ness super for life
annual report 30 June 2012
Contents Message from your Board News update
3 4-5
The people who look after your super
6
Investment report
8
Your investment options
9-11
Penson Investment Options
12-13
Managing your investments
14-15
NESS’ financial position
16
Fees and other costs – super members
18-20
Fees and other costs – pension members
21-23
Additional information
24
Contact us
25
Issue Date: 15 October 2012
Membership No. 1234567
13010122222
Date Joined Fund: Email Address: Tax File Number: Beneficiaries:
Mr Sam Sample 123 Sample Street SAMPLE NSW 2000
1 July 1997 Provided Provided Not provided
Your Member Statement for the period 1 July 2011 to 30 June 2012 Your account summary as at 30 June 2012
5 Year account snapshot
($) 63,958.14
Your preserved benefit
63,958.14
Your non-preserved benefit Restricted
Dollars ($)
63958
Your account balance
50529
40507
42260
41123
2009
2010
0.00
Unrestricted
0.00
Your insured death benefit+
110,400.00
Your insured monthly salary continuance benefit+
2,400.00
2008
2011
2012
+Are you and your family adequately protected in the event of your sickness, accident or even death? Please
check that the death and monthly salary continuance insurance cover amounts shown above are adequate for your needs and those of your family. Adding or increasing cover is easy and inexpensive. Just contact us on 1800 022 067.
Your transaction summary as at 30 June 2012 The amounts below summarises the transactions in your report. More detail on these transactions are on the following pages. Description
Total ($)
Your balance as at 1 July 2011
50,529.33
Plus Contributions received from your employer(s) Earnings from your investments Less Federal Government Contributions Tax Total Management Costs Insurance Premiums
10,641.89 1,647.34 -1,549.66 -120.96 -189.80
Your balance as at 30 June 2012
60,958.14
Do you want your super to grow faster? Call us on 1800 022 067 to discuss the benefits of: Topping-up your contributions (salary sacrifice and member after-tax) Government co-contributions Rolling-over your other super funds and tracking down any lost super
Our annual reporting to members comprises this Annual Report and your Member Statement for the period 1 July 2011 to 30 June 2012. This Annual Report should be read in conjunction with your Member Statement. It is available from NESS’ website or on request. Call 1800 022 067 to have a copy sent to you.
Please refer to the Additional Information section at the end of this Statement for an explanation of the terms used. Your insured benefits are not guaranteed and are subject to you meeting the policy conditions and our records being correct. 1/VSM/QINKA /REX/A3_MEMSTM_9925_1.xml
Page 1 of 8
Please see over page for additional information
About this Report This Annual Report is issued by the New South Wales Electrical Superannuation Scheme Pty Ltd (Trustee) ABN 28 003 156 812, AFSL 238945. New South Wales Electrical Superannuation Scheme (NESS) ABN 72 229 227 691. Issued 15 October 2012. The information contained in this Annual Report is general information only and does not take into account any person’s individual financial objectives, financial situation or needs. The member should, before acting on any financial product advice, consider the appropriateness of the advice, having regard to his or her own objectives, financial situation or needs. NESS is governed by a legal document called a Trust Deed. If there is any discrepancy between the Trust Deed and this Annual Report, the Trust Deed prevails. While the Trustee has taken all due care in the preparation of this Annual Report, it shall not be liable for errors and omissions.
2
New South Wales Electrical Superannuation Scheme
Message from your Board Considering the extremely volatile investment markets during 2011/12, we are pleased to report another year of mainly positive returns in our investment options for the year to 30 June 2012.
TONY GLOSSOP (Chairman of the Board) Employer Representative Director Nominated by NECA NESS’ annual return for the Balanced Option of 0.13% for super members is close to the market median for super funds generally. According to Chant West’s Superannuation Fund Performance Survey, the median return for equivalently invested funds for the year to 30 June 2012 was 0.5%. For more information, please refer to the investment performance report on page 8. NESS is the Fund dedicated to employees in the electrotechnology industry. To further assist you in ‘securing your retirement’, we have made a number of enhancements to NESS and our services. These include: • • • •
continuing enhancements to our website making it easier for you to access and monitor your super account; the development of a clearing house to facilitate multiple superannuation fund contributions for employers; continuing member and employer support and education from Mynas Leontios, NESS’ service representative; and the launch of our new Pension Product promotion with two very tax effective pension options for NESS’ members who are aged 55 or more. We will also soon be introducing eStatements so we can communicate with you more efficiently and so you can keep track of your superannuation easier. To find out more about these changes read page 4.
Members of the NESS Board and advisers at the strategy and planning day in June this year.
Every year, your Board holds a strategic conference in June to determine its Business Plan for the year ahead and beyond. This year’s meeting was especially significant as we considered the stronger super package (the most significant changes to influence the way superannuation funds conduct business) that is to be introduced commencing 1 July 2013. The package will bring major advances including: • • • •
MySuper, a low cost and simple investment option; SuperStream, a more streamlined “back office” system; The introduction of new prudential standards to improve management and governance frameworks; and Other changes include the improvement of retirement incomes by gradually increasing the super guarantee from 9% to 12%.
We will keep you informed on how these changes will affect you. Please refer to page 5. Tony Glossop Chairman of the Board
Annual Report 2012
3
News Update Website Upgrade
Pension PDS
Members are encouraged to make use of the login service, to make online payments and check their account balances. Pension members can access their personal account information and employers can log in to a range of administrative functions including adding a new employee and paying contributions online.
On 1 July 2011 we introduced 6 new, tax free, investment options that are designed to meet the special needs of members who are in retirement or transitioning to retirement.
Monthly investment options performance, publications, forms and the benefits of NESS’ membership can all be found online including a section to keep members up to date with the latest Fund news. There are plans to significantly revise the NESS website to extend member services and inform members about the transition to MySuper.
NESS Clearing House We have been working to develop a more efficient way to enable employers to pay super contributions to the various Funds that their members belong to. A clearing house is an organisation that receives all the member data from an employer and allocates it to the relevant super funds at a minimal cost. NESS will be offering that option early in 2013.
eStatements NESS is exploring a process enabling more efficient and cost effective communications to members via email. This will apply to half-yearly and annual statements as well as regular letters. This process allows significant cost and time savings over mail. That’s why we are encouraging members to supply their email addresses. Please refer to the first page of your statement at the top right. If it says “Email Address: Not Provided”, please call us on 1800 022 067 to update your email address.
