jonathan Street 5/5-2/2 - Francis Costigan 3/3 - - - Ainsley Lee 1/1-1/2 - Tom Mooney 1/3-1/3 - As an Alternate Director, Donna Walker attended the September 2014 Board meeting in place of David McClatchy. Whilst an Alternate Director, Ainsley Lee attended the December 2014 Board meeting in place of Tom Mooney. S YOUR 20 IAG & NRMA Superannuation Plan Annual Report 2015
A chance to have your say As member-representative directors are elected by the members of the Plan, you get the chance to nominate and vote for representatives on the Trustee Board. The Plan has a specific set of rules applying to the appointment and removal of member directors and the filling of casual vacancies. These rules are available on the Plan website. Indemnity insurance The Trustee and its directors may be reimbursed and indemnified out of the Plan for all liabilities which they properly incur in administering the Plan including liabilities that arise as a result of an honest mistake. To protect the assets of the Plan against certain losses arising from the conduct of the Trustee and its directors and administrators, the Trustee has taken out trustee indemnity insurance cover. Trust Deed and Rules The Trust Deed and Rules may be amended from time to time. During the year to 30 June 2015, no changes were made to the Trust Deed and Rules. However, effective 1 July 2015 the Trust Deed and Rules were amended to reflect the reduction in the Salary Continuance Insurance benefit in relation to Accumulation members and the increase in Funeral Benefit for all members with insurance cover. Concessional tax treatment In order to qualify for concessional tax rates, funds have to be classified as complying superannuation funds under the income tax laws. To be eligible, funds must report regularly to APRA and demonstrate their compliance with superannuation laws and APRA guidelines. The Plan is classified as a complying superannuation fund and the Trustee is not aware of any matter that would cause the Plan to lose its complying status. Management assistance The Plan is administered by Mercer Outsourcing (Australia) Pty Ltd. The administrator performs such functions as determining member benefits, processing and allocating contributions and ensuring all membership data is correct. Contact details for Mercer can be found on page 27 of this report. The Plan s compliance status is monitored by the Plan s Compliance Manager. The Trustee is assisted by a number of professional organisations who provide advice and assistance in the administration of the Plan. These include: Administration, superannuation, actuarial and communication consulting Mercer Outsourcing (Australia) Pty Ltd ABN 83 068 908 912 Mercer Consulting (Australia) Pty Ltd ABN 55 153 168 140 Auditor KPMG ABN 51 194 660 183 Insurer MLC Limited ABN 90 000 000 402 Investment consulting JANA Investment Advisers Pty Ltd ABN 97 006 717 568 Solicitor mackenzie thomas ABN 89 052 422 965 Custodian JPMorgan ABN 43 074 112 011 S YOUR 21 IAG & NRMA Superannuation Plan Annual Report 2015
If you leave employment On ceasing employment with IAG or NRMA, if your account balance is $5,000 or more (or you commit to increasing your account balance to this amount), you have the option of leaving your super in the Plan. By leaving your super in the Plan you can continue death and total and permanent disablement insurance cover (on modified terms) and you can continue to benefit from the other features the Plan provides such as access to Retirement Income Stream products. Your super is an important investment and you are encouraged to consider carefully how you wish to receive it and/or where you want to invest it. Receiving your benefit as a lump sum If you leave employment before you reach your preservation age, part or all of your superannuation benefit will be subject to preservation and cannot be paid directly to you. If your account balance is $5,000 or more, you can remain a member of the IAG & NRMA Superannuation Plan in the Reserved category. If you don t give the Trustee instructions as to where to transfer your super, you will automatically remain a member of the Plan as a Reserved member. If your account balance is less than $5,000, see below under the heading Eligible Rollover Fund and unclaimed money. If you were an Accumulation member before becoming a Reserved member, you will continue in the same investment option(s). You can elect a new investment choice at any time. If you were a Defined Benefit member before becoming a Reserved member: the amount of your benefit represented by your additional accumulation account will remain invested in the same investment option(s), and the remainder of your benefit (your defined benefit entitlement) will be invested in the Cash option. As a Reserved member you may change your investment options at any time. Additionally, if you are a Reserved member and are now employed with another employer, by exercising your right to choose your super fund, you may be able to have your employer contribute to the IAG & NRMA Superannuation Plan. To do this, you must complete a Standard choice form and return this form to your new employer. Your new employer can contribute to the Plan via BPAY on the Plan website, www.iagnrma.superfacts.com or by completing the Employer remittance form and sending the Plan a cheque. These forms are