BlueScope Steel Superannuation Fund. Defined Benefit Division

Transcription

1 BlueScope Steel Superannuation Fund Defined Benefit Division Member Booklet 30 August 2013

2 Important notice This document describes the main features of the BlueScope Steel Superannuation Fund (BlueScope Steel Super or the Fund) Defined Benefit Division. The information in this booklet is not intended to constitute financial product advice. It has been prepared without taking into consideration your particular financial needs, circumstances and objectives. We recommend that you assess your own financial situation before making any decision based on the information contained in this booklet. You can call SuperConnect to obtain help in choosing a licensed financial adviser who can provide advice about financial products, based on your individual financial circumstances. Please note that if your employer is not a financial services licensee nor an authorised representative it is not permitted to provide you with advice regarding BlueScope Steel Super or any other superannuation product. A formal dispute resolution system has been set up by BlueScope Steel Super. Details of this system are contained on page 25 of this booklet. The information contained in this booklet is correct at the time of publishing. Changes to Government legislation or superannuation rules after this date may affect its accuracy. If there is a material change to any of the information in this booklet, the Trustee may prepare a supplementary or revised booklet. A copy of the most recent booklet is available to all members on the website at or by calling SuperConnect. If a change is not materially adverse to members, the Trustee will instead provide the updated information to members via the website and by the newsletter, SuperTalk. A paper copy of this information will be sent to any member, free of charge, on request. The benefits of the Fund are governed by the provisions of the Trust Deed, that override the content of this Member Booklet to the extent of any inconsistency. This document is issued by the Trustee, Total Risk Management Pty Limited (TRM) (ABN , AFSL ) for BlueScope Steel Superannuation Fund ABN Further information The Trustee will provide all information that it believes you will reasonably need to assess the management, financial condition and performance of BlueScope Steel Super. If you are seeking further information about your benefit, BlueScope Steel Super or the Trustee, please contact: BlueScope Steel Superannuation Fund Locked Bag A4010 Sydney South NSW bstlbsr@russellsuper.com You can also call SuperConnect on and speak to a Service Representative or visit the website The Trustee has provided the regulator (APRA) with a bank guarantee in the sum of $5 million. This guarantee is a minimum capital requirement for TRM and provides comfort in the event of any default in relation to the operation of the Fund. A copy of the guarantee is available on request. BlueScope Steel Superannuation Fund Defined Benefit Division

3 Contents Welcome 2 Resignation and retirement benefits 3 Death and Disablement benefits 5 Contributing to your super 10 Other benefits through the Fund 14 Accessing your super 15 Investing your money 17 About fees 20 Leaving BlueScope Steel 21 Tax and your super 23 Fund administration 25 More information 26 Defined Benefit Division BlueScope Steel Superannuation Fund 1

4 Welcome Welcome to BlueScope Steel Super, Defined Benefit Division (DBD) Part 1. This division closed to new members on 1 August 1997 as part of the BHP Billiton Superannuation Fund. BlueScope Steel Super s DBD is a defined benefit superannuation fund. This means that your superannuation benefit is usually calculated using a mathematical formula. Your benefit is based on: your age, your years of membership in BlueScope Steel Super (which includes your membership of BHP Billiton Super); and your Final Average Salary. The more time you take to understand the superannuation options available to you, the better use you can make of all the benefits and services. Please file this booklet somewhere handy, as you will need to refer to it from time to time. You can always find out information about your superannuation and personal benefits by calling SuperConnect on or visiting the Fund website at You can expect regular communication from the Fund in the future. BlueScope Steel Super looks forward to continuing to provide you with an exceptional superannuation service. Please read this booklet to find out more about your benefits. 2 BlueScope Steel Superannuation Fund Defined Benefit Division

5 Resignation and Retirement Benefits When you leave BlueScope Steel (the Company) for any reason, other than if you are eligible to claim a death or disablement benefit, then your benefit is calculated using this mathematical formula: Final 20% x Average x Membership x Benefit Salary Period Factor plus accumulation accounts (AVCs and rollovers, excluding rollovers that bought back-dated service) less any Surcharge Offset Account subject to a Minimum Benefit. Final Average Salary Your Final Average Salary is your average superannuation salary over the last three years that you work for BlueScope Steel. Your superannuation salary is your base salary. It does not include overtime, shift loading, allowance, bonuses and other benefits. Membership Period Full time employment Your Membership Period is the time elapsed between the date you joined the BHP Billiton Superannuation Fund and the date you leave BlueScope Steel Super. The maximum years of membership is 36 years. After 36 years, you have the option of transferring to the Defined Contribution Division. You will receive more information about this at the time. If you would like information about this option now, please call SuperConnect on Prior to 1 July 2000, members who rolled non-preserved super into the BHP Billiton Superannuation Fund were able to purchase extra years of membership. These extra years of membership are added to the Membership Period. If you have back-dated membership this will be recorded on your annual Benefit Statement. Part time employment Your Membership Period is adjusted if any of your service with the Company is on a part-time basis. It is adjusted in exact proportion to the amount of your part-time service. For example, if you worked exactly half time for two years, this period would be counted towards your Membership Period as one year. The Final Average Salary for part-time employees is calculated based on the full-time equivalent of your average superannuation salary over the last three years that you work for BlueScope Steel. Leave without Pay If you take Leave without Pay (see page 13) and do not make full contributions, the period of leave is not counted towards your Membership Period. Benefit Factor The benefit factor used in calculating your benefits depends on your age. Age Benefit Factor 40 or less or more 1.00 Pension option If you are over 55 years, you have the option of taking your retirement benefit as a lifetime pension rather than a lump sum. You must elect to take a lifetime pension within 90 days of leaving the Company. For more information about this option, please call SuperConnect on Defined Benefit Division BlueScope Steel Superannuation Fund 3