Experience and personal service Members and employers can find out more about NESS, its products, services and superannuation by contacting NESS’ service representative, Mynas Leontios. With over 22 years’ experience in superannuation, Mynas provides a personal service to members and employers to help them get the best from NESS. He is available to visit work sites and talk to both members and employers about NESS, super in general and the upcoming Government reform agenda.
4
New South Wales Electrical Superannuation Scheme
If you are age 55 or more, you may be interested in one of the two tax effective pension options contained in our Pension PDS. If you have $20,000 or more in your NESS Super account, you are eligible to apply for a pension whether working or not. It is one of the few ways that you can access funds in your Super that are normally preserved until retirement. Just contact us for a copy of the Pension PDS or download it from our website.
Shorter Product Disclosure Statement (PDS) Government rules required Funds to produce an abbreviated PDS in June 2012. The Fund’s PDS provides information about NESS in a concise format, while providing references to the NESS website where members can get more detailed information on topics relating to their membership.
Federal Budget changes to super The Federal Budget frequently includes Government modifications to superannuation. The 2012/13 Budget was no exception and included:
1. Deferral of higher concessional contributions cap In the 2010 Budget, the Government announced that from 1 July 2012 individuals aged 50 and over with superannuation balances below $500,000 would be able to make up to $25,000 more in concessional contributions than generally allowed. That is, they would be able to contribute up to $50,000. This measure will now commence from 1 July 2014. In short, this means that for 2012-13 and 2013-14 there will be a concessional contributions cap of $25,000 applicable to everyone.
2. Reduction of higher tax concessions for contributions of very high-income earners People on incomes greater than $300,000 will have the tax concession on their concessional contributions reduced from 30 per cent to 15 per cent to bring it more in-line with the concession received by averageincome earners. The definition of “income” will include concessional superannuation contributions. Where
an individual’s income excluding their concessional contributions is less than $300,000 and the inclusion of their concessional contributions pushes them over the $300,000 threshold, the reduced tax concession will only apply to that part of the contributions that is in excess of the threshold.
3. Recovery of costs from APRA-regulated funds for the implementation of SuperStream reforms The Government will provide $467.1 million over seven years to implement the SuperStream reforms that are part of the package of Stronger Super reforms. To fund the implementation of SuperStream, APRA fees charged to APRA regulated funds have been increased for the 2012/13 financial year.
MySuper
Auto Consolidation The Government is concerned that multiple member super accounts are making the industry inefficient. It has targeted a reduction of millions of members’ accounts by commencing a consolidation process early in 2014. The first step will be aimed at the Australian Taxation Office (ATO) identifying super accounts up to $1,000 where the member is currently contributing to another Fund. It will advise the current Fund who will then request the other Fund to transfer the amount to it and close the account. That process may be extended to balances up to $10,000 late in 2014. NESS agrees with the principle of this process but is concerned that some members may lose valuable insurance cover in NESS.
MySuper is a Government initiative that commences on 1 July 2013. It’s an investment option with a simple set of product features and is intended to enable members in default options to compare funds more easily based on a few key differences – cost, investment, performance and the level of insurance coverage.
SuperStream
MySuper is also aimed at ensuring that members don’t pay for unnecessary ‘bells and whistles’ they don’t use.
NESS has commenced this process, in conjunction with its Administrator by encouraging employers to make electronic contributions and members to provide email addresses and mobile phone numbers.
In many respects, the proposed MySuper products are similar to those already offered by industry super funds such as NESS, that are low cost with no commissions paid to advisers.
‘SuperStream’ is a process designed to apply modern technology to improve the efficiency of the superannuation system to make it easier and cheaper to use. Fundto-Fund rollovers and contributions will be processed more quickly.
NESS is required to apply to the Australian Prudential Regulation Authority (APRA) for an authority to offer a MySuper product. Subject to NESS recieving this authority, from 1 July 2013, NESS members (other than Pension members) invested in the Default Balanced option will automatically be transferred to a MySuper investment option that will have special rules about fees with underlying investments that are similar to those in the Balanced option. Investments in the other 6 options will be continued as “choice” investment options. Once the rules and regulations are finalised, we will write to you to inform you on how these changes will affect you.
Annual Report 2012
5
The people who look after your super Trustee Board NESS is the Fund dedicated to employees of employers in the electrotechnology industries. NESS’ Trustee Directors understand your industry because most are from your industry.
NESS’ Directors (left to right) Reg Young, Paul Sinclair, Tony Glossop, Russell Wilson and John McCrory
NESS is managed by a trustee company, New South Wales Electrical Superannuation Scheme Pty Limited (the Trustee), ABN 28 003 156 812, AFSL 238945. The Board is made up of five directors who are responsible for managing NESS in the best interests of all members. They are: Reg Young
Employer Representative Director, nominated by the National Electrical and Communications Association NSW (NECA)
Paul Sinclair
Member Representative Director, nominated by the Electrical Trades Union New South Wales Branch (ETU). Paul was appointed to the NESS Board on 18 August 2012 to replace Steve Butler who resigned on 21 May 2012.
Tony Glossop (Chairman of the Board)
Employer Representative Director, nominated by NECA
Russell Wilson
Member Representative Director, nominated by the ETU
John McCrory
Independent Director, appointed by the other Directors.
James Tinslay is the Alternate for the Employer Representative Directors. Certain Directors are also members of the Audit & Compliance, Investment, Marketing and Remuneration Committees. Angie Mastrippolito is the Secretary of NESS, the Trustee and the Committees. NESS’ rules are set out in its Trust Deed and Product Disclosure Statements. The Trustee’s rules are contained in its Constitution. NESS is regulated by ASIC (Australian Securities and Investments Commission) and APRA (the Australian Prudential Regulation Authority) through their licensing systems. Other regulators are the ATO and AUSTRAC (Australian Transaction Reports and Analysis Centre). NESS is also subject to the many laws applicable to superannuation and financial services products. The Trustee Board has taken out indemnity insurance to protect its Directors and NESS against most of the financial liabilities that may be incurred during their management of NESS. This insurance does not protect the Trustee from being liable for the consequences of Trustee Director fraud, dishonesty, intentional or reckless neglect, wilful default or other misconduct.