available from the IAG & NRMA Superannuation Plan website or by calling the Plan Helpline on 1300 424 676. You can also make personal contributions (after-tax) to the Plan. These can be made using BPAY using your phone or internet banking facilities or by completing the Application to make lump sum contributions form and sending the Plan a cheque. As a Reserved member you can also continue to make rollovers of other superannuation monies into your account in the Plan. You can transfer your entitlement to another approved superannuation entity, including an eligible rollover fund, superannuation fund, deferred annuity, approved deposit fund, retirement savings account or allocated pension. See page 23 for details on preservation. Receiving your benefit as an allocated pension After you reach your preservation age (see next page) and provided your benefit in the Plan is at least $50,000, you can choose to receive your benefit from the Plan as an allocated pension. Please see the Plan s Retirement Income Stream Product Disclosure Statement (RIS PDS) for more information. You can download the PDS from the Plan website, www.iagnrma.superfacts.com or request a copy by calling the Plan Helpline on 1300 424 676. Receiving your benefit as a lifetime pension Certain categories of Defined may be entitled to a lifetime pension or to a deferred pension (a lifetime pension that commences at a future date) on ceasing employment. If this is the case, you will be informed about your pension options. Other members can request the Trustee to provide them with a pension in lieu of their lump sum entitlements. In this case, the terms of any pension offered are at the discretion of the Trustee in conjunction with advice from the Plan s actuary. Eligible rollover fund and unclaimed money If you do not tell the Trustee within 90 days how you want your benefit paid and your account balance in less than $5,000, it will automatically be transferred to an eligible rollover fund (ERF). An ERF is a fund approved by APRA to receive benefits payable to members who cannot be located, or who do not advise how and where their benefit is to be paid. The ERF currently used by the Trustee is SuperTrace Eligible Rollover Fund (SuperTrace). Its contact details are: The Senior Administrator SuperTrace Eligible Rollover Fund Locked Bag 5429 Parramatta NSW 2124 Tel: 1300 788 750 If you have reached Government pension age when you leave your employer and you have not given the Trustee instructions regarding the payment of your benefit from the Plan, and you cannot be contacted, your benefit may be treated as unclaimed money according to superannuation law. In this instance, your benefit will be placed with the Australian Tax Office. If your benefit is transferred to an ERF or treated as unclaimed money, you will no longer be a member of the Plan. However, you have rights to claim your benefit from the ERF or the relevant Government body as the case may be. S YOUR 22 IAG & NRMA Superannuation Plan Annual Report 2015
About SuperTrace Set out below is a summary of some of the more significant features of SuperTrace. The assets of SuperTrace are invested in an investment policy (the SuperTrace Policy) issued to Colonial Mutual Superannuation Pty Ltd by The Colonial Mutual Life Assurance Society Limited (CMLA). The SuperTrace Policy is invested solely in the Capital Stable Fund in CMLA s No. 2L Statutory Fund. There is no investment choice available to members. The investment objective of the Capital Stable Fund is to provide a reasonably high level of security and consistent returns. The investment strategy for the assets in the Capital Stable Fund is to invest in a broad range of assets with a majority in defensive investments. Investment returns are credited to members accounts as an annual crediting rate effective 30 June. The crediting rate is derived from the earning rate of the SuperTrace Policy which is net of tax on investment earnings, less any asset charge. The crediting rate is not guaranteed and the rate applied can be negative. The following fees and charges apply in SuperTrace: an asset charge of 1.95% p.a. (actual cost net of tax) is deducted from the earnings of SuperTrace prior to the crediting rate being declared SuperTrace is unable to accept contributions from members or their employers. However, rollovers from other superannuation funds are permitted. SuperTrace does not provide insurance cover. Should you wish to know more about SuperTrace, contact the SuperTrace Customer Service Representatives on 1300 788 750 between 8.30am and 6pm Monday to Friday (Eastern Standard Time) or www.supertrace.com.au for a copy of their Product Disclosure Statement. Contribution surcharge tax While the contribution surcharge tax was abolished with effect from 1 July 2005, it still has potential application in some cases (possibly where there has been an amended assessment or a transfer of benefits to the Plan with an outstanding surcharge liability). In such a case, the applicable surcharge will be levied against your benefit in the Plan. If you are an Accumulation member, this will usually be by deduction from your accounts. If you are a Defined Benefit member, if the Trustee is required to pay surcharge tax, the amount paid will be accrued, with interest at the Plan s net earning rate, and deducted from your benefit