6 Example: Calculating a Retirement Benefit Mark is 64 years old and is about to permanently retire. Age at retirement: 64 Membership period: 30 (years) (This includes his Membership Period with BHP Billiton Super) Benefit factor: 1.00 Final Average Salary: $80,000 Benefit payable to Mark: 20% x $80,000 x 30 x 1.00 = $480,000 Final Years of Benefit Factor for Average Membership a 64 year old Salary (see table on page 3.) So Mark s Retirement Benefit is $480,000 plus any accumulation accounts that he may have (less the balance of his Surcharge Offset Account, if he has one). Guaranteed minimum benefit Your benefit on resignation or retirement is subject to a Minimum Benefit. If your Minimum Benefit is greater than the benefit calculated using the standard benefit formula set out on page 3, you will receive the Minimum Benefit instead of your standard benefit. Your Minimum Benefit is the total of: 2.5 x your total Basic Member Contributions (defined on page 10) to BlueScope Steel Super (and previously to the BHP Billiton Superannuation Fund) with investment earnings (which are determined assuming an Option C investment strategy see page 19 for more information); 3% of your Final Average Salary x Years of Membership from 1 March 1987, or the date you joined the Fund, whichever is the later; any accumulation accounts you might have; any roll-in that bought you back-dated membership while you were at BHP Billiton; less the balance of your Surcharge Offset Account, if you have one. Example: Calculating a Resignation Benefit Fiona is 45 years old and about to resign from BlueScope Steel. Age at resignation: 45 Membership period: 20 (years) Benefit factor: 0.80 Final Average Salary: $70,000 Benefit Payable to Fiona: 20% x $70,000 x 20 x 0.80 = $224,000 Final Years of Benefit Factor for Average Membership a 45 year old Salary (see table on page 3.) Fiona s resignation benefit from BlueScope Steel Super is $224,000, plus any accumulation accounts that she may have (less the balance of her Surcharge Offset Account, if she has one). As Fiona is continuing to work, she must keep her preserved money (see page 15) in a complying superannuation fund. She could choose to leave all or part of her benefit in the BlueScope Steel Super Retained Benefits Division, which is a complying superannuation fund. Example: Calculating a Minimum Resignation Benefit Fiona had contributed $20,000 to her superannuation account during her Membership Period. With investment earnings of $6,000 she has a total of $26,000. She has no accumulation accounts or back-dated membership. Basic Member Contributions + investment earnings: $26,000 Final Average Salary: $70,000 Membership period: 20 (years) Minimum benefit: 2.5 x $26,000 = $65, % x $70,000 x 20 = $42,000 = $65,000 + $42,000 = $107,000 Fiona s Minimum Benefit of $107,000 is lower than her standard Resignation Benefit of $224,000. As Fiona is entitled to receive the greater benefit, she will receive the standard Resignation Benefit of $224, BlueScope Steel Superannuation Fund Defined Benefit Division

7 Death and Disablement benefits Death and Total and Permanent Disablement (TPD) insurance benefits are designed to provide you with peace of mind. If you die or become totally and permanently disabled, you or your family may be provided with financial benefits to help cover the loss of your income. You are covered 24 hours a day, seven days a week while you are a BlueScope Steel employee. Death and TPD cover is insured with an external insurer who is involved in the claims assessment process. The Trustee makes the final decision on all claims. As a Defined Benefit member you are automatically covered for death and TPD benefits. Calculating your death and TPD benefit If you die or become permanently disabled while you are member of BlueScope Steel Super, generally the benefit payable to you, or your dependants, is: 20% x Projected Final Potential x Average Salary Membership Period (capped at 36 years) plus the value of your accumulation accounts less any Surcharge Offset Account. Projected Final Average Salary This is your projected Final Average Salary at age 65. It is based on the assumption that your current salary would have remained unchanged up to your 65th birthday. If you are currently working part time, your projected Final Average Salary at age 65 will be based on your full-time equivalent salary. Potential Membership Period Your Potential Membership Period is the number of years (subject to a maximum of 36 years) from the date you joined the BlueScope Steel Superannuation Fund until your 65th birthday. Your Potential Membership Period will be adjusted if any of your service with the Company is on a part-time basis. In particular, your future membership to age 65 will be calculated assuming that you would have continued to work your current hours. If you have bought back-dated membership, your Membership Period will be adjusted accordingly. If you have a Surcharge Offset Account, the balance will be deducted from your benefit Death benefits Death benefits are paid to your dependants as directed by the Trustee. In terms of superannuation law, the people that you are able to nominate to receive your death benefit are: your spouse (including a de facto partner of the same or opposite sex who is living with you on a genuine domestic basis in a relationship as a couple or with whom you are in a relationship that is registered under relevant State or Territory law); Example: calculating a TPD (or Death) benefit Jack is 50 years old when he is totally and permanently disabled. He has not bought any back dated membership. His salary is $75,000. The benefit he receives is the same as the benefit his dependants would receive if he died. It is calculated as follows: Age at disablement: 50 Age joined (BHP Billiton Superannuation Fund): 30 Projected Final Average Salary: $75,000 Potential Membership period: 35 (years) 20% x $75,000 x 35 = $525,000 Projected Potential Final Average Membership Salary period So, the lump-sum payable to Jack would be $525,000. He would also receive the balance of any accumulation accounts he has with BlueScope Steel Super. your children (including adopted children, step children and children born outside of marriage) and any child who is the child of your spouse; any person who is financially dependent on you; any person with whom you have an interdependency relationship including: any person with whom you have a close personal relationship and live with, where one or both of you also provides ongoing financial support, domestic support and personal care; and any person with whom you have a close personal relationship, where, because of a disability, the above requirements of living together, financial support, domestic support and personal care are not able to be satisfied. If you do not make a nomination, your benefit will be paid to your dependants or to your Estate, as determined by the Trustee. Tax may be payable on your death benefit. You should ensure that your Trustee knows who your dependants are by completing a Nomination of Dependants form. The form is available from SuperConnect or you can download it from the website. You can make either a binding nomination or a non-binding nomination see page 6 for more information. Defined Benefit Division BlueScope Steel Superannuation Fund 5

8 Non-binding nomination With a non-binding nomination, the Trustee makes the final decision on who will receive your benefit. Superannuation law seeks to ensure that it is paid to your dependant or people who are financially dependent on you. You can advise the Trustee of whom you want to receive your benefit by completing the relevant sections of the Nomination of Dependants Form. The Trustee will consider your nomination before paying out the money, so it s important to keep your nomination up-to-date, and to pay attention to who qualifies as a dependant. It s a good idea to complete a new beneficiary nomination form whenever your circumstances change, e.g. through marriage, divorce or if you have a child. With a non-binding nomination, the Trustee will consider your personal circumstances at the time of death in determining who receives your benefit. Binding nomination A binding nomination allows you to control, within certain bounds, who receives your death benefit. A valid binding nomination is legally binding, meaning that the Trustee is required by law to pay your death benefit to the person(s) nominated by you. To make a valid binding nomination, you must complete the relevant sections of the Nomination of Dependants form. In particular, you will need to: nominate individuals who satisfy one of the above dependants relationship criteria, or alternatively nominate your Legal Personal Representative or Estate if you wish your death benefit to be paid to your Estate*; ensure that the percentages allocated to the nominated individual(s) add up to 100%; sign and date the nomination form in the presence of two witnesses; have the form signed by two witnesses (who must be over 18 years of age and not be nominated as beneficiaries); and have these two witnesses complete the declaration in the form. A binding nomination will remain in place for a period of three years from the date it was signed by you unless it is replaced, revoked or re-confirmed within this time. You can replace your binding nomination via the same process used to make the original nomination, i.e. complete a new Nomination of Dependants Form, including the witnessing process. If the Fund receives a new Nomination of Dependants Form, it will automatically replace any existing binding nomination held by the Fund. If you do not replace your binding nomination it will expire at the end of the three year period and will be treated in the same way as a non-binding nomination, that is, the Trustee will make the final decision as to who will receive your death benefit. If your binding nomination is valid at the date of your death, the Trustee is required to pay your death benefit in accordance with your instructions. You should be aware that a binding nomination will not necessarily become invalid in the event that your personal circumstances change. As such it is important you review your nomination regularly to ensure it remains up-to-date. * Note: You should note that the relationship between you and each of the nominated beneficiaries will not be investigated at the time of receipt of a binding nomination but will be validated at the date of death. In the event that a nominated beneficiary is not an eligible beneficiary under superannuation law at the date of death (i.e. no longer financially dependent, has pre-deceased the member etc), then the WHOLE binding nomination will be treated as invalid. An invalid binding nomination will be treated in the same way as a non binding nomination. 6 BlueScope Steel Superannuation Fund Defined Benefit Division

