The Executive Superannuation Fund KPMG STAFF SUPERANNUATION PLAN PRODUCT DISCLOSURE STATEMENT Prepared: 30 July 2010 The issuer and Trustee of The Executive Superannuation Fund, ABN: 60 998 717 367, is The Trust Company (Superannuation) Limited, ABN: 49 006 421 638, AFSL No: 235153, Address: PO Box 361 Collins Street West VIC 8007. Ph: (03) 9665 0200 Fax: (03) 9620 5821. The Administrator of The Executive Superannuation Fund is KPMG Superannuation Services Pty Limited, ABN: 90 094 584 755, AFSL No: 241366, Address: PO Box H67, Australia Square NSW 1213. Ph: (02) 9335 7852.
Contents Contents... 2 Introduction...3 About the Plan... 4 Risks of the Plan... 6 Joining the Plan... 7 Member online access and the Plan website... 9 Contributions and rollovers... 10 Member investment choice... 15 The Plan s investment options... 18 Aggressive option... 18 Balanced option... 19 Conservative option... 20 Cash option... 21 Fees and other costs... 23 Additional explanation of fees and costs... 25 Example of annual fees and costs for the Balanced investment option... 29 Insurance benefits... 30 Taxation... 37 Accessing your benefit in the Plan... 41 Nomination of beneficiaries... 45 Other information about the Plan... 47 Glossary of terms... 51 Application for membership KPMG Staff Superannuation Plan... 55 Nomination of Beneficiaries Form... 57 Further information and how to contact us... 60 2
Introduction Important Information This Product Disclosure Statement ("PDS") relates to members of the KPMG Staff Superannuation Plan ("Plan") in The Executive Superannuation Fund ("Fund"). The Fund was established under a trust deed dated 14 June 1976, as amended from time to time. The Plan is designed to provide financial security for you in retirement and protection for both you and your family, in the event of your premature death or permanent disablement. The Plan is governed by the trust deed and relevant law and is operated by an independent trustee company, The Trust Company (Superannuation) Limited ("Trustee"), formerly known as Trust Company Superannuation Services Limited. The Trustee is legally obliged to act in accordance with the provisions of the trust deed and the relevant law. A copy of the trust deed is available for inspection by members at all reasonable times upon request, by contacting the Plan (contact details on the back page). This Product Disclosure Statement ("PDS") provides important information about the Plan, benefits provided by the Plan, its terms and conditions and other information. You should read it carefully. If you have any queries regarding your own personal circumstances and the Plan, you can contact the Plan (contact details on the back page). This PDS should be read in conjunction with the Plan s latest Annual Report to members available on the Plan website or by contacting the Plan directly (contact details on the back page). A Glossary also appears at the back of the PDS to assist your understanding of some of the terms used in this PDS. The information provided in this PDS is a summary of the benefits and terms and conditions of the Plan, however, the terms of the trust deed governing the Plan have precedence over anything in this PDS. This PDS provides general information only and does not take into account your individual financial situation, circumstances or needs. You should take these into account when making decisions about your benefit in the Plan, for example, decisions regarding investment options, and consult a financial adviser where required. All parties named in this PDS have consented to being named in the form and context in which they have been named and have not withdrawn their consent prior to printing of this PDS. Neither The Trust Company Limited (the Trustee s parent company), nor any of its subsidiaries, nor their respective officers, guarantees the capital invested by investors, the performance of specific investments or your account generally. Neither The Trust Company Limited, nor any of its subsidiaries, nor their respective officers, guarantees or has any liability in connection with the performance by the Trustee of its obligations under this PDS. From time to time the Trustee may receive rebates or other benefits in respect of the Plan s investments. Any rebates or benefits are passed on to members through net investment earnings. Changes to this PDS If a material alteration occurs that would make any statement in this PDS misleading, deceptive or materially adverse, or if there has been any material omission in this PDS, then the PDS will either be withdrawn immediately, or a Supplementary PDS will be issued correcting the statement or omission. Information contained in this PDS is up to date at the time of preparation. Information that is not materially adverse may, if it changes, be updated on the Plan website at www.execsuper.com.au. In addition, we will provide this information to you in hardcopy free of charge upon your request. Further information Further information regarding the Plan can be obtained from the Plan website, or by contacting the Plan (contact details on the back page). Where required, we will also provide you with other information regarding the Plan (including a copy of the trust deed or information previously made publicly available) upon request. We will tell you whether there is a charge for providing this information. 3
About the Plan Superannuation is a means of saving for retirement on a regular basis. In addition to the savings element, the Plan also provides generous insured benefits to KPMG employees in the event of death or permanent disablement. The Plan has been established on the accumulation principle and operates similarly to a bank account, in that contributions are allocated to specific accounts established for each member. Members accounts continue to accumulate with both contributions and any investment earnings (net of relevant fees, costs and taxation), until a benefit payment becomes due. Net earnings can be positive or negative. Please note that your investment or returns on that investment are not guaranteed. In the Plan, members can choose from a range of investment options for their accounts. This allows members to select an option to suit their individual financial situation, objectives and needs. Membership categories The Fund has a number of plans and divisions, as follows: The KPMG Staff Superannuation Plan for current staff members of KPMG (excluding KPMG partners and executive directors). This sub-plan includes KPMG insurance only members of the Plan (see page 30 for further details). The KPMG Executive Superannuation Plan for current KPMG partners and executive directors. The WHK Albury Staff Superannuation Plan and the WHK Albury Executive Superannuation Plan; The Personal Division Spouses and family members of KPMG staff, partners and executive directors can join the Personal Division of the Fund. Members of the KPMG Staff Superannuation Plan, KPMG Executive Superannuation Plan, WHK Albury Staff and WHK Albury Executive Superannuation Plans will also be automatically transferred to the Personal Division of the Fund upon your termination of employment with either KPMG or WHK Albury, or upon retirement from the KPMG Partnership; and The Pension Division If you wish to take out a Superannuation Pension from the Fund you will become a member of the Pension Division of the Fund. Each plan or division of the Fund has its own relevant PDS. This PDS specifically relates to members of the KPMG Staff Superannuation Plan. Benefits of the Plan The Plan provides a number of benefits to both you and your dependants. These benefits include: Superannuation benefits payable upon retirement (or earlier in certain special circumstances) based on contributions and other amounts paid into your account after taking into account investment returns (which may be positive or negative) and relevant fees, costs and taxes; and Insurance cover to provide protection for you and your family in the event of your death or permanent disablement. For further information, see pages 30-36 of this PDS. In the case of lump sum death benefits, you may also receive an anti-detriment payment (see the Taxation section on pages 37-40 of this PDS for more information). Note: Some members who have elected to make contributions, or have contributions made, to an alternative superannuation fund, may have been joined as insurance only members of the Plan (see pages 30-36 of this PDS for more details). KPMG audit independence requirements The Trustee of the Fund has been advised by KPMG that the Plan meets the audit independence requirements of KPMG employees in two key ways: The Plan offers to members four multimanager (or manager of managers ) investment options. Each of these options utilises a number of different underlying investment managers, however, you have no individual influence over how much of your money is invested directly with a particular manager such as MLC, Maple-Brown Abbott etc. This is determined by the Trustee in conjunction with the Asset Consultant. You can select the Aggressive, Balanced, 4
Conservative and/or the Cash option, but not a particular manager. The investment decisions are made by the independent Trustee of the Fund, The Trust Company (Superannuation) Limited, on the basis of the recommendations of the independent Asset Consultant to the Fund, Strategic Capital Management Limited. As such, neither KPMG, nor any partner or employee of KPMG, can directly influence the selection of investment managers or the level of assets allocated to specific managers. In this way, the independence of employees is preserved within the Plan. In addition, should audit independence issues affect your immediate family members, they are also eligible to join the Personal Division of the Fund. For further information about the Personal Division, and an Application Form, see the Product Disclosure Statement - Personal Division, available from the Plan website or by contacting the Plan (contact details on the back page). This Product Disclosure Statement should be considered when deciding whether to become a member of the Personal Division. 5
Risks of the Plan Market risk Various economic, technological, political, legal and social factors have an effect on the value of investment markets and may affect the value of your investment in your chosen investment option within the Plan. The Trustee and the Plan s underlying investment managers seek to reduce and manage this market risk through the specific investment strategies adopted for each investment option, as described in the Member Investment Choice section of this PDS on pages 15 to 22. Investment risk Investment risk can be described as the variability of returns or the chance of negative returns. An investment that has a high chance of fluctuations or negative returns is considered high risk and an investment with a low chance of negative returns is considered low risk. Generally, share investments are considered high risk and cash or fixed interest investments are considered low risk. Investment risk is also affected by the length of time that an investment is held because the chance of a negative return may decrease (and the potential for higher returns may increase) the longer that an investment is held. For example, a share investment held over a period of only one year might be considered very high risk compared to a share investment held over a much longer period (say 10 years). Over the long term, high risk investments may, therefore, lead to greater returns than low risk investments. Risks associated with various investment options may change depending on the economic environment and other external factors. This means that different asset classes perform differently at different times. For example returns in relation to shares may increase over a period, whereas, the returns in relation to fixed interest investments may decrease over the same period of time. The Plan s underlying investment managers seek to minimise these risks by assessing and analysing information relating to these investments from a number of sources and by diversifying investments across a range of assets and asset classes. All of the investment options offered by the Plan (except the Cash option) involve, to varying degrees, diversification across a range of assets or asset classes. You can help to manage your investment risk by diversifying your investments and by making investment choices suited to your personal circumstances, including your investment timeframe. However, should you leave the Plan or withdraw monies within a few years of joining the Plan, fluctuations in investment returns (in addition to taxation, fees and costs) may result in you getting back less than you have contributed. Superannuation fund risk There may be other risks specific to the Plan s operations. As with any other superannuation fund, these risks include the possibility of changes to the Plan or its internal operations such as changes to key staff involved in the management of the Plan or a disruption of its systems. The Trustee seeks to minimise this risk by taking into account the best interests of members at all times when making decisions about the Plan and maintaining a risk management and compliance framework in accordance with legislative requirements. Risk of changes in the legal environment Superannuation laws, the Corporations Act, Australian taxation laws and other laws affect the Plan and the Plan s investments. Changes in superannuation laws may affect your ability to access your benefit in the Plan. Changes in taxation laws may also affect the value of your benefit. 6