6
New South Wales Electrical Superannuation Scheme
CEO and Fund Secretary
NESS helps members achieve security in retirement. We act in the best interests of our members and provide a high level of service to employers. Please direct your NESS enquiries initially to our service centre by calling 1800 022 067. If you need to contact a representative of the Trustee, email me at:
[email protected] Angie Mastrippolito Chief Executive Officer and Fund Secretary
Angie Mastrippolito, CEO and Fund Secretary, is responsible for the efficient running and day-to-day management of NESS. Angie works closely with the Trustee Board to make sure all decisions made by it are implemented effectively. She also manages all of the expert service providers to NESS, making sure they deliver to the required standard and provide value for money.
Our expert service providers A professional team made up of an administrator, auditor, investment consultant and other service providers help the Trustee to fulfill its responsibilities. As at 30 June 2012 our service providers were:
ADMINISTRATIVE SERVICES
ELIGIBLE ROLLOVER FUND
Australian Administration Services ABN 62 003 429 114
AUSfund ABN 85 945 681 973
ARREARS COLLECTION
FINANCIAL ADVISER
Laytins Mayfair Pty Ltd ABN 59 082 035 130
Money Solutions Pty Ltd ABN 36 105 811 836, AFSL 258 145
AUDITOR
INSURER
Ernst & Young ABN 75 288 172 749
Hannover Life Re of Australasia Ltd ABN 37 062 395 484
CONSULTANT
INVESTMENT CONSULTANT
Deloitte ABN 74 490 121 060
JANA Investment Advisers Pty Ltd ABN 97 006 717 568
COMPLIANCE
LEGAL ADVISER
Professional Financial Solutions ABN 84 096 646 178
Mercer Legal Pty Ltd ABN 11 091 577 632
Annual Report 2012
7
Investment report for the year ended 30 June 2012 The Year in Review The Financial Year 2012 (FY) started off very weak as investors grappled with the European debt, worries of a ‘double dip’ US recession and fears of a faster than anticipated slowdown in China. From January 2012, markets rallied strongly following the European Central Bank (ECB) pledging €1 trillion to the European Financial Stability Fund to help stabilize European financial institutions. However, the relief in markets was short lived with share markets declining again from May 2012 as the Investment outlook for Europe quickly deteriorated. The Greek elections in April 2012 led to a stalemate as the parties were unable to reach a compromise that would allow a workable coalition government. This resulted in concerns about the stability of the European Union (EU) and the potential for adverse impacts on European banks, particularly for heavily indebted peripheral countries. Spanish banks suffered large outflows of deposits and it became clear that its banks were unable to secure funding to roll over maturing loans at acceptable prices. Economic data from China, the USA and Europe all showed a continued deceleration during the June quarter, which in turn had a negative impact on commodity prices. With all this uncertainty it is no surprise that financial markets finished the year in a volatile manner. Domestically, the ASX 300 finished the FY returning -7.0%. Global equities fared a little better, ending the year in positive territory, with the MSCI world index (hedged in $A) posting +1.2% and the unhedged index returning +0.1%. The two asset classes that performed well over the year were property and bonds. The Australian listed property index had an excellent year returning 11.0%, Market Index
Looking Ahead – 2012/13 Post June 2012, the themes dominating the previous financial year have continued. At a macro level, the markets gained greater confidence that the European Central Bank (ECB) and U.S. Federal Reserve would take action to stimulate their economies. This helped the performance of investment markets. The outlook for financial markets continues to depend on the political outcomes in Europe. European growth rates are expected to be sluggish at best with recession in that region most likely. It is fair to say that we can expect continued market volatility, in both directions, for some time to come. NESS continues to invest members’ money on a longterm basis. The Trustee believes that diversification continues to be essential in the current environment and is investing with this key principle in mind. To this end, NESS has diversified its exposure to higher risk assets to include diversifiers to shares such as property, infrastructure and credit securities, which all have the potential to deliver sound long term returns. In addition, we are also keeping a healthy level of cash to maintain liquidity. We believe that, over the long term, this strategy will provide members with sound returns. All investment information in this article was provided by JANA Investment Advisers Pty Ltd.
Performance (income and capital gain or loss) – Year end 30 June 2012
Australian Shares (S&P/ASX 300 Accumulation)
-7.0%
International Shares (MSCI World ex-Australia) unhedged
0.1%
International Shares (MSCI World ex-Australia) hedged
1.2%
Unlisted Property (Mercer Unlisted Property Funds Index (Pre Tax)
8.2%
Listed Property Trusts (S&P/ASX 300 Property Trusts Accumulation)
11.0%
Australian Bonds (UBS Composite Index)
12.4%
Global Bonds (Barclays Global Aggregate (Hedged))
11.6%
Cash (UBS Bank Bills) Appreciation of $A against $US
8
as investors focused on the sector’s high yield and perceived defensive characteristics. Both domestic and global bonds delivered strong returns of 12.4% and 11.6% respectively. Government bonds rallied, reflecting the decline in investors’ sentiment and preference for perceived safe haven assets.
New South Wales Electrical Superannuation Scheme
4.7% -4.3%
Your investment options NESS offers you a range of seven investment options and six pension options that can be mixed in any combination to suit your personal investment needs. You can choose how conservatively or aggressively you want to invest and exactly how much exposure you want to different asset classes such as cash, fixed interest, shares, property and so on. We recommend you review those options every year when you receive your statement. The crediting rates for each option for the 2011/12 year, net of tax, fees and other costs are shown below. On the following pages you’ll find an overview of each of NESS’ investment options. If you want to change your investment option(s), you can download a Super Member Change of Investment Choice form from our website www.nesssuper.com.au or request one from us. If your investment choice is received by the 20th of the month, your changed option will apply on the first day of the following month. If you need help choosing the right investment option for your personal situation or with managing your super up to and through retirement, simply ring NESS on 1800 022 067 and ask to speak to a Money Solutions’ coach.