when it is paid. Restrictions on when you can access your benefits Preservation rules Superannuation is a long-term investment and the Federal Government has placed restrictions on when a person can have access to benefits. These restrictions are known as preservation. When you leave the Plan, some or all of your benefit may have to be preserved. This means you may not be able to take all your benefit (less tax) in cash when you leave the Plan. Your benefit statement shows how much of your benefit is preserved. Preserved benefits must generally be kept in the superannuation system until you: retire permanently at or after your preservation age (see below) leave your employer at or after age 60 reach age 65 become permanently incapacitated or suffer a terminal medical condition as defined by Superannuation Industry Supervision (SIS) law (see below), or die. Your preserved amount is shown on your benefit statement. Your preservation age depends on your date of birth according to the table below: Date of birth Your preservation age Before 1 July 1960 55 1 July 1960 to 30 June 1961 56 1 July 1961 to 30 June 1962 57 1 July 1962 to 30 June 1963 58 1 July 1963 to 30 June 1964 59 After 30 June 1964 60 Preservation of disablement benefits In some cases it is possible that, even though you may have qualified for a total and permanent disablement benefit from the Plan, the benefit may not be paid to you in cash until you have satisfied one of the above payment triggers. This is due to the difference in definitions between the terms total and permanent disablement, as defined in the Trust Deed (or the Plan s insurance policy) and permanent incapacity in Superannuation legislation. For preservation purposes, permanent incapacity, in relation to a member who has ceased to be gainfully employed, means ill-health (whether physical or mental), where the Trustee is reasonably satisfied that the member is unlikely, because of the ill-health, ever again to engage in gainful employment for which the member is reasonably qualified by education, training or experience. S YOUR 23 IAG & NRMA Superannuation Plan Annual Report 2015
Your 2015 super update Following several years of legislation requiring significant change to how super funds operate, the 2014/2015 year was somewhat quieter. However change never stops and we have listed below the major changes which have occurred since last year s annual report. There are also a number of changes which the Government still intends to progress. The Government has announced there will be no unexpected changes to superannuation legislation during the current Parliament, however there continues to be considerable debate in the media relating to superannuation tax with some organisations pushing for reductions in the tax benefits for high income earners and those with large superannuation balances. Tax may be a significant issue leading up to the next Federal election. The debate on gender inequality in the superannuation system is also starting to heat up and over the next year or so we may see moves which would encourage a greater build-up of super for women. Set out below is a summary of the key changes in super that have taken place since the last annual report. Summaries of other proposed Government changes are also listed. The following matters are now legislation: Superannuation Guarantee From 1 July 2014, the minimum employer superannuation contribution (Superannuation Guarantee) increased from 9.25% to 9.5% of Ordinary Time Earnings. The rate was previously planned to increase in steps to 12% by 1 July 2019. As indicated in last year s annual report, the Government was attempting to defer these increases by three years. However it eventually obtained Parliament s agreement to a six year deferral. Following this change, this rate is now scheduled to increase to 10% from 1 July 2021 with further increases each subsequent 1 July until the rate reaches 12% in 2025. The timetable for these increases is now: Income year Current legislated rate % 2015/16 9.5 2016/17 9.5 2017/18 9.5 2018/19 9.5 2019/20 9.5 2020/21 9.5 2021/22 10 2022/23 10.5 2023/24 11 2024/25 11.5 2025/26 12 Low Income Superannuation Contribution The Low Income Superannuation Contribution (LISC) currently applies to contributions made on or after 1 July 2012. The LSC is designed to offset the tax paid on superannuation guarantee contributions (at least at the 9% level) of individuals earning up to $37,000. After originally attempting to remove the LISC from 1 July 2013, the Government has now amended the legislation to remove the LISC for contributions made from 1 July 2017. It will continue to apply to contributions made prior to 1 July 2017. Excess non-concessional contributions As announced in the May 2014 Budget, the Government has introduced an option for individuals with excess non-concessional contributions made from 1 July 2013 to withdraw the excess contributions and associated earnings. If the withdrawal option is taken, the associated earnings are taxed at the individual s marginal tax rate. The associated earnings will be calculated using a standard formula set out in the legislation and will differ from the actual earnings in the Plan. Any excess non-concessional contributions which are not withdrawn are subject to excess nonconcessional contributions tax. Changes in age pension