9 Total and Permanent Disablement (TPD) benefits To become eligible for a TPD benefit, you must be physically or mentally disabled (through illness, infirmity or accident) such that the Trustee considers that you are likely to be permanently incapable of obtaining or continuing in suitable employment, having regard to your qualifications, training and experience. The Trustee will consider the advice of two or more registered medical practitioners in deciding whether you meet the definition of total and permanent disablement. There is normally a six-month waiting period between the date you last attended work and when your TPD claim is assessed. However, if you think you are eligible for a TPD benefit, you should still notify BlueScope Steel Super as soon as possible. The appropriate claim forms are available from SuperConnect. In certain circumstances, this six month waiting period might be waived, e.g. if you are diagnosed with a terminal illness and the insurer agrees to waive the waiting period, your claim will be assessed immediately. Pension option If you joined the BHP Billiton Superannuation Fund before 1 July 1994, your death or TPD Benefit can be taken as part lump sum and part pension. Taking part of your benefit as a lump sum and the other part as an on-going pension may better suit your circumstances or it may be preferable to your family. Following legislative changes that took effect on 1 July 2007, a benefit can be taken as a pension following the death of a member on or after that date only if the person receiving the pension was, at the date of death the deceased s spouse, financially dependent on the deceased, in an interdependency relationship with the deceased, a child under 18, a child aged 18 or over but under 25 who was financially dependant on the deceased at the date of death and a child who is disabled. A pension payable to a child (other than a disabled child) must cease at age 25. The pension and lump sum are linked to your Final Average Salary. The size of the pension and the period of time for which it is payable depends on whether the pension is received by a member, spouse or child dependant. Important facts about these pensions 1. Pensions do not increase with inflation. Please note that these pensions do not increase in line with inflation, nor do they grow with investment earnings. Pensions payable to children can be increased at the discretion of the Trustee. In the case of a disablement pension no tax is payable once you reach age 60. Prior to age 60 the taxable component of the pension, less a deductible amount, is taxed at your marginal rate less a 15% tax rebate. In the case of a death pension payable to a death benefits dependant*, no tax is payable once the recipient of the pension turns 60. Prior to reaching age 60 the taxable component of the pension, less a deductible amount, is taxed at the marginal tax rate of the recipient less a 15% tax rebate. * A death benefits dependant includes the deceased s spouse, children under 18, anyone in an interdependency relationship with the deceased at the date of death and anyone who was financially dependent on the deceased at the date of death. Call SuperConnect or see a licensed financial adviser for more information. Commute your pension to a lump sum Pension beneficiaries may, with approval of the Trustee, choose to commute their pension to a lump sum amount at any time. This means that the pension is converted to a lump sum and no further pension payments would be payable. You should seek advice before deciding to commute a pension, as tax may be payable on the lump sum benefit. To find out the value of your pension if you commute it to a lump sum, please call SuperConnect. Duration of TPD pension A TPD benefit paid to a former member may cease if the member, prior to age 65, is assessed by the Trustee as no longer being disabled. Alternatively, the Trustee may decide to suspend or reduce the pension. 2. Taxation of pensions No tax is payable when a benefit is taken as a pension if you are age 60 or more at the time of your death or disablement. However, tax may be payable if you are under age 60 at the time the pension becomes payable. Defined Benefit Division BlueScope Steel Superannuation Fund 7

10 Calculating a part lump sum for death or TPD The part lump sum is calculated as: Final Average x Lump Sum Salary Multiple Example: calculating a part lump sum Let s look at Jack s benefit again. Jack is eligible to receive his TPD Benefit as part lump sum and part pension rather than entirely as a lump sum. The lump sum part of his benefit would be calculated as: Final Average Salary x Lump Sum Multiple $70,000 x 2.25 = $157,500 So, Jack could receive a lump sum of $157,500 (plus the balances of any accumulation accounts he has with BlueScope Steel Super) plus a monthly pension. Lump Sum Multiple Table Age of member on death or disablement Lump Sum Multiple 45 or younger or older 0 Calculating TPD pensions The formula used to calculate a member s part pension is: 1/54 x Final Average x Total Potential Salary Membership (capped at 36 years) Example: calculating a part pension In addition to his part lump sum of $157,500, Jack would receive a monthly pension Age : 50 Total Potential Membership period (to age 65): 35 (years) Final Average Salary $70,000 1/54 x $70,000 x 35 = $45,370 per annum = $3,781 per month* * Tax at the applicable rate will be deducted from each pension payment. Calculating a pension on death Spouse If a member dies, or if a former member who is receiving part of his TPD benefit as a pension dies, a lifetime pension will be paid to the surviving spouse, provided the spouse is a special dependant at the date of death. The amount of the spouse s pension depends on how many special dependants there are refer to the following table. A special dependant includes the member s spouse (but not a person who became a former member s spouse after the member ceased to be a member of the Fund) and any children who are either under age 18 or, in the Trustee s opinion, a full time student in a course of study at a school or tertiary institution approved by the Trustee. If the number of special dependants reduces after the member s death (e.g. a child over 18 ceases to be a full time student), the amount of the pension being paid may be adjusted appropriately. Special Dependants Pension payable* 1 50% % % 4 or more 100% * If the member was aged 65 or less at the date of death, this is the percentage of the TPD pension (see above). If the member was aged over 65 at the date of death, this is the percentage of an amount equal to the greater of (i) an amount calculated by the actuary, based on the member s retirement benefit at death, and (ii) an amount equal to 1/54th x FAS for each year of actual membership to the date of death. In the case of the death of a former member, this is the percentage of the pension he was receiving immediately prior to death. On the death of a former member who was receiving a TPD benefit as a pension, the spouse will also receive an additional lump sum, equal to one half of the annual pension that was being paid to the deceased, immediately prior to his death. 8 BlueScope Steel Superannuation Fund Defined Benefit Division