2011/12 Crediting rates The rates shown, in the table below, are the annual crediting rates of all NESS investment options for the 2011/12 year, net of tax, fees and other costs. Crediting rates for NESS members – 2011/12
Crediting rates for NESS Pension members – 2011/12
Cash
4.77%
Cash
5.39%
Stable
4.51%
Conservative
5.32%
Balanced
0.13%
Cautious
3.17%
Property
6.43%
Moderate
0.13%
High Growth
-2.80%
Assertive
-0.22%
Australian Shares
-4.34%
Aggressive
-3.18%
Overseas Shares
-3.70%
The Balanced option is the default option for NESS Super members. If you haven’t made an investment choice, your super will automatically be invested in this option. If your account was invested in the same investment option for the whole financial year, you will receive the total annual rate for that option, allowing for the movement of cash in and out of your account. If you switched options during the year, you will receive crediting rates for those options based on the timing of the investment switch. For more detail on NESS’ investment performance, see pages 10 to 11 and the information included with your Member Statement.
Annual Report 2012
9
Your investment options Continued
The charts below outline the seven NESS investment options and asset allocations as at 30 June 2012. For comparison purposes, 30 June 2011 allocations are shown in brackets. Pension options are on the following pages CASH1
STABLE1
BALANCED (Default)1
Profile
An investment with maximum security but low potential for growth after taking into account inflation.
An investment with good security and potential for some growth.
For growth above inflation over the medium term. Default option for members who do not make a choice.
Risk Profile
Very low risk. The most conservative investment, likely to produce both the lowest volatility and the lowest long-term returns. It invests exclusively in cash investments.
Low risk. A conservative investment, likely to produce both low volatility and lower long-term returns. The majority of the Stable option is invested in defensive assets such as cash, Australian and overseas fixed interest.
Moderate risk. A diverse mix of investments, providing more of a balance between risk and return than the Stable option. It should experience less short-term return volatility than the High Growth option but not achieve the same long-term returns.
Investment Objective2
To achieve a return after fees and tax in line with the UBS Australia Bank Bill Index.
To achieve a return after fees and tax over rolling three-year periods of at least 1% per annum above inflation, as measured by the CPI*.
To achieve a return after fees and tax over rolling five-year periods of at least 3% per annum above inflation, as measured by the CPI*.
Asset Mix
Defensive Assets:
Growth Assets:
34%
Growth Assets:
70%
Defensive Assets:
66%
Defensive Assets:
30%
Crediting Rates -Year Ended 30 June 3
Compound Average Returns3 Allocations at 30 June 2012 The actual amount of investment return applied to your account for the year may not equal the crediting rate declared for your selected investment option(s) due to the timing of transactions recorded in your NESS account.
100%
2012 4.8%
2012 4.5%
2012 0.1%
2011 4.9%
2011 7.8%
2011 8.6%
2010 3.7%
2010 8.1%
2010 8.0%
2009 2.0%
2009 -6.3%
2009 -11.9%
2008 4.0%
2008 -0.8%
2008 -7.4%
5-year: 3.9%
5-year: 2.5%
5-year: -0.9%
Cash
100% (100%)
Cash Australian Shares International Shares Defensive Alternatives Unlisted Property Listed Property Fixed Interest
28% 13% 10% 9% 9% 2% 29%
(20%) (15%) (12%) (6%) (7%) (1%) (39%)
Cash Australian Shares International Shares Defensive Alternatives Unlisted Property Listed Property Growth Alternatives Fixed Interest
11% 32% 23% 8% 8% 2% 5% 11%
1 The performance of investment options is not guaranteed. The value will rise and fall due to the performance of investment markets. 2 NESS is required by law to set an investment objective for the Fund and each underlying investment option. The investment objectives do not constitute a forecast or guarantee of future returns. 3 Past performance is not an indicator of future performance. 4 This option commenced on 1 December 2008, therefore there is a limited history of investment returns. * Consumer Price Index (CPI) 10
New South Wales Electrical Superannuation Scheme
(10%) (33%) (23%) (6%) (9%) (1%) (5%) (13%)
Your investment options Continued 2
PROPERTY1
HIGH GROWTH1
AUSTRALIAN SHARES1
OVERSEAS SHARES1
For growth above inflation over the medium term.
For significant growth above inflation in the longer term.
For significant growth above inflation in the longer term.
For significant growth above inflation in the longer term.
Moderate to high risk. The Property option invests in direct and listed property. It provides higher long-term returns than the Stable option, but with more volatility.
High risk. This has the highest long-term return expectation and is also the highest risk strategy producing very volatile returns over the short term.
High risk. This has the highest long-term return expectation and is also the highest risk strategy producing very volatile returns over the short term.
High risk. This has the highest long-term return expectation and is also the highest risk strategy producing very volatile returns over the short term.
To achieve returns after fees and tax over rolling five-year periods of at least 2% per annum above inflation, as measured by the CPI*.
To achieve a return after fees and tax over rolling seven-year periods of at least 4% per annum above inflation, as measured by the CPI*.
To achieve a return after fees and tax over rolling seven-year periods of at least 4% per annum above inflation, as measured by the CPI*.
To achieve a return after fees and tax over rolling seven-year periods of at least 4% per annum above inflation, as measured by the CPI*.
Growth Assets:
Growth Assets:
Growth Assets:
Growth Assets:
100%
100%
100%
100%
2012 6.4%
2012 -2.8%
2012 -4.3%
2012 -3.7%
2011 15.3%
2011 10.4%
2011 11.3%
2011 7.9%
2010 7.0%
2010 11.1%
2010 14.7%
2010 8.5%
2009 -17.0%
2009 -17.6%
2009 -14.4%
2009 -21.3%
2008 2.2%
2008 -13.5%
5-year: 2.2%
5-year: -3.2%
5-year: NA4
5-year: NA4
Property
100% (100%)
Australian Shares 46% (50%) International Shares 37% (35%) Defensive Alternatives 7% (5%) Unlisted Property 9% (9%) Listed Property 1% (1%)
Australian Shares
100% (100%)
Overseas Shares
100% (100%)
Annual Report 2012
11
Pension investment options The charts below outline the six NESS pension investment options and asset allocations as at 30 June 2012. Options
Aggressive
Assertive
Moderate
Asset Mix
Growth: 95% Defensive: 5%
Growth: 79% Defensive: 21%
Growth: 70% Defensive: 30%
What is the objective of the portfolio?