assets and income tests A number of changes to the income and assets tests for various social security pensions (including the Age pension) have been announced in the Federal Budgets in 2014 and 2015 and subsequently been passed by Parliament. From 1 January 2015, account-based superannuation income streams are subject to the deeming rules used for social security pension income tests. The deeming rules did not change for persons in receipt of a social security pension at 31 December 2014. Eligibility for grandfathering is lost if the Social Security pension a person was receiving at 31 December 2014 ceases, or if the account-based superannuation income stream held at 31 December 2014 ceases (e.g. on transfer to another provider). From 1 January 2016, the proportion of a defined benefit pension which is not counted towards the income test will be capped at 10% (announced in the May 2015 Federal Budget and applies to defined benefit pensions paid from corporate and public sector superannuation funds). From 1 January 2017, the Age pension asset test will be varied, resulting two main outcomes: The level of assets which can be held before they start to impact the Age pension has been increased which will result in an increase in the Age pension for some retirees; and The rate at which the Age pension is reduced for each $1,000 of additional assets has been increased from $1.50 to $3.00 per fortnight. This will significantly reduce the Age pension for some pensioners. The Government has decided not to proceed with several changes announced in 2014 relating to the reduction in the indexation of social security pensions and freezes in various thresholds. S YOUR 24 IAG & NRMA Superannuation Plan Annual Report 2015
Concessional contributions limit for 2015-16 The concessional (before tax) contribution limit for 2015-16 is $35,000 for those aged 50 or over at 30 June 2016. Concessional contributions include employer and salary sacrifice contributions. The cap for those aged under 50 is $30,000. These are the same levels as the previous year. Non-concessional contributions limit for 2015-16 The non-concessional (post tax) contribution limit for 2015-16 is $180,000. However a member under age 65 on 1 July 2015 can (unless they have already done so in the prior two years) generally bring forward two years of non-concessional contributions and make non-concessional contributions of up to $540,000 in 2015/16. This bring-forward provision will automatically be triggered if non-concessional contributions of more than $180,000 are made in 2015/16 and excess non-concessional contributions will only arise if total non-concessional contributions for 2015/16 and the next two years exceed $540,000. Disclosure using electronic means Recent changes announced by the Australian Securities and Investments Commission provide super funds with more opportunities to provide material on web-sites and by email rather than on paper. This should provide super funds with greater opportunities to develop more interesting and engaging material for members as well as saving considerable printing costs. The Plan has embraced these recent changes. This year we re offering our Pension members the ability to opt out of receiving paper statements, this will also be offered to accumulation members from 1 July 2016. This Annual Report will only be mailed to members who have elected to opt in to receive a hard copy and all members will receive the notification via email. This year, the Plan has also developed a new interactive summary of our Annual Report, which is available on the Plan website www.iagnrma.superfacts.com Terminal medical condition For some time, it has been possible for members who are suffering from a terminal medical condition (with a life expectancy of less than one year) to withdraw their superannuation benefit on a tax-free basis. The Government has amended the definition of terminal medical condition so that benefits can be withdrawn on a tax free basis where life expectancy is less than two years. This change will automatically apply in respect of allowing access to a member s account balance. However the conditions of the Plan s group insurance arrangements currently remain based on the one year life expectancy period. If you have a terminal medical condition and wish to claim your insured benefit you should contact the Helpline to discuss the options available. Transfers from the UK Following changes to UK legislation effective from April 2015, almost all Australian funds are no longer able to accept transfers from UK pension schemes. Further, where part or all of a member s benefit has previously been transferred from the UK, the changes in the UK may result in adverse UK tax consequences where benefits are transferred from one Australian fund to another. It is understood negotiations are occurring between Australia and the UK authorities to try and free up the transfer process again. Proposed changes: The main Government proposals still to be legislated at the time of going to press are: Trustee boards The Government has introduced legislation into parliament to improve the governance of superannuation funds by requiring at least one-third of the directors of a super fund trustee, including the Chairperson, to be independent. This change together with a number of related requirements are