11 Dependants If the special dependants do not include a spouse, or if the deceased s spouse dies whilst in receipt of a pension, a pension (calculated in accordance the above table) will be paid to one or more of any other special dependants for the time being, in such proportions as the Trustee determines. Any such pension will cease when a recipient ceases to be a special dependant and the amount of the pension payable to any remaining special dependants will be adjusted appropriately. For example, if the deceased is survived by 4 children only, and 3 of those children are special dependants, the total pension (to be shared between the 3 children, as determined by the Trustee) will be 83.3% of the pension that the deceased was receiving. When the first child ceases to be a special dependant, the amount of the pension will reduce to 66.67% of the pension that the deceased was receiving. A pension payable to a child may be increased each year, with the approval of the Trustee and BlueScope Steel. Claiming a benefit If you or your family need to claim a death or TPD Benefit, call SuperConnect on for the appropriate form(s). The assessment time on disablement claims varies from case to case, depending on the circumstances. If successful, TPD claims are usually paid within five days of receipt of Trustee authorisation. If you leave BlueScope Steel You have death and TPD cover (where applicable) for up to 60 days after you leave the Company. The level of cover will be the difference between your death / TPD benefit and your Leaving Service Benefit. Insurance cover within the Retained Benefits Division When you leave BlueScope Steel, unless you choose otherwise, your super benefit will be transferred into the Fund s Retained Benefits Division (RBD). At that time you will be able to retain in the RBD the amount of death insurance cover that you had as an active employee member of the Fund. The insurer that covers you for death and Total and Permanent Disablement (TPD) benefits as an active employee member of the Fund also covers members of the RBD for death benefits. The amount of death cover that you would be entitled to would be the amount of death cover that you had on leaving BlueScope Steel rounded up to the nearest available unit. You may wish to contact BlueScope Steel to ensure that there are no delays in notifying the Fund of the termination of your employment. If there is a delay in being notified of your termination of employment by your employer, premium deductions from your account in the RBD may be backdated to the date of ceasing employment with BlueScope Steel. Any premium deductions from your account in the AD&S Category for this period may be refunded such that there is continuity of premium deductions. However, there may be a period when premium deductions for death and TPD cover are made to your account in the DCD even though death only cover is being provided in the RBD from the date of ceasing employment with BlueScope Steel. Whilst the insured death cover provided to you would continue within the RBD, your TPD cover would cease 60 days after your termination of employment with BlueScope Steel regardless of when your employer notifies the Fund of your termination of your employment. However, you would remain able to claim a TPD benefit (or Terminal Illness benefit) as a result of a disablement (or diagnosis) that arose while you were an active BlueScope Steel employee. If, after joining the RBD, you were paid such an insured TPD benefit, your RBD death insurance cover would cease immediately, unless your insured death benefit is greater than the insured TPD benefit paid. In this case, the difference between your insured death benefit and the insured TPD benefit paid to you could continue, as death only cover. For example, if your death cover was $100,000 and you received an insured TPD benefit of $80,000, you would continue to have $20,000 death only cover. In all other situations, members cannot receive both a TPD insured benefit and an insured death benefit from the Fund only one insured benefit is payable, regardless of whether your entitlement arose while you were an active BlueScope Steel employee or as a member of the RBD. Finally, let s consider what would happen if you were to die while a member of the RBD but, before you died, you had submitted a claim and the claim was being assessed for a TPD benefit in respect of your membership as a BlueScope Steel active employee. In this case, the benefit paid from the Fund would be the higher of your insured TPD benefit and your insured death benefit, provided that the insurer and the Fund had sufficient information to decide that you qualified for a TPD benefit. However, if (at the date of death) the Insurer and the Fund did not hold sufficient information to approve your TPD benefit, the Fund would pay your insured death benefit. In either case, you would receive one insured benefit only. For more information please contact SuperConnect on Continuing your death and TPD insurance If you are under 60 when you leave BlueScope Steel and you are not leaving due to disability or poor health, you may have the option of continuing your death and TPD cover by purchasing an individual insurance policy from the Fund s insurer. To be eligible you must take up the option for cover within 60 days of leaving BlueScope Steel and meet certain other criteria. It is important to note that the Fund s insurance policy states that you will not be entitled to have death cover in the RBD and purchase an individual policy from the insurer. If you decide to purchase an individual policy from the insurer, we suggest that you consider retaining your death cover in the RBD until such time that the individual policy has been approved and commenced. At that time it would be your responsibility to cancel your cover in the RBD. Please call SuperConnect for further information. Defined Benefit Division BlueScope Steel Superannuation Fund 9

12 Contributing to your super You must contribute 4% of your annual salary (excluding bonuses, overtime and allowances) towards meeting the cost of your superannuation benefits. These contributions are called your Basic Member Contributions. (If you are earning more than $60,000 per year, the maximum you are required to contribute is $2,400 net per annum.) If you choose to make your Basic Member Contributions on a salary sacrifice (before-tax) basis, your contribution is 4.7% of your annual salary. This is to cover the 15% tax on super contributions that you pay as salary sacrifice. All contributions are deducted from, and at the time of, your regular pay. BlueScope Steel makes contributions on your behalf to meet the value of your defined superannuation benefits. The amount that BlueScope Steel contributes to your defined benefit is determined by the Fund s Actuary. Additional Voluntary Contributions (AVCs) With BlueScope Steel Super, you can also choose to add to your superannuation savings by making Additional Voluntary Contributions (AVCs). There are two types of AVCs: 1. Regular AVCs these are contributions made directly from your regular pay. They can be made from your before-tax or after-tax income; and 2. Lump sum AVCs these are contributions in the form of occasional lump sum payments. You can make them via cheque or you could decide to contribute all or part of your bonus, overtime payments or other allowances. Concessional and non-concessional contributions The table on page 12 defines concessional contributions and nonconcessional contributions and the tax treatment of each. It is important to understand the differences between each type of contribution, as different limits apply and each has different tax effects. Special rules apply to calculate the amount of concessional contributions for Defined Benefit members. It is important that you monitor the total amount of concessional and non-concessional contributions that you make to superannuation in any financial year. You should not rely on the Fund or your employer to do this on your behalf. If you contribute in excess of the relevant contribution limit(s), you will have to pay excess contributions tax. You should read the information on pages about taxation of contributions to make sure you understand the impact of taxation. The main advantage of salary sacrifice (concessional) contributions over non-concessional contributions is that they can reduce your income tax by redirecting taxable income into superannuation. Also, invested in superannuation, the money generally attracts less tax than it would if paid as personal income, taxed at your marginal income tax rate. The overall effectiveness of salary sacrificing super depends on your marginal income tax rate. You should also remember that only nonconcessional contributions count for Government co-contribution purposes (see page 13). Contact SuperConnect to discuss your options or visit the Fund s website. To start, stop or change your: Lump sum AVCs call SuperConnect on ; Payroll deductions contact your payroll department. 10 BlueScope Steel Superannuation Fund Defined Benefit Division