To outperform CPI + 5% per annum over rolling 7 year periods.
To outperform CPI + 4% per annum over rolling 4 year periods.
To outperform CPI + 3% per annum over rolling 5 year periods.
What are the main investments?
Between 95% and 100% invested in a range of Australian and international shares, Growth Alternative Assets and property.
Between 78% and 88% invested in a range of Australian and international shares, Growth Alternative Assets and property, with the balance in diversified fixed interest investments, Defensive Alternatives and cash.
Between 68% and 78% invested in a range of Australian and international shares, Growth Alternative Assets and property, with the balance in diversified fixed interest investments, Defensive Alternatives and cash.
Who should invest?
Members who feel comfortable accepting short-term volatile returns in order to achieve higher capital growth in the long term.
Members who feel comfortable accepting short-term volatile returns in order to achieve higher capital growth in the long term, but do not wish to have their benefits fully invested in shares.
Suitable for Members seeking a diversified investment over a broad range of asset classes, in order to achieve higher capital growth in the medium term with a moderate level of risk.
Indication of level of short-term volatility in performance.
High
Moderate to high
Moderate
Crediting Rates – Year ended 30 June1
2012
-3.2%
2012
-0.2%
2012
0.1%
Asset allocation at 30 June 2012
Australian Shares Overseas Shares Property Growth Alternatives Total Growth Assets Defensive Alternatives Diversified Fixed Interest Cash Total Defensive Assets
1 Options introduced 1 July 2011
12
New South Wales Electrical Superannuation Scheme
48.0% 35.0% 10.0% 2.0% 95.0% 5.0% 0.0% 0.0% 5.0%
Australian Shares Overseas Shares Property Growth Alternatives Total Growth Assets
39.0% 28.0% 10.0% 2.0% 79.0%
Australian Shares Overseas Shares Property Growth Alternatives Total Growth Assets
33.0% 24.0% 11.0% 2.0% 70.0%
Defensive Alternatives Diversified Fixed Interest Cash Total Defensive Assets
7.0% 6.0% 8.0% 21.0%
Defensive Alternatives Diversified Fixed Interest Cash Total Defensive Assets
7.0% 10.0% 13.0% 30.0%
Pension investment options 2 Cautious
Conservative
Cash
Growth: 50% Defensive: 50%
Growth: 30% Defensive: 70%
Defensive: 100%
To outperform CPI + 2% per annum over rolling 3 year periods.
To outperform CPI + 1% per annum over rolling 3 year periods.
To outperform the UBS Australia Bank Bills Index.
Between 48% and 58% invested in a range of Australian and international shares, Growth Alternative Assets and property, with the balance in diversified fixed interest investments, Defensive Alternatives and cash.
Between 28% and 38% invested in a range of diversified fixed interest investments, Defensive Alternatives and cash, with the balance in Australian and international shares, Growth Alternative Assets and property.
100% in short-dated fixed interest investments and cash
Suitable for Members seeking moderate capital growth.
Suitable for Members seeking some capital growth whilst placing a high importance on the protection of capital.
Members who are seeking a high level of security and who are prepared to accept lower returns, after taking inflation into account.
Moderate
Moderate to low
Low
2012
3.2%
2012
5.3%
Australian Shares Overseas Shares Property Growth Alternatives Total Growth Assets
21.0% 16.0% 10.0% 3.0% 50.0%
Australian Shares Overseas Shares Property Growth Alternatives Total Growth Assets
10.0% 8.0% 10.0% 2.0% 30.0%
Defensive Alternatives Diversified Fixed Interest Cash Total Defensive Assets
7.0% 23.0% 20.0% 50.0%
Defensive Alternatives Diversified Fixed Interest Cash Total Defensive Assets
7.0% 31.0% 32.0% 70.0%
2012
Cash
5.4%
100%
Annual Report 2012
13
Managing your investments Managing NESS’ investments is one of the key responsibilities of the Trustee.
Reserving policy
Investment Managers at 30 June 2012
Fluctuations in investment returns directly affect members’ benefits. A contingency reserve equal to 0.46% of net assets at 30 June 2012, (0.45% IN 2011, 0.31% in 2010) was maintained. Its use is strictly governed by a Trustee policy. It is invested in the Stable option.
The Trustee has appointed JANA Investment Advisers Pty Ltd (JANA), a subsidiary of the National Australia Bank, to provide implemented asset consulting services to NESS. The Trustee invested the assets underlying the NESS investment options in JANA Investment Trusts and in two MLC Corporate Investment Policies, where JANA selects the underlying investment managers for the various asset classes. The investment options also include legacy investments in trusts managed by the managers listed below that will be realised over time, in consultation with JANA.
Use of derivatives
• AMP Capital Investors Limited
The Trustee expects that, over the long-term, the use of these instruments will enhance the returns of NESS’ investment options.
• Goodman Funds Management Australia Limited • Macquarie Specialised Asset Management Limited
14
NESS does not have an investment fluctuation reserve.
New South Wales Electrical Superannuation Scheme
While the Trustee does not directly invest in derivative securities, investment managers are permitted to use futures, options and other derivative instruments to assist with the effective management of NESS’ assets, consistent with the Trustee’s Investment Policy. However, these instruments may not be used to gear the portfolio.