Joining the Plan Commencement of membership If you are a permanent employee of KPMG, you will be enrolled as a member of the Plan on the day you commence employment with KPMG. Note: this does not apply to casual staff of KPMG. KPMG (as your employer) will provide your details to the Plan and you will be automatically joined as a member of the Plan, effective from the day you start employment with KPMG, or the date you became eligible to become a member of the Plan. In order to confirm certain details in relation to your member account in the Plan (including contact details, investment choice etc), you may however also wish to complete the Application for Membership form enclosed at page 55 of this PDS. Upon commencement of your membership, you will be placed in the default investment option of the Plan, the Balanced option, unless you nominate an alternative investment option for your future contributions or any account balance which you may decide to rollover into the Plan from any other superannuation fund. Upon commencement of your membership, you will receive a letter from the Plan, welcoming you as a member of the Plan and providing you with other relevant information about the Plan. Once you have received your information, you can go to the Plan website (www.execsuper.com.au) to provide the following details online: Your Tax File Number ( TFN )*; and Your preferred beneficiaries (whom you nominate to receive your benefit in the event of your death). Please note that you can only update non-binding nominations via the website (see page 45 of this PDS for more details in relation to the binding and nonbinding nominations offered by the Fund). *Please note however that KPMG as your employer will generally provide your TFN to the Plan on your behalf. You should also consider whether you need to advise the Plan of your chosen investment option(s). You can do this by way of the Application for Membership form at page 55 of this PDS, or by completing an Investment Choice Form which is available from the Plan s website at www.execsuper.com.au Who else can join the Fund? Other people such as your spouse or immediate family members can join the Personal Division of the Fund. The Product Disclosure Statement Personal Division is available on the Plan website or by contacting the Plan (contact details on the back page). This Product Disclosure Statement should be considered when deciding whether to become a member of the Personal Division. Proof of age It is not necessary to provide proof of age upon joining the Plan, however, this may be required should an insurance claim be made, at the time of submitting a claim. Such proof may include your birth certificate, passport, naturalisation certificate, etc. As a result of Government reforms designed to counteract money laundering and terrorism, you may be required to provide proof of identity or meet other requirements, as determined by the Trustee from time to time. See the Other information about the Plan section on pages 47 to 50 of this PDS for more information. What if you contribute to an alternative superannuation fund? If you elect an alternative superannuation fund under the choice of fund rules, or you are covered by an Industrial Award which specifies another superannuation fund as the default fund for your superannuation contributions (e.g. CARESuper for clerical staff), you will still be enrolled in the Plan as an insurance only member of the Plan. This is so that your insurance benefits, provided by KPMG, can be appropriately administered. Note: casual KPMG staff are not enrolled as insurance only members of the Plan and are not provided with insurance benefits through the Plan. See the Insurance benefits section of this PDS (on pages 30 to 36) which outlines the insurance benefits provided to KPMG staff. 7
Cooling off period Once your account in the Plan is established, you have 14 days (the cooling off period ) in which to decide if the Plan will meet your needs. During this time, you may terminate your membership in the Plan by providing notice to the Trustee in writing of your wish to cease your membership. Any contributions that have been made to the Plan during that time will be rolled over to a superannuation fund of your choice or as otherwise permitted by Government legislation. You will not be charged any fees in relation to your membership or the termination of your membership with the Plan. However, any benefits you have with the Plan may be adjusted to reflect the investment returns of your account during your period of membership. 8