13 Calculating concessional contributions Concessional contributions for each year equal the sum of: Pre-tax Additional Voluntary Contributions (i.e. salary sacrificed contributions, including salary sacrificed bonuses); plus Notional Taxed Contributions worked out using a special formula set by the Government that applies for Defined Benefit members only. (If you make your Basic Member Contributions on a salary sacrifice basis, these are included in your Notional Taxed Contributions.) Calculating your Notional Taxed Contributions Your Notional Taxed Contributions for the year are calculated as: Your Superannuation Salary at the start of the financial year (i.e. at 1 July) multiplied by 1.2 multiplied by Your New Entrant Rate less Any after-tax compulsory member contributions that you make in the year to partially fund your defined benefit, multiplied by 1.2. Minor modifications will apply to this formula if you work part-time, and/or in the year that you leave BlueScope Steel. The New Entrant Rate is calculated by the Fund s Actuary according to rules provided by the Government. The New Entrant Rate varies depending upon the type of defined benefit you have. The New Entrant Rate that the Actuary expects will apply to you was communicated to you in a letter and fact sheet in October This rate may change if the Government makes further modifications to the rules. The Fund will advise you if it changes. Once you know your New Entrant Rate, you will be able to use the formula to evaluate the level of any additional voluntary contributions you wish to make. For example suppose a Defined Benefit member under age 50 has a Superannuation Salary of $150,000, is making Basic Member Contributions on an after tax basis and has a New Entrant Rate of 10%. The member s Notional Taxed Contributions would be calculated as per the table below. Note that in this example the member has Notional Taxed Contributions of $15,120. This is well below the applicable concessional contribution threshold of $25,000 for the 2013/14 financial year. The member is able to make additional voluntary contributions on a salary sacrifice basis of up to $9,880 before being liable to pay excess tax. Superannuation Salary Factor prescribed by legislation New Entrant Rate* Basic After Tax Contributions Notional Taxed Contributions $150,000 X 1.2 X 10% ($2,400 X 1.2) = $15,120 * The New Entrant Rate of 10% applies for most Defined Benefit members however some members will have a different New Entrant Rate. Please contact SuperConnect to enquire about your New Entrant Rate. Defined Benefit Division BlueScope Steel Superannuation Fund 11

14 Concessional contributions Non-concessional contributions Definition Tax benefits Contribution limits Additional voluntary contributions made from your before-tax salary plus the Notional Taxed Contributions required to fund your defined benefits. Your Notional Taxed Contributions will be calculated each year using the formula specified in the Tax Regulations. If you make your Basic Member Contributions on a salary sacrifice basis, these are included in your Notional Taxed Contributions. As a member of the Defined Benefit Division, your Notional Taxed Contributions will be calculated each year as follows: 1.2 multiplied by (Your Superannuation Salary at the start of the financial year i.e. at 1 July) multiplied by your New Entrant Rate less (any after-tax Basic Member Contributions you make in the year to partially fund your defined benefit multiplied by 1.2). At the time of printing, the New Entrant Rate that will apply to most Defined Benefit members is 10%. This rate will continue to apply unless the Government amends the Tax Regulations. You will be advised in the event of a change to this New Entrant Rate or to the Notional Taxed Contributions formula. In most cases, if your Notional Taxed Contributions exceed your concessional contributions limit (see below), your Notional Taxed Contributions will be set equal to the concessional contribution limit. The Australian Tax Office (ATO) will determine your concessional contributions for a tax year as your concessional contributions to the BlueScope Steel Superannuation Fund plus any concessional contributions you make to any other superannuation fund. If you make salary sacrifice Basic Member Contributions or AVCs (i.e. from your pay before income tax has been deducted), this lowers your taxable income and may have tax advantages, depending on your marginal income tax rate. For the financial year, the concessional contribution limit is $35,000 per annum for individuals aged 60 or over and $25,000 per annum for individuals aged under 60. This limit includes any additional employer contributions as well as any salary sacrifice contributions. Contributions made from after-tax money plus any excess concessional contributions. Non-concessional contributions do not attract additional tax provided they are within the contribution limit identified below which means more money invested in a tax effective system, working for you. The non-concessional contribution limit is $150,000 for the 2013/14 financial year. If you are under age 65 on 1 July in a financial year, you can bring forward two years contributions. This would give you a limit of $450,000. If you are considering making contributions in excess of the annual nonconcessional contribution limit, please call SuperConnect to obtain further information about how this bring forward provision operates. Tax implications As a Defined Benefit member, contributions tax will be deducted from your before-tax Additional Voluntary Contributions and from any Basic Member Contributions that you make from your before-tax salary. Your defined benefit formula benefits will not be affected by tax on Basic Member Contributions. You will be required to pay additional tax if the sum of your Notional Taxed Contributions and your before-tax Additional Voluntary Contributions exceeds the concessional contribution limit. If your Notional Taxed Contributions exceed the concessional contribution limit, any before-tax Additional Voluntary Contributions that you make will be excess concessional contributions. If you exceed your concessional contribution limit, excess contributions will be taxed at your individual marginal rate plus Medicare levy plus any applicable excess concessional contribution charge. These excess Concessional Contributions will also count towards your nonconcessional contribution limit. For the financial year ending 30 June 2014 and onwards you will be able to elect to have the excess contributions released from the Fund to avoid having them count towards the nonconcessional contribution limit. On withdrawal, your benefit will be tax-free if you are over age 60. If you are under age 60, tax may be payable on the taxable component of your benefit. Concessional contributions form part of the taxable component. Contributions in excess of the limit will incur tax at the top marginal rate plus Medicare levy. On withdrawal your benefit will be tax-free if you are over age 60. If you are under age 60, tax will be payable on the taxable component of your benefit. Non-concessional contributions form part of the tax-free component, but investment earnings on those contributions form part of the taxable component. 12 BlueScope Steel Superannuation Fund Defined Benefit Division