Investment products used by NESS at 30 June 2012 NESS uses professional fund managers whose performance is regularly monitored. Over the past two years, NESS’ assets have been invested in the following products. 30 June 2012 ($)
% of total
30 June 2011 ($)
% of total
Property GPT Wholesale Office Fund Goodman Australia Industrial Fund
–
0.00%
5,473,362
1.57%
6,713,409
1.81%
6,810,751
1.96%
6,713,409
1.81%
12,284,113
3.53%
AMP Infrastructure Equity Fund
5,433,381
1.47%
4,985,688
1.43%
Macquarie Global Infrastructure Fund 11 A
3,263,065
0.88%
3,268,319
0.94%
8,696,446
2.35%
8,254,007
2.37%
23,979,579
6.47%
22,894,418
6.58%
Other Investments
JANA Managed Funds JANA Passive Aust Share Trust JANA Aust Share Long Short Trust
–
0.00%
6,070,560
1.75%
JANA Core Aust Share Trust
66,499,589
17.95%
63,845,229
18.36%
JANA High Alpha Aust Share Trust
25,198,475
6.80%
23,450,970
6.74%
JANA Core Global Share Trust
24,560,233
6.63%
23,412,301
6.73%
JANA Core Global Share Trust with Currency Hedged
20,992,822
5.67%
16,539,259
4.76%
JANA Passive Global Share Trust
16,928,133
4.57%
16,345,759
4.70%
JANA Emerging Markets Trust
4,802,578
1.30%
4,668,043
1.34%
16,824,698
4.54%
16,074,731
4.62%
199,786,107
53.93%
193,301,270
55.58%
MLC Property Option
3,913,410
1.06%
3,157,484
0.91%
MLC Stable Option
6,347,872
1.71%
5,083,166
1.46%
753,433
0.20%
739,323
0.21%
133,673,965
36.08%
120,063,164
34.52%
MLC High Growth Option
4,258,262
1.15%
3,563,644
1.02%
JANA Select Cash Option
4,435,035
1.20%
1,320,895
0.38%
84,957
0.02%
38,025
0.01%
153,466,934
41.43%
133,965,701
38.52%
444,681
0.12%
–
–
JANA High Alpha Global Share Trust MLC Life Statutory Fund
MLC Aust Shares Option MLC Balanced Option Unit
MLC Overseas Shares Option Pension JANA Moderate JANA Assertive
82,514
0.02%
–
–
JANA Conservative
889,205
0.24%
–
–
JANA Cash
144,904
0.04%
–
–
63,284
0.02%
–
–
155,143
0.04%
–
–
JANA Aggressive JANA Cautious
1,779,731
0.48%
–
–
370,442,627
100.00%
347,805,091
100.00%
Annual Report 2012
15
NESS’ financial position The following financial summary is based on the audited accounts for 2011 and unaudited accounts for 2012. The audited accounts and auditor’s report will be available to members, on request from November 2012. STATEMENT OF CHANGES IN FINANCIAL POSITION Opening Balance
30 June 2012 ($)
30 June 2011 ($)
369,851,645
327,937,781
(1,458,026)
29,443,563
179,744
141,676
Plus Income Net Investment Income Interest Received Contributions from Employers and Members
43,402,633
41,110,201
Transfers into NESS by Members
4,009,870
3,789,902
Proceeds of Insurance Claims
1,330,148
1,540,818
Other Income
161,281
305,738
Total Income
47,625,650
76,331,898
20,884,072
24,979,362
Administration Costs
2,181,380
1,727,638
Member Insurance Premiums
2,198,739
2,095,487
Commonwealth Government Taxes
3,199,523
5,615,547
Total Expenses
28,463,714
34,418,034
Closing Balance
389,013,581
369,851,645
30 June 2012 ($)
30 June 2011 ($)
370,442,627
347,805,091
6,134,122
4,678,354
Other
15,369,614
20,501,026
Total
391,946,363
372,984,471
Benefits Payable
462,221
732,307
Other Amounts Payable
463,836
447,015
Provision for Income Tax
2,006,725
1,953,504
Total
2,932,782
3,132,826
389,013,581
369,851,645
Less Expenses Benefits Paid to Members and Dependants
STATEMENT OF FINANCIAL POSITION Assets Investments Cash at Bank
Liabilities
Net Assets
16
New South Wales Electrical Superannuation Scheme
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Fees and other costs super members
This section shows fees and other costs that you may be charged as a super member. These fees and costs may be deducted from your account, from the returns on your investment or from the Fund assets as a whole. You should read all the information about fees and costs because it is important to understand their impact on your investment. Type of fee or cost
Amount
How and when paid
Fees when your money moves in or out of the fund Establishment fee1 The fee to open your investment
Nil
Not applicable
Contribution fee1 The fee on each amount contributed to your investment – either by you or your employer
Nil
Not applicable
Withdrawal fee1 The fee on each amount you take out of your investment
$50.00
Deducted from your account each time a benefit is paid. When member protection applies, the fee may be partly or fully rebated
Termination fee1 The fee to close your investment
Nil
Not applicable
A flat fee of $62.40 p.a.
Charged at a rate of $1.20 per week or partial week of membership and deducted from your account on a monthly basis
Management costs2 The fees and costs for managing your investment
The amount you pay for specific investment options is shown on page 20.
Plus An administration fee of 0.15% p.a. of your account balance Plus A percentage fee ranging from 0.23% p.a. for the Cash option to 0.96% p.a. for the Property option3
The percentage based fee is deducted partly from investment earnings prior to the earning rate for that investment option being determined and partly from a monthly deduction from account balances4
Nil
Not applicable
Service fees5 Investment switching fee. The fee for changing investment options
1 No adviser remuneration fee applies 2 See breakdown of percentage based management costs on page 20 3 This includes an amount calculated in arrears as at 30 June each year to cover additional operating costs. 4 In some cases, user pays fees may also apply. See the section “Additional explanation of fees and other costs” on page 19. 5 Performance fees paid to investment managers may apply. For the performance fees which applied for the 2011/12 year, see breakdown of percentage based management costs on page 20
18
New South Wales Electrical Superannuation Scheme
Example of annual fees and costs for the Balanced investment option This table gives an example of how the fees and costs in the Balanced investment option for this product can affect your superannuation investment over a one-year period. You should use this table to compare this product with other superannuation products. EXAMPLE — the Balanced investment option Contribution Fees
Nil
For every $5,000 you put in, you will be charged nil
Plus Management Costs
0.82% + $62.40 ($1.20 per week)
And, for every $50,000 you have in the fund you will be charged $410 each year plus $62.40 in administration fees regardless of your balance
Equals cost of fund
$472.40
If you put in $5,000 during a year and your balance was $50,000, then for that year you will be charged fees: $472.40* What it costs you will depend on the investment option you choose
* Additional fees may apply: If you leave the fund, you will also be charged a withdrawal fee of $50.00. Performance fees paid to investment managers may apply. For the performance fees which applied for the 2011/12 year, see breakdown of percentage based management costs on page 20.