Member online access and the Plan website You can access your account details online through the Plan website at www.execsuper.com.au. Logging on to the website To log on to the website, you need to provide your member number in the Plan and your log-in PIN. You will be provided with your member number and initial PIN details upon joining the Plan. Alternatively, you can also request your initial PIN by sending an email to the following email address: AU-FMNatSuperPINRqst@kpmg.com.au Your email should contain the subject line PIN request and provide your name, date of birth, residential address and member number in the Plan in the body of the email. Your PIN will then be emailed to you along with instructions to log onto the website. You can personalise your PIN when you log onto the website for the first time. Individual member account details You can view the following details regarding your account online and confirm transactions that may occur from time to time: Your membership details such as your name, date of birth, the date you joined; You can also update/provide certain details regarding your account such as: Your address details; Your nominated beneficiaries (however please note that you can only update nonbinding nominations online see page 45 of this PDS for more details regarding the types of beneficiary nominations offered by the Fund); and Your TFN. You can also access general information about the Plan on the website, such as investment updates, as well as all Plan booklets and forms. The website is provided by the Administrator to the Plan, KPMG Superannuation Services Pty Limited (AFSL No. 241366). With the exception of the Plan documentation issued by the Trustee, which can be accessed via the website (such as this PDS), the Trustee is not responsible for the information provided on the website. More information in relation to the website (including how to obtain access to the website) can be obtained from the Plan (contact details on the back page). Your up to date account balance and benefit quotes; The transaction history of your account; Your nominated beneficiaries; Your insurance details; and Details regarding your chosen investment option(s). 9
Contributions and rollovers Concessional contributions Concessional contributions include any Superannuation Guarantee (SG) contributions made by your employer(s) on your behalf, and any additional contributions you choose to make from your pre-tax salary (salary sacrifice contributions). Contribution types Quarter July September October December January March Required payment date 28 October 28 January 28 April Superannuation Guarantee contributions and contributions to meet insurance costs KPMG as your employer will contribute 9% of your ordinary time earnings to the Plan, up to the prescribed maximum in superannuation guarantee legislation (the maximum contribution for the 2010/2011 financial year is $15,199 per annum). These contributions are concessional contributions. For permanent KPMG employees, KPMG as employer, will also make an annual contribution to cover the cost of your Standard Death and Total and Permanent Disablement insurance cover within the Plan. The amount contributed to the Plan for each KPMG employee depends on the level of Standard insurance cover (see pages 30 36 for further details of the level of insurance cover applicable to eligible employees). This annual amount is paid into your account in the Plan as a concessional contribution and is advised on your annual member statement from the Plan. For further information about the annual amount contributed by KPMG to meet the cost of premiums for any Standard insurance cover you may have within the Plan, you can also contact the Plan (contact details on the back page). All contributions, net of relevant taxes and expenses, are immediately fully vested and must be preserved (the concept of preservation is discussed on page 41). Under superannuation guarantee legislation, KPMG is required to pay your 9% SG contributions on a quarterly basis, by certain prescribed dates as follows: April June 28 July Superannuation Guarantee contributions from other employers If you have a second job (e.g. you work in a bar at night or on the weekend), you can request that this employer pay your superannuation contributions into the Plan. To assist your additional employer to make contributions to the Plan, you can obtain a Standard Choice Form with the details regarding the Plan already filled in for you from the Plan website, or by contacting the Plan (contact details on the back page). A guide with further information in relation to how contributions can be made by external employers is also available on the Plan website or by contacting the Plan. If you give this information to your additional employer, they will be able to contribute to the Plan on your behalf. Employers that are subject to Choice of Fund legislation are generally required to implement your request. Salary sacrifice contributions KPMG may agree with you to make additional voluntary superannuation contributions to the Plan on your behalf in lieu of pre-tax remuneration (called salary sacrifice contributions ). These contributions are concessional contributions. Please note that the ability to make salary sacrifice contributions may not be available to all KPMG staff members. Please contact the Plan for further information (contact details on the back page). To make salary sacrifice contributions to the Plan, you must complete a Salary Sacrifice Nomination Form. The form is available on the Plan website, or by contacting the Plan (contact details on the back page). 10
From 1 July 2009, salary sacrifice contributions are taken into account when determining eligibility for the Government co-contribution and tax deductibility of personal contributions. Other Government entitlements may also be affected. You should seek your own professional advice about making salary sacrifice contributions, having regard to your personal circumstances. Limits on concessional contributions From 1 July 2009, concessional contributions are limited to $25,000 per individual for each financial year. The limit applies across all superannuation funds to which concessional contributions are made. For people aged 50 or more, this limit is $50,000 per annum up until 1 July 2012. The $25,000 limit will be periodically increased in line with AWOTE in $5,000 increments. Concessional contributions made up to the $25,000 (or $50,000) limit will be subject to tax payable by the Plan at the rate of 15%. Any concessional contributions made in excess of the $25,000 (or $50,000) limit will be subject to tax at the rate of 46.5%. The liability for the excess tax (at 31.5%) will be levied on you personally by the ATO, i.e. you will receive a notice from the ATO requesting payment of the excess tax. However, on receipt of the notice, you can nominate a superannuation fund to release monies to pay the liability. In addition, any excess contributions you make above the limit will be counted towards your non-concessional contribution limit (see below). Additional tax where you have not provided your TFN Where you joined the Plan or another division of the Fund prior to 1 