15 Rollovers If you have superannuation savings in other funds, you may want to roll over those accounts into BlueScope Steel Super. This has a number of advantages, such as: it s easier to keep track of just one superannuation account; you ll only pay one set of fees; and you can choose an investment strategy appropriate to your entire superannuation savings. All you need to do is complete the Rollover form available from the website or by calling SuperConnect. You will be issued with a rollover confirmation letter once the transaction is complete. In order to process a rollover, your previous fund may need to know the legal name of your new fund, which is BlueScope Steel Superannuation Fund (ABN ). They might also require a Compliance Letter. You can download a copy of the letter from the Fund website under Publications or call SuperConnect to request one to be sent to you. Government co-contribution The Government co-contribution is a contribution by the Government to match personal non-concessional (after-tax) contributions you make to the Fund. Depending on your level of income you may be eligible for the Government co-contribution. For the 2013/14 financial year, the upper income limit is $48,516 p.a. and the lower income limit is $33,516. The maximum co-contribution is available to members whose taxable income is less than the lower income limit. The maximum government co-contribution for the 2013/14 financial year is $500. Refer to the Australian Taxation Office website at for more information about eligibility for the Government co-contribution. Contribution splitting You can split what are called splittable contributions made during the previous financial year namely up to the lesser of 85% of your concessional (before-tax and Company) contributions and the concessional contribution limit. Restrictions apply if your spouse is over his/her preservation age. Your Annual Benefit Statement will include details of your contributions for each financial year. To apply for a contribution split you must submit a completed Superannuation Contribution Splitting Application Form available on the Fund s website or by calling SuperConnect. The benefits of contribution splitting will vary, depending on your personal circumstances. We recommend that you seek advice, based on your own situation, before making a decision to split your contributions. Once you split your contributions with your spouse, these become the property of your spouse and cannot be transferred back to you. Contributions that you split with your spouse will still count towards your contribution limits. To split contributions made in a financial year you must complete a Contribution Splitting Application Form available on the Fund s website or by calling SuperConnect and return it to the Fund by 1 June in the following year. Leave without pay If you take leave without pay from BlueScope Steel, you have three options in terms of your superannuation contributions. You can: 1. make normal Basic Member Contributions and Company contributions; 2. not contribute anything while you are on leave without pay; or 3. defer contributing Basic Member Contributions and Company contributions until you return from leave without pay. To accrue benefits for the period of your leave you must pay in full contributions for the period of leave within 12 months of your return from leave. With options one and three you must make the Company contributions yourself because BlueScope Steel will not make contributions in respect of time spent on leave without pay. The period of your leave will not count towards your Membership Period (see page 3) unless you choose option one or three. Your death and TPD cover will continue for 12 months. If you are on leave without pay for longer than 12 months, your death cover will continue however TPD benefits would only be payable under limited circumstances beyond this initial 12 month period of leave. If you intend to take leave without pay, please call SuperConnect to discuss your options. If you intend to leave the Fund you will be able to split any splittable contributions before you exit. Once your benefit has been rolled over to another fund, you will lose the ability to split contributions made to the Fund. For more information about splittable contributions refer to the Australian Taxation Office (ATO) website at Defined Benefit Division BlueScope Steel Superannuation Fund 13

16 Other benefits through the Fund Member services to help you make the most of your super Visit the website at The Fund s website houses a wealth of useful information. It gives you access to your account details and investment choices, which you can update and change at any time. You can also explore the latest news about superannuation on the home page, access Fund communications and experiment with the Fund s modelling tools. Call the SuperConnect helpline on You can call SuperConnect (with your member number and PIN ready) to have your superannuation questions answered. You can also request copies of past annual reports and newsletters and the rules of the Fund. SuperConnect is open Monday to Friday, 8.30am to 5.30pm (Eastern Standard Time). Our interactive voice response system is available between 6am and 2am (Eastern Standard Time) seven days a week. Attend the education seminars As a member of the BlueScope Steel Superannuation Fund you have the opportunity to attend financial education seminars run by Russell Financial Solutions. Each year education seminars are held at major BlueScope Steel worksites. These education seminars are your chance to learn more about the latest developments within superannuation and how they may impact your superannuation benefit. Attending a seminar puts you in a position to learn more about how you can make the most of your investment in superannuation and get the best possible value from the products and services available to you through the Fund. Topics covered at these seminars include: retirement planning; issues to consider when it s time to receive a benefit; personal savings plans; and balancing immediate financial needs with the importance of saving for your financial needs later in life. Access to financial advice If you need more information than what is provided to you through the Fund s communications, you can call SuperConnect and speak with a Service Representative who can give you limited advice by: answering questions about your benefit entitlements; and If you require more extensive financial planning advice related to your personal circumstances, a Russell representative can appraise your personal needs and refer you to a financial adviser, selected by Russell, with the most appropriate expertise and support services to help you. Neither Russell, BlueScope Steel, nor the Fund receives any commissions or fees for referring you to a financial adviser. Spouse Account establishing savings for your spouse You can establish superannuation savings for your spouse with the Fund in the Spouse Account Division. Your spouse includes a person (of the same or different sex) who is living with you on a genuine domestic basis in a relationship as a couple or with whom you are in a relationship that is registered under State or Territory law. The Trustee is required to determine whether your spouse, if not legally married to you, meets this definition. Making contributions to a spouse account during your working years means you and your spouse will both have super savings from which to draw an income when you retire. You may also be able to benefit from potential tax savings. In addition, the Government currently offers a tax rebate of up to $540 p.a. to members who contribute to a spouse account, provided their spouse earns less than $13,800 a year and is an Australian resident for tax purposes. Please refer to the Fund s Spouse Account Product Disclosure Statement for more information. If, under choice of fund or portability legislation, you decide to leave the Fund, your spouse can retain his/her Spouse Account. Retained benefits keeping your super with the Fund If you leave the Company, there s no need to leave the Fund. If you leave BlueScope Steel before you retire, you have the option to keep your benefit in the Retained Benefits Division (RBD) of the Fund or transfer it to another complying superannuation fund. Keeping your benefit in the RBD means that you will continue to access many of the features and benefits you enjoyed as an active member (i.e. BlueScope Steel employee) of the Fund. providing you with limited personal guidance about superannuation and retirement issues. 14 BlueScope Steel Superannuation Fund Defined Benefit Division