Additional explanation of fees and other costs Family Law Fees Type of fee or cost
Amount $
How and when paid
Application for information – in the format specified under the Family Law Act
$50 including GST.
Payable to the Trustee by the person making the request for information at the time a request is made
Splitting a benefit
$50 per partner
Shared equally by both parties and will be deducted from each party’s benefit at the time the benefit is split unless all of the benefit is going to the non-member spouse (in which case the non-member spouse pays all of the fee)
Flagging a benefit
None
Not applicable
Contribution Splitting Fee Family Law Fees Type of fee or cost
Amount $
How and when paid
Contribution Splitting Fee
$85.00
Payable by the member for whom the benefit is being withdrawn
Annual Report 2012
19
Fees and other costs super members – continued
Breakdown of Management Costs The following table shows a breakdown of the Management Costs included in the Fee table on page 18. These management fees are deducted partly from investment earnings prior to the earning rate for that investment option being determined and partly from a monthly deduction from account balances. Investment Option
Management Fee (%)
Buy/Sell Spread (%)
Administration Fee* (%)
Total Management Fee (%)
Performance Fee 2011/2012 (%)
Cash
0.23
Nil
0.15
0.38
nil
Stable
0.60
Nil
0.15
0.75
0.01
Balanced
0.67
Nil
0.15
0.82
0.05
Property
0.96
Nil
0.15
1.11
nil
High Growth
0.71
Nil
0.15
0.86
0.07
Australian Shares
0.67
Nil
0.15
0.82
0.06
Overseas Shares
0.74
Nil
0.15
0.89
0.06
Administration charge An asset-based fee of 0.15% p.a. was charged to members each month at the rate of 1/12th of 0.15%, based on the net asset balance of members’ accounts at the end of each month. This charge is intended to cover operating expenses incurred by the Trustee in managing NESS and typically includes expenses that can be deducted from fund assets in accordance with the Trust Deed.
20
New South Wales Electrical Superannuation Scheme
Fees and other costs pension members
This section shows fees and other costs that you may be charged. These fees and costs may be deducted from your account, from the returns on your investment or from the Fund assets as a whole. Type of fee or cost
Amount $
How and when paid
Fees when your money moves in or out of the Fund Establishment fee
Nil
Not applicable
Regular Pension Payment
Nil
Not applicable
Commutation (withdrawal) fee
$50.00
Deducted from your account upon full or partial commutations
Investment Switch fee
Nil
Not applicable
A flat fee of $62.40 p.a.
Charged at a rate of $1.20 per week or partial week of membership and deducted from your account on a monthly basis
Management costs The fees and costs for managing your investments
Plus An administration charge of 0.2% of your account balance
Calculated monthly at a rate of 1/12th of 0.2% of your end of month balance. A maximum charge of $7.69 per week applies to members with account balances of $200,000 and over
Plus The amount you pay for specific investment options is shown on page 22
A percentage fee ranging from 0.15% p.a. for the Cash option to 0.73% p.a. for the Agressive option1
The percentage based fee is deducted partly from investment earnings prior to the earning rate for that investment option being determined and partly from a monthly deduction from account balances
Example of annual fees and costs for the Moderate investment option This table gives an example of how the fees and costs in the Moderate investment option for this product can affect your pension account balance over a one-year period. You should use this table to compare this product with other pension products. EXAMPLE — the Moderate investment option
Balance of $50,000
Management Costs
0.84% + $62.40 ($1.20 per week)
For every $50,000 you have in the fund you will be charged $420 each year plus $62.40 in administration fees regardless of your balance1
Cost of fund
$482.40
If you put in $5,000 during a year and your balance is $50,000 throughout the year then for that year you will be charged fees: $482.40* What it costs you will depend on the investment option you choose.
* Additional fees may apply: If you leave the fund, you will also be charged a withdrawal fee of $50.00. 1 Performance fees paid to investment managers may apply. For the performance fees which applied for the 2011/12 year, see breakdown of percentage based management costs on page 22.
Annual Report 2012
21
Fees and other costs pension members – continued
Additional explanation of fees and costs Family Law Fees Type of fee or cost
Amount $
How and when paid
Application for information – in the format specified under the Family Law Act
$50 including GST
Payable to the Trustee by the person making the request for information at the time a request is made.
Splitting a benefit
$50 per partner
Shared equally by both parties and will be deducted from each party’s benefit at the time the benefit is split unless all of the benefit is going to the non-member spouse (in which case the non-member spouse pays all of the fee).
Flagging a benefit
None
Not applicable.
Management costs Breakdown of Management Costs The following table shows a breakdown of the Management Costs included in the Fee table on page 21. These management fees are deducted partly from investment earnings prior to the earning rate for that investment option being determined and partly from a monthly deduction from account balances. Investment Option
Investment Management Fee (%)
Buy/Sell Spread (%)
Administration Fee* (%)
Total Management (%)
Performance Fee 2011/2012 (%)
Cash
0.15
Nil
0.20
0.35
nil
Conservative
0.52
Nil
0.20
0.72
0.04
Cautious
0.57
Nil
0.20
0.77
0.07
Moderate
0.64
Nil
0.20
0.84
0.10
Assertive
0.70
Nil
0.20
0.90
0.10
Aggressive
0.73
Nil
0.20
0.93
0.14
Administration charge An asset-based fee of 0.2% p.a. is charged to members each month at the rate of 1/12th of 0.2%, based on members’ account balances at the end of the month. The maximum charge is $33.33 for members with account balances of $200,000 and over. This charge is intended to cover operating expenses incurred by the Trustee in managing the Pension and typically includes expenses that can be deducted from NESS’ assets in accordance with the Trust Deed.
Goods and Services Tax (GST) Fees and costs shown in the Fees section include GST and stamp duty if applicable, unless stated otherwise.
22
New South Wales Electrical Superannuation Scheme
Income Tax and its effect on fees Tax is payable on investment earnings of NESS at a maximum rate of 15%. However, as NESS is allowed a tax deduction in respect of certain fees and costs, the rate of tax actually payable by NESS is likely to be less than 15%. The benefit of any income tax savings are passed to members indirectly when the Trustee determines the crediting rate that applies to members’ accounts.