July 2007, if you have not provided your TFN to the Plan, your concessional contributions will be subject to additional tax of 31.5% if the total concessional contributions that you or your employer make above $1,000 in any financial year. You can provide your TFN via the Plan website or by contacting the Plan (contact details on the back page). If you joined the Plan or another division of the Fund after 30 June 2007, your employer has automatically provided your TFN to the Plan or Fund. Amounts excluded from the concessional contributions cap towards your concessional contribution cap, including: Rollovers (including those from an overseas superannuation fund) subject to some special rules for any untaxed amounts; Government co-contributions; and Employment termination payments up to $1m, received up until 1 July 2012, if contracted for prior to 9 May 2006. See page 13 for details regarding how contributions can be made to the Plan. See information published by the ATO at www.ato.gov.au for more information regarding the concessional contributions cap. Non-concessional contributions Non-concessional contributions are contributions you make to superannuation from your after-tax salary. You can make up to $150,000 of nonconcessional contributions to superannuation each financial year. This limit will be maintained at six times the $25,000 (indexed) cap on concessional contributions (see above). If you are under age 65, you can average this limit over three years, i.e. you can make contributions of $450,000 in one year, provided you do not make any additional non-concessional contributions for the following two years. Contributions made up to the $150,000 (or $450,000) limit will not be subject to tax. Any contributions in excess of the limit will be subject to tax at the rate of 46.5%. The liability for this tax will be levied on you personally by the ATO. You must then nominate a superannuation fund to release monies to pay the liability. Any excess contributions you make during the year that, in total, are above the limit will remain in the Plan (however individual contributions which exceed the applicable limit must be rejected or refunded, after allowable adjustments). Inability to make non-concessional contributions where you have not provided your TFN You will be unable to make non-concessional contributions to the Plan if you have not provided your TFN. Any non-concessional contributions that you attempt to make to the Plan will be returned where required by law, after taking into account any allowable adjustments for investment fluctuations and reasonable costs. Some amounts that can be contributed or transferred to superannuation do not count 11
Other amounts measured against the nonconcessional contributions cap Other amounts that count towards your nonconcessional contributions cap include: Any excess concessional contributions you make; The non-taxable portion of any benefit transferred from an overseas superannuation fund; and Contributions made to your account by your spouse. Amounts excluded from the non-concessional contributions cap Some amounts that can be contributed or transferred to superannuation are not counted towards your non-concessional contribution cap. They include: Rollovers from within the superannuation system; The taxable portion of a benefit transferred from an overseas superannuation fund. Note the untaxed portion will count towards your non-concessional limit; Government co-contributions; Proceeds from the sale of qualifying small business assets which have been held for 15 years (subject to a lifetime limit of $1.155 million for the 2010/11 financial year); and Settlements for injuries resulting in permanent disablement made to the Plan within 90 days of receiving the payment. Please refer to page 13 for details regarding how non-concessional contributions can be made to the Plan. See information published by the ATO at www.ato.gov.au for more information regarding the non-concessional contributions cap. Contributions for your spouse or other family members If your spouse or other family member is a member of the Personal Division of the Fund, you can make non-concessional contributions to the Fund on their behalf. A spouse contribution may attract a tax rebate of up to $540 per year for the contributing spouse, depending on the recipient s income (see page 40 for details). These contributions will count towards the recipient s non-concessional contribution limit. Contribution splitting You can request that up to 85% of your concessional (SG, employer and salary sacrifice) contributions made during a financial year are split with your spouse, including a de facto spouse. This is subject to a maximum of your concessional contributions limit. The Trustee may also make whatever adjustments to the splittable amount it considers necessary or appropriate (for example, to meet any tax liabilities relating to your benefits). You are unable to split non-concessional contributions, your previously accumulated account balance, previously rolled over amounts or employment termination payments paid into your superannuation account with your spouse. In general, you can apply to split contributions made to the Plan during the financial year after the end of each financial year. You can only split your contributions with your spouse once each financial year. Where you are terminating your membership of the Plan and are rolling over your entire benefit to another superannuation fund, you can request to split the contributions made in the current financial year immediately prior to your exit from the Plan. Your applications to split the contributions made during the year and to rollover your entire benefit to another Plan must be made together. The contributions that you split with your spouse can be transferred to your spouse s account within the Plan or to another superannuation fund of which your spouse is a member. Your spouse must be under the age of 65, under their preservation age (refer to the section Accessing your benefit in the Plan on page 41 of this PDS) or aged between their preservation age and 65 and not permanently retired in order to be able to receive split contributions. If your spouse is between their preservation age and 65, they must submit a declaration to the Plan with your splitting application, stating that that they are still gainfully employed either on a full-time or part-time basis and are not permanently retired. Contribution splitting may provide tax planning opportunities where superannuation benefits are withdrawn prior to age 60, or provide superannuation benefits to a spouse who is not working. You may wish to discuss the advantages of contribution splitting with a licensed or authorised financial adviser to determine whether splitting contributions with your spouse is appropriate for you. 12