17 When you leave BlueScope Steel your benefit will automatically be transferred to the RBD. Your Additional Accounts will remain in your chosen investment option(s). You can change your investment option(s) for your Additional Accounts at any time. Your defined benefit crystallises into a dollar amount on the date of termination of employment. In the time it takes to process your benefit payment, this amount will accrue earnings at the Fund s earning rate this is the rate earned on the Fund s defined benefit assets. Once your payment has been processed and has been transferred to the RBD the defined benefit balance will be invested in Option A until you decide to change it. You can change your investment option, from Option A, at any time after your benefit has been moved to the RBD. For more information about the Fund s Retained Benefits Division refer to the Product Disclosure Statement (PDS) of the RBD. Refer to page 21 for more information about your options if you leave BlueScope Steel. Accessing your super Preservation Superannuation is for you in your retirement years. As superannuation is a long-term investment, the Federal Government has placed restrictions on when you can access your benefits. The Government has distinguished between preserved funds and nonpreserved funds. Both terms are explained below. Preserved funds From 1 July 1999, all contributions to superannuation are preserved. Generally, this means that you can only withdraw your preserved super benefit when you permanently retire from the workforce after your preservation age, or leave your employer after age 60. Non-preserved funds Your Annual Benefit Statement will show you if you have any non-preserved funds. This will be the case if: you made any after-tax contributions before 1 July 1999; or you rolled into the BlueScope Steel Superannuation Fund non-preserved superannuation savings from another fund. What is your preservation age? The Government has determined a preservation age for superannuation that is based on when you were born: Date of birth Preservation age Before 1 July From 1 July 1960 to 30 June From 1 July 1961 to 30 June From 1 July 1962 to 30 June From 1 July 1963 to 30 June On or after 1 July Accessing your benefits You can also take your preserved and non-preserved benefit if: the preserved component of your benefit is less than $200 and you cease employment with BlueScope Steel; or you satisfy the criteria for release on the grounds of financial hardship or for compassionate reasons (legislative limits apply); or you become permanently incapacitated; or you have reached your preservation age and purchase a preretirement pension; or you reach age 65; or you become terminally ill*. * A terminal medical condition exists if two registered medical practitioners (one of whom is a specialist practising in the area related to the illness or injury) have certified that you suffer from an illness or have incurred an injury that is likely to result in death within a period of not more than 12 months. No tax will be withheld from the lump sum benefit paid, even if you are under age 60. Your benefits are paid to your dependants or Legal Personal Representative if you die before your preservation age. Even though your preservation age may seem a long way away, it is important to remember that superannuation is designed to help you save for your retirement. By restricting when you can take your super, the Government believes it can help you safeguard it for when you will need it most when you are no longer working and may not have a regular income. In return, the Government grants tax concessions in relation to your superannuation. Defined Benefit Division BlueScope Steel Superannuation Fund 15

18 Tax on benefits Tax may be payable on your benefit when it is paid out to you in cash. If you leave your benefit in the Fund s Retained Benefits Division (RBD), or transfer your leaving service benefit to another complying superannuation fund, payment of lump sum benefits tax will be deferred. Refer to the section Tax and your super for information on tax on withdrawal. We recommend that you obtain advice from a licensed financial adviser before accessing your superannuation benefits. Choice of Fund and Portability Under Portability legislation, you may be able to transfer your accrued benefit to a fund of your choice while you remain employed by BlueScope Steel. Under Choice of fund legislation, you may be able to direct your future super contributions to another super fund. If you choose to direct your accrued defined benefit and/or future contributions to another fund, you will first have to convert to an accumulation benefit. You should consider the risks in moving and the features of different funds with respect to insurance cover, investments, fees and charges, fund management and access to products and services. If you choose to convert and move to the DCD, you cannot rejoin the DBD in the future as this division is closed. As a DCD member, you can direct future contributions to the fund of your choice, subject to conditions. Employer contributions in BlueScope Steel Super s DCD would be at the standard DCD rates. If you choose to direct your future contributions to another fund, your existing account balance will be transferred to the Retained Benefits Division (RBD). Your account will be debited with the administration charge applicable to the Retained Benefits Division. Your TPD cover will cease immediately but your existing death cover will continue (you can elect to terminate this cover at any time). Insurance premiums at the rate applicable to RBD members will be deducted from your account. Transfer to the Defined Contribution Division You can move to the BlueScope Steel Super Fund DCD at any time if you would prefer to receive an accumulation benefit. The Fund website has a Defined Benefit transfer section which provides further information. To exercise choice, as a member of the Defined Benefit Division (DBD) you must first convert to an accumulation benefit by transferring to the Defined Contribution Division (DCD). This means that your resignation or retirement benefit would no longer be based on your salary and years of service. Accumulation accounts are made up of contributions and investment earnings less fees and charges. When considering whether to cease membership in the DBD it is important to think about: how your benefit will compare over time as an accumulation benefit as opposed to a defined benefit; the level of investment risk you are prepared to accept; the level of insurance you will need this will no longer be automatically provided and paid for by the Company; and the amount of fees that you will have to pay these will no longer be paid by the Company. Your existing death and Total and Permanent Disablement (TPD) benefits in the DBD would cease with effect from the date of your election to become a DCD member. The insurance cover for DCD members is set out in the Product Disclosure Statement available on the website or by calling SuperConnect. 16 BlueScope Steel Superannuation Fund Defined Benefit Division

19 Investing your money Investment performance generally has no effect on Defined Benefits. However, if you make AVCs or roll over monies from other super funds, you will have an accumulation account. Accumulation accounts, as well as your Basic Member Contributions, grow in line with contributions and investment earnings. Therefore if your benefit is calculated by the Guaranteed Minimum Payment (defined on page 4) then your benefit amount will change with investment performance, and may decrease if returns are negative. Part of your Guaranteed Minimum Payment is based on the accumulation of your Basic Member Contributions. The rate used to accumulate those contributions is currently the rate earned by Option C, as the Defined Benefit assets are invested in that option. Investment objective The investment objective of the Fund is to maximise investment earnings and retirement benefits for members within acceptable risk parameters. The investment strategy set by the Trustee: takes a long-term approach; minimises risk by spreading the assets over a number of investments and investment managers; uses futures and options (derivatives) if their use is consistent with the underlying investment strategy. Investment returns applied to members accumulation accounts will vary from year to year and like all investments, may be positive or negative. It is also possible that earnings may grow at less than the rate of inflation over a particular period. Member Investment Choice You can choose an investment strategy that is right for you with BlueScope Steel Super s Member Investment Choice. You can choose to invest your Additional Accounts in up to two of the four different investment options A, B, C or D. To make an investment choice, you need to nominate the percentage of your current benefit and/or future contributions that you want invested in your chosen option/s. If you do not make a choice, your super will automatically be invested in Option C. While you can only choose up to two investment options, you can vary the percentages that apply to your current benefit and your future contributions. For example, you may choose to invest 50% of your current benefit in Option A and the remainder in Option B, and then choose to invest 70% of your future contributions in Option A and the remainder in Option B. An excessive transaction fee may apply if you make more than 5 investment switches in any year. See page 20 for more information. It is important to remember that if you choose to invest in different proportions in two or more options, your allocation will be applied once only and will not be rebalanced to maintain the weighting. Investing your super across more than one investment option allows you to create your own particular investment mix through the resulting weighting of underlying asset sectors. This is called blending. As an investor, you are able to exercise greater control over the mix of assets in your investment portfolio. Some of the Fund s options are diversified across various asset classes and some options are predominantly invested in one asset class. When making investment decisions you should consider whether your overall investment in the Fund is adequately diversified taking into consideration your personal circumstances, including investments you hold outside of BlueScope Steel Super. Please note that no investment option is capital guaranteed. Consequently, the value your investment may fall. Risks Investing in superannuation carries some risk as superannuation and taxation laws may change. These changes may affect things such as the final amount of your benefit or how or when the benefit may be paid. There are also risks associated with the Fund s investment strategy. These risks arise through the choice of assets in which the Fund is invested. These assets generally all change in value over time. This means that the unit prices will change from time to time and may fall if the value of the underlying investments decreases. Investment managers BlueScope Steel Super s investment strategy is set by your Trustee and managed by Russell Investment Management Limited (Russell). The investment strategy is built around a long-term planning time frame and a strategic allocation of assets diversifying across asset classes including shares, property, fixed interest and cash. Russell s investment strategy also diversifies across multiple investment managers selected on the basis of their specialist skills, experience and capabilities. These managers are integral to the Fund s investment strategy. Russell does not take into account labour standards or environmental social or ethical considerations in its decision to engage underlying investment managers to manage the investments of Russell funds. (Russell has consented to the inclusion of this statement.) The Trustee does not take into account labour standards or environmental, social or ethical considerations when it decides how the assets of the Fund are to be invested. Defined Benefit Division BlueScope Steel Superannuation Fund 17