Insurance costs The cost of default insurance cover at 30 June 2012 was $2.40 per week for 2 units of Death cover and $1.25 per week for 2 units of Temporary Salary Continuance cover.
Surcharge An additional tax known as Surcharge may apply to certain employer contributions and before – tax member contributions for higher income earners for the financial years 1997-2005. This tax was abolished for contributions paid after 30 June 2005. However the Trustee may still receive a surcharge assessment or amended surcharge assessment for you for the financial years 1997-2005. If the Trustee does receive a surcharge assessment or amended surcharge assessment that applies to you, it will be deducted from your account in the Fund. If the Trustee receives an assessment after you have left NESS, it will generally be forwarded on to the fund or institution to which you have forwarded your benefits.
Member Benefit Protection NESS protects the benefits of members with small account balances from erosion by administration fees, as required by law. If your account balance is less than $1,000, the management costs charged to your account cannot exceed the total interest credited during that year. However, a maximum of $10 in administration charges can be applied to your account in a year when the interim or annual crediting rate is negative or low. At each Annual Review (30 June) or upon closure of a NESS account for any purpose, member protection will be applied to members with account balances of less than $1,000. Members who have made a portability claim are not eligible for Member Benefit protection.
Changes to fees The fees quoted on the preceding pages may change from time to time. You will be notified of any increase at least 30 days in advance of the change becoming effective.
Annual Report 2012
23
Additional Information Our partners providing benefits to members NESS has arranged for a number of additional benefits to members including: • Health insurance cover through nib. • Banking products and home loans through ME Bank.
If you would like a copy of the NESS Privacy Statement, please contact us on freecall 1800 022 067 or visit our website www.nesssuper.com.au
• Financial advice through Money Solutions.
Enquiries and complaints
NESS’ Eligible Rollover Fund
NESS has established a procedure for the prompt handling of member enquiries and complaints. If you have a general enquiry about NESS or about your account, please ring our member helpline 1800 022 067 or write to:
Your superannuation account balance may be transferred to an eligible rollover fund (ERF) if your super account balance falls below $500 and if we have not received contributions for 15 months or more. The nominated Eligible Rollover Fund for NESS is AUSfund ABN 85 945 681 973. If you are transferred to AUSfund you will cease to be a member of NESS and, therefore, any insurance cover held in NESS will cease and you will, instead, be subject to AUSfund’s governing rules. If NESS can provide AUSfund with your current contact details, AUSfund will provide you with its current Product Disclosure Document which contains details of AUSfund, its investments and charges. Members can transfer their AUSfund benefits to another complying superannuation fund at any time. AUSfund’s contact details are:
The AUSfund Administrator PO Box 2468, Kent Town SA 5071. Phone: Fax: Hours:
1300 361 798 (for the cost of a local call) 1300 366 233 (for the cost of a local call) 8.00am to 6.00pm Monday to Friday (local time)
Website: unclaimedsuper.com.au Email:
[email protected]
How we protect your privacy The Privacy Act 2000 outlines standards for the collection, maintenance and disclosure of information about individuals, and the consequences of an individual not providing information when requested and provides for the destruction of personal information once it is no longer
24
required. These policies, documentation and administration procedures are necessary to ensure compliance with the requirements of the Act has been achieved. Please see the current NESS PDS for more information.
New South Wales Electrical Superannuation Scheme
NESS Administration Locked Bag 20 Parramatta NSW 2124. If you have a complaint please write to:
NESS Complaints Officer NSW Electrical Superannuation Scheme Locked Bag 20 Parramatta NSW 2124 or phone 1800 022 067 (free call) There is no fee for lodgement or management of your complaint. NESS will respond in writing to your complaint within 90 days of receipt. If necessary your complaint will be considered by the Trustee Board, which will advise of its decision within 30 days. If your complaint is not resolved within 90 days or if you are not happy with the Trustee’s response, you can contact the Superannuation Complaints Tribunal (SCT). The SCT is an independent tribunal set up by the Federal Government to settle superannuation complaints. The SCT must consider whether the Trustee of a Fund has been fair and reasonable in making a decision that relates to a member. If you wish to complain to the SCT you should contact it to determine if it can deal with your complaint. The SCT will not consider a complaint that has not been through the NESS’ internal complaints process or if your complaint relates to the management of NESS generally. Before lodging a complaint with the SCT, we suggest that you phone it first on 1300 884 114 for the cost of a local call anywhere in Australia.
Make sure your employer is paying your super Generally, the law requires your employer to pay 9% super contributions for you in addition to your salary or wages. These contributions are credited to your NESS account. These contributions are shown on your NESS Annual Member Statement and half-yearly transaction report. You can also access your account online at www.nesssuper.com.au using Member Access to check the payments your employer has made. If you are concerned your employer isn’t making super payments for you, you can write to the Australian Taxation Office and ask it to check with your employer on your behalf.
Keep in touch if you move If you change address, don’t forget to let us know so you can continue to get the information issued by NESS. You can advise us online through our website or you can call, email or write to NESS. If we do lose track of you because we don’t have your current address, you may be classified as a ‘lost member’. If so, you may be able to find it via Australian Taxation Office’s (ATO) SuperSeeker service. It can be contacted on 13 28 65 or via the individuals section of the ATO Web site www.ato.gov.au
Contact us
Information available on request
There are four easy ways to contact NESS if you have a question or want more information about your super.
You can inspect other documents on request, for example:
Call a Helpline Officer on:
• the Trust Deed • the Investment Policy Statement • the latest audited accounts and auditor’s report • details of how Trustee Directors are appointed • the inquiries and complaints procedure • NESS’ Privacy Policy
1800 022 067 Monday to Friday, between 8:00am and 8:00pm EST. We are ready to help you with any information you need about your account.
Write to us:
• NESS’ Risk Management Plan
NESS Administration Locked Bag 20 Parramatta NSW 2124.
• NESS’ Insurance Policies.
E-mail us:
Call us to arrange for an inspection of these documents at our office.
[email protected]
If you have any questions about this Report, you can address them to the Fund Secretary via email on
[email protected]
www.nesssuper.com.au
Website and online access: Simply log on to access up to date news and information. You can also download the latest member publications and forms.
Annual Report 2012
25
www.nesssuper.com.au
NE/AR 27.9 09/11 ISS12