To request to split contributions, contact the Plan (contact details on the back page). The Trustee may establish rules or policies in relation to contribution splitting from time to time at its discretion. Eligibility to contribute to superannuation Any person under age 65 may contribute to superannuation, regardless of whether or not they are employed. From the ages of 65 to 69, you must have worked at least 40 hours during a continuous 30-day period during the financial year ( work test ) in order to be able to make a contribution to superannuation. However, mandated employer contributions are not subject to the work test. From the age of 70 to 74, mandated employer contributions can be accepted and personal contribution and non-mandated employer contributions can be accepted only if you meet the work test. You cannot make personal contributions to superannuation past the age of 74. You cannot make contributions for your spouse or other family member if they are aged 70 or more. Generally, from age 75 no contributions other than award contributions can be made to superannuation. Contributions made to the Plan in contravention of these eligibility rules must be refunded by the Trustee in certain circumstances. A refund may be adjusted for any allowable investment fluctuations and reasonable costs. Government co-contributions Some members of the Plan may be eligible to receive the Government co-contribution. The Government co-contribution applies to nonconcessional contributions made by low and middle income earners. The Government co-contribution will match eligible personal non-concessional contributions made by qualifying low and middle income earners by $1.00 for each $1.00 you contribute, up to $1,000. The Government co-contribution will be paid annually to qualifying low and middle income earners superannuation funds. The maximum co-contribution for a financial year is $1,000 and is available to people earning an assessable income plus reportable fringe benefits of $31,920* or less. The maximum co-contribution amount phases out by 3.333 cents per dollar of income up to an income of $61,920*, when it phases out completely. The Government co-contribution (the amount contributed by the Government) does not count towards either your concessional or nonconcessional contribution caps. *These thresholds apply up to 30 June 2012 but are subject to change in future years. For up to date information about the Government co-contribution from year to year, go to www.ato.gov.au. How to contribute to the Plan SG and salary sacrifice contributions are made automatically to the Plan. All other contributions to the Plan must be made by cheque, payable to The Trust Company (Superannuation) Limited ATF The Executive Superannuation Fund. All payments should be accompanied by a Contribution Form (available on the Plan website or by contacting the Plan Administrator), detailing your membership number and name (or your spouse s if the contribution is for them), and the type of contribution (e.g. member after-tax, spouse contribution etc.) Contributions cannot be made to the Plan electronically. Rolling over into the Plan If you have benefits in another superannuation fund, Retirement Savings Account or Approved Deposit Fund, you may choose to transfer these into the Plan. Such amounts will accrue earnings as per your other benefits in the Plan. Advantages of rolling over benefits into the Plan may include: The Plan may have lower administration fees than the current superannuation fund, Retirement Savings Account or Approved Deposit Fund where your benefit is currently located; You only pay administration fees to one fund as a consequence of consolidating your benefits; and KPMG has advised that the Plan meets the audit independence requirements of KPMG employees, whereas other funds may not from time to time. All employment termination payments rolled over into a superannuation fund must be fully preserved. The payment of employment termination payments to superannuation funds can only be made in limited circumstances. This will apply to people with entitlements upon termination of employment, specified in existing employment contracts as at 9 May 2006, provided that payments are made prior to 1 July 2012. 13
To roll over other superannuation benefits that you may have to the Plan, refer to the guide titled How to rollover into the Fund, available on the Plan website or by contacting the Plan (contact details on the back page). The guide contains instructions on how to roll over your superannuation benefits to the Plan. You may incur fees or lose benefits if you withdraw benefits from your other fund (contact your other fund for more information). UK Pension Transfers The Plan is registered with the UK s HM Revenue and Customs as a Qualifying Recognised Overseas Pension Scheme ( QROPS ) (reference number QROPS/500104). As such, you can elect to transfer any monies you hold in a UK pension fund into the Plan. If you are considering such a transfer, you should be aware that UK authorities have released guidance surrounding the tax implications of such a transfer. The guidance relates specifically to transfers that are in excess of the non-concessional contributions cap applicable under Australian taxation laws ($150,000 per year or $450,000 over rolling three-year periods for those aged under 65). As can be seen from the above, the transfer of monies to Australian funds can be complex. There may be other taxation implications for any lump sum transferred from an overseas fund, depending on your personal circumstances. As such, members should see appropriate advice prior to considering overseas transfers and, in particular, amounts that are in excess of the nonconcessional contribution cap. Up to date information relating to UK pension fund transfers may also be made available on the Plan s website (www.execsuper.com.au) or