intended to be implemented over a three year transition period commencing from 1 July 2016. At this stage, consultation on the changes is continuing and the precise requirements to be considered independent have not been finalised. Lost super accounts A number of initiatives through the Australian Taxation Office (ATO) have already been put in place to help reunite members with lost super accounts. The account balance threshold for lost super to be transferred to the ATO has increased from $200 to $2,000 from 31 December 2012, and the Government has announced a further increase to $4,000 from 31 December 2015 and again to $6,000 from 31 December 2016. These accounts will receive interest equal to increases in the Consumer Price Index (CPI) after being transferred to the ATO. S YOUR 25 IAG & NRMA Superannuation Plan Annual Report 2015
More information Resolving disputes and complaints If you have a question about your benefits in the Plan, please contact the Plan Helpline on 1300 424 676. Most enquiries can be dealt with over the phone. If not, you may be asked to put your enquiry in writing and provide a contact address for the reply. Enquiries will generally be answered within 28 days. Complex queries should be addressed to: The Enquiries Officer IAG & NRMA Superannuation Pty Limited Level 26 388 George Street Sydney NSW 2000 If you have a query or a problem which is not resolved to your satisfaction, you should send a written complaint (including all relevant details) to: The Complaints Officer IAG & NRMA Superannuation Pty Limited Level 26 388 George Street Sydney NSW 2000 The matter will be investigated by the Complaints Officer and, where necessary, the Audit, Risk Management and Compliance Committee on behalf of the Trustee. You will be advised of the Trustee s decision as soon as possible and within 90 days of your complaint being received or within 30 days of the Trustee s decision, whichever is earlier. Please remember to include an address to which the response can be mailed. If the Trustee has not responded to your complaint within 90 days, or you are not satisfied with the Trustee s decision, you may be able to take the matter to a special government body called the Superannuation Complaints Tribunal (see right). While the Trustee has a process in place to deal with complaints from members, the Trustee s objective is to avoid complaints by providing a good level of service to members and, if complaints do occur, to resolve them to the satisfaction of all concerned. A copy of the Trustee s dispute resolution procedure is available on request from the Plan Helpline on 1300 424 676. Superanuation Complaints Tribunal The Tribunal is an independent body set up by the Federal Government to provide a low-cost, informal forum for resolving most superannuation disputes. Before the Tribunal can consider a complaint, it must be satisfied that the matter has been referred to the Trustee under the procedure set out above. Any complaints must be lodged with the Tribunal within certain time limits. In particular, there is a two year time limit on complaints about total and permanent disablement claims. For more information about requirements and time limits, you can call the Superannuation Complaints Tribunal on 1300 884 114. If the Tribunal accepts your complaint, it will try to help you and the Trustee reach a mutual agreement through conciliation. If conciliation is unsuccessful, the Tribunal can make a determination, which is binding. S YOUR 26 IAG & NRMA Superannuation Plan Annual Report 2015
If you d like more information For Accumulation members, full details of the benefits provided by the Plan are set out in the Plan s Product Disclosure Statement, which is available on the Plan website or from the Plan Helpline. For Defined, full details of the benefits provided by the Plan are set out in a member s booklet. As a member of the Plan, you can inspect other Plan documents by contacting the Helpline, the documents available include: the Plan s Trust Deed and rules the Plan s Product Disclosure Statement the Plan s Retirement Income Streams Product Disclosure Statement the Plan s Lifetime Pensions Product Disclosure Statement the Plan s insurance policies for death and disablement benefits extracts from actuarial reports the latest audited Plan accounts the Plan s Privacy Policy Statement the rules covering the appointment and removal of member representative Trustee directors and the independent Trustee director, and the Plan s enquiries and complaints procedures. There is no charge for this additional information. Be aware that the Trustee cannot provide you with any financial advice. For financial advice regarding superannuation, the selection of an investment option(s) and insurance options, you should speak to a licensed or appropriately authorised financial adviser. Financial advice can be arranged through the Plan s Administrator by calling the Plan Helpline on 1300 424 676. Questions? If you have questions about your superannuation benefits, please call the Plan Helpline on 1300 424 676. Mercer Outsourcing (Australia) Pty Ltd (Mercer) administers the Plan on behalf of the Trustee. You can write to the Plan Administrator at: Plan Administrator IAG & NRMA Superannuation Plan GPO Box 4303 Melbourne Vic 3001 S YOUR 27 IAG & NRMA Superannuation Plan Annual Report 2015