by contacting the Plan (contact details on the back page). Other payments into the Plan Other payments may also be made into the Plan, for example, employer termination payments (if contracted for as at 9 May 2006), disability settlement amounts, foreign sourced superannuation (other than UK pension transfers) and the proceeds from the sale of a small business. The rules relating to the transfer of other amounts into the Plan are complex. We recommend that you seek advice (including taxation advice) from an appropriately qualified adviser. Under current rules, where the amount transferred to the Plan exceeds your non-concessional contributions cap, the benefit will be subject to excess contributions tax at the rate of 46.5%. Where you are eligible for additional tax, you must pay the additional tax by requesting the Trustee (via presentation of an ATO Release Authority to the Trustee) to deduct the amount from your benefit in the Plan and pay it to the ATO on your behalf. A recent announcement from the UK authorities confirms that, where you are under the UK retirement age, any payment out of the Plan to cover the additional tax will be considered an unauthorised payment and will be subject to additional UK tax. The release confirms that an additional 40% UK tax applies to any Unauthorised Payment and an additional 15% surcharge applies if more than 25% of the original amount transferred is required to be withdrawn. 14
Member investment choice To ensure investment flexibility within the Plan, you can choose how your account balance and future contributions to the Plan are invested. The Plan allows you to choose from a range of four investment options for your superannuation: The Aggressive option; The Balanced option; The Conservative option; and The Cash option. These options are designed to suit different time horizons and levels of risk. You need to choose the one that best suits your circumstances. The investment options that the Plan offers are described in more detail on the following pages, and in the Member Investment Choice Brochure issued by KPMG Superannuation Services Pty Limited available on the website (www.execsuper.com.au) or by contacting the Plan (see contact details on the back page). You should review your investment strategy regularly to ensure that it continues to suit your circumstances and fits in with your overall financial plan. Investment choice for existing account balance Existing account balances in the Plan can be split between multiple investment options. You can split the investment of your existing account balance in any proportion between the Plan s four investment options. If you select more than one investment option, after your existing account balance has been invested in the proportions nominated by you, no adjustments are made to your existing balance s allocation to each option (i.e. the account balance is not re-balanced so that your nominated proportions are maintained over time). This means your account balance s allocation to each option will fluctuate from time to time. Investment choice for future contributions You can direct your future contributions to one of the Plan s four investment options. How often can I change my investment choice? You can change your nominated investment option(s) for your account balance or future contributions once per month. The table below shows the switching dates for 2010 and 2011, as well as the due date by which you need to return your "Investment Choice Form" to effect an investment switch. Due date of request Switch effective date 23 July 2010 30 July 2010 20 August 2010 27 August 2010 17 September 2010 24 September 2010 22 October 2010 29 October 2010 19 November 2010 26 November 2010 10 December 2010 17 December 2010 21 January 2011 28 January 2011 18 February 2011 25 February 2011 18 March 2011 25 March 2011 22 April 2011 29 April 2011 20 May 2011 27 May 2011 17 June 2011 24 June 2011 22 July 2011 29 July 2011 19 August 2011 26 August 2011 23 September 2011 30 September 2011 21 October 2011 28 October 2011 18 November 2011 25 November 2011 9 December 2011 16 December 2011 While there is no fee charged by the Plan for switching investment options, you should however be aware that a buy/sell spread (reflecting fees charged by the Plan s underlying investment managers for the redemption and acquisition of assets) may apply. Further details regarding buy/sell spreads are contained in the Fees and other costs section on page 23 of this PDS. How do I change my investment choice? You can change your investment choice by completing an Investment Choice Form, available on the Plan website or by contacting the Plan (contact details on the back page). 15
What if I don t choose an option? If you don t choose an investment option for your existing account balance and/or future contributions when you first join the Plan, your account balance and/or future contributions will be invested in the Balanced option (the Plan s default option). Further details regarding the Balanced option are contained on page 19 of this PDS. Investment option on death of a member With effect from 9 November 2009, upon receipt of written notification of a member s death, the Trustee will invest the accumulated account balance of a deceased member into the Plan s Cash Option. For more information, refer to page 21 of this PDS. Trustee considerations The Trustee of the Plan does not take into account labour standards, environmental, social or ethical considerations in making investment decisions or selecting underlying investment managers. Underlying investment managers may take these factors into account, however they do so in their own right and not on behalf of the Trustee. Choosing an investment option The information contained in the PDS is general information only. It does not take into account your individual objectives, financial situation or needs. As such, you should consider your investment goals and the time your superannuation will be invested, as part of your investment choice decision. When making an investment choice, the performance of the investment options may also be considered, however, past performance is not necessarily an indicator of future performance. If required, contact a licensed or authorised financial planner before making an investment decision, to ensure that your investment choice fits in with your overall financial plan and goals. Allocation of investment returns to your account of the investment options in which a member participates. As such, it does not hold any investment fluctuation reserves. The net earnings of your chosen investment option are based on the option s actual investment earnings, less relevant taxes, fees and costs, and are equal to the net investment return. (For details regarding fees and costs deducted from earnings see the Fees and other costs section on page 23 of this PDS). Net earnings are allocated to your account on a pro-rata daily basis and are compounded annually each 30 June, based on monthly earning rates declared by the Trustee. The net earnings of the Plan s investment options are subject to normal investment market movements and future investment performance cannot be guaranteed. As a result, the earning rate of any investment option may be positive or negative. If you leave the Plan or withdraw monies from your chosen investment option within a few years of joining the Plan or making an investment choice, you may get back less than the amount of contributions paid into the Plan because of the level of investment returns earned by the investment option in which your account is invested and the deduction of taxation, fees and costs. Past investment performance is not necessarily an indicator of future investment performance. The Trustee does not guarantee that you will earn any specific rate of return on your investment or that your investment will gain or retain its value. Interim earning rates Members who leave the Fund before 30 June, transfer to another category of membership (for example, the Pension Division), switch investment options or make partial withdrawals during the year, may have interim rates of earnings applied, calculated in accordance with the Trustee s policy. The interim rates of earnings change over time (usually determined fortnightly) and reflect the investment experience of the Plan at the time of the interim rate calculation, less any applicable taxes, fees and costs. Interim earning rates may be positive or negative. The Trustee has adopted a policy of fully allocating the Plan s investment earnings (net of relevant taxes, fees and costs) to members accounts, based on the investment performance 16
How do I know the value of my account and benefits in the Plan? You will be provided with an Annual Member Statement showing your account and benefit entitlements in the Plan as at the Plan s annual review date of 30 June each year. This information is also available on the Plan website or by contacting the Plan (contact details on the back page). 17
The Plan s investment options Aggressive option Investment objectives Returns (gross of tax but net of investment fees) exceeding: CPI + 4.5% p.a. over rolling 5 year periods The simulated (gross of tax and net of investment fees) return of a portfolio invested in market indices in line with the option s benchmark asset mix, over rolling 5 year periods Risk profile Potential long term return Likely variability of return Potential for negative returns High High 1 in 4 years on average Benchmark Investment strategy asset mix Aust Shares 58% Int Shares 31% Property 6% Aust Fixed Int 2% Internat Fixed Int 1.5% Cash 1.5% Investment strategy allocation of assets to underlying investment managers Historical investment option net earning rates year ending 30 June Investment manager Benchmark Allocation Massachussetts Financial Services Fully Hedged Global Equity Trust 14.5% BlackRock International Alpha Tilts Fund - unhedged 14.0% Hyperion Australian Growth Companies Fund 14.0% Ankura Capital Australian Equity Trust 12.0% BT Wholesale Core Australian Share Fund 12.0% BlackRock Wholesale Indexed Australian Equity Trust 12.0% MLC (NCIT) Moderate Trust 6.5% Maple-Brown Abbott Australian Equity Trust 6.0% Challenger Wholesale Property Fund 6.0% Schroder Fixed Income Fund Standard Class 1.5% UBS Cash Fund / Trust Cash Management Fund 1.5% 2009 2008 2007 2006 2005 Five year compound average -19.95% -15.43% 17.92 18.00% 12.44% 1.16% Please note that more recent investment option net earning rates, interim earning rates and Quarterly Investment Newsletters issued after 30 June 2009 are available on the Plan s website at www.execsuper.com.au under Fund Information. Past performance is not a reliable indicator of future performance. The investment managers utilised by the Plan may be changed at the absolute discretion of the Trustee. You have no ability to choose the underlying investment managers. 18
Balanced option Returns (gross of tax but net of investment fees) exceeding: Investment objectives Risk Profile CPI + 3.0% p.a. over rolling 5 year periods The median return of the Morningstar Australian Wholesale Investment Trusts Multisector Growth Index over rolling 5 year periods Potential long term return Likely variability of return Potential for negative returns Moderate High Moderate High 1 in 5 years on average Benchmark Investment strategy asset mix Aust Shares 40% Int Shares 23% Property 7% Aust Fixed Int 17% Internat Fixed Int 8% Cash 5% Investment strategy allocation of assets to underlying investment managers Investment manager Benchmark Allocation MLC (NCIT) Moderate Trust 20.0% Schroder Fixed Income Fund Standard Class 18.0% Ankura Capital Australian Equity Trust 10.0% BT Wholesale Core Australian Share Fund 10.0% BlackRock Wholesale Indexed Australian Equity Trust 9.5% Massachussetts Financial Services Fully Hedged Global Equity Trust 8.5% BlackRock international Alpha Tilts Fund - unhedged 8.0% Challenger Wholesale Property Fund 6.0% UBS Cash Fund / Trust Cash Management Fund 6.0% Maple-Brown Abbott Australian Equity Trust 4.0% Historical investment option net earning rates year ending 30 June 2009 2008 2007 2006 2005 Five year compound average -11.95% -10.00% 13.88% 13.94% 11.48% 2.77% Please note that more recent investment option net earning rates, interim earning rates and Quarterly Investment Newsletters issued after 30 June 2009 are available on the Plan s website at www.execsuper.com.au under Fund Information. Past performance is not a reliable indicator of future performance. The investment managers utilised by the Plan may be changed at the absolute discretion of the Trustee. You have no ability to choose the underlying investment managers. 19