20 Your investment options Option A Investment return objective: Expect to earn a return after costs and tax, over a one year period, consistent with the benchmark (also after costs and tax). Suitability: Suitable for investors seeking cash-like returns, who have a short investment horizon. Minimum investment timeframe: Less than 12 months. Benchmark: UBSA Bank Bill Index Investment strategy: The option is predominantly exposed to assets such as bank deposits, money market instruments (including but not limited to bank bills and certificates of deposit). Estimated ICR: 0.02% p.a. Risk level**: Short-term risk is the risk that your super savings will be reduced by volatility of investment markets. Medium-term risk balances two risks. The first is that your super savings will be reduced by volatility and the second is that your super savings will not keep up with inflation. Long-term risk is the risk that a member s superannuation savings will not significantly outperform inflation over a member s superannuation accumulation lifetime. Risk level for the time invested Length: Short Medium Long Risk: Very low Medium to high Very high Estimated number of negative annual returns over any 20-year period: Less than 0.5 Asset allocation ranges # : Cash 100% Option B Investment return objective: To earn a return after expected costs and tax, exceeding CPI* by 2.5% per annum, measured over rolling 5 year periods. To earn a return after tax and fees in excess of the median of relevant peers in the relevant funds universe. Suitability: Suitable for investors who do not have a long investment horizon and whose most important consideration is having a low chance of a negative return over this horizon. Minimum investment timeframe: Be prepared to stay invested in this option for at least 3 years before it meets its objectives. Investment strategy: The option is typically exposed to a diversified portfolio mix of growth investments around 40% and defensive investments around 60%^. The option may be exposed to derivatives. Estimated ICR: 0.36% p.a. Risk level**: Short-term risk is the risk that your super savings will be reduced by volatility of investment markets. Medium-term risk balances two risks. The first is that your super savings will be reduced by volatility and the second is that your super savings will not keep up with inflation. Long-term risk is the risk that a member s superannuation savings will not significantly outperform inflation over a member s superannuation accumulation lifetime. Risk level for the time invested Length: Short Medium Long Risk: High Medium Medium to high Estimated number of negative annual returns over any 20-year period: Approximately 4 to 5 Asset allocation ranges # : Cash 8% 12% Fixed Income Property 0% 4% International Equities 15% 23% Australian Equities 16% 22% 47% 53% * CPI stands for Consumer Price Index, which is used as a measure of inflation. ^ Please refer to the asset allocation ranges for details of the parameters surrounding the investment strategy. ** The risk level is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be, nor the potential for a positive return to be less than the return an investor may require to meet their objectives. # The actual asset allocation may temporarily fall outside the ranges stated above in certain circumstances, such as asset transitions or extreme market movements.

21 Option C Investment return objective: To earn a return after expected costs and tax, exceeding CPI* by 3.5% per annum, measured over rolling 5 year periods. To earn a return after tax and fees in excess of the median of relevant peers in the relevant funds universe. Suitability: Suitable for investors who are seeking to build wealth over the medium to long term and are willing to accept the possibility of negative returns over the shorter term. Minimum investment timeframe: Be prepared to stay invested in this option for at least 5 years before it meets its objectives. Investment strategy: The option is typically exposed to a diversified portfolio mix of growth investments around 70% and defensive investments around 30%^. The option may be exposed to derivatives. Estimated ICR: 0.45% p.a. Risk level**: Short-term risk is the risk that your super savings will be reduced by volatility of investment markets. Medium-term risk balances two risks. The first is that your super savings will be reduced by volatility and the second is that your super savings will not keep up with inflation. Long-term risk is the risk that a member s superannuation savings will not significantly outperform inflation over a member s superannuation accumulation lifetime. Risk level for the time invested Length: Short Medium Long Risk: High Low to Medium Low Option D Investment return objective: To earn a return after expected costs and tax, exceeding CPI* by 4.0% per annum, measured over rolling 5 year periods. To earn a return after tax and fees in excess of the median of relevant peers in the relevant funds universe. Suitability: Suitable for investors who are seeking to build wealth over the long term and are willing to accept the possibility of negative returns over the shorter term. Minimum investment timeframe: Be prepared to stay invested in this option for at least 7 years before it meets its objectives. Investment strategy: The option is typically exposed to a diversified portfolio mix of growth investments around 90% and defensive investments around 10%^. The option may be exposed to derivatives. Estimated ICR: 0.45% p.a. Risk level**: Short-term risk is the risk that your super savings will be reduced by volatility of investment markets. Medium-term risk balances two risks. The first is that your super savings will be reduced by volatility and the second is that your super savings will not keep up with inflation. Long-term risk is the risk that a member s superannuation savings will not significantly outperform inflation over a member s superannuation accumulation lifetime. Risk level for the time invested Length: Short Medium Long Risk: High Medium Low Estimated number of negative annual returns over any 20-year period: Approximately 5 to 6 Asset allocation ranges # : Estimated number of negative annual returns over any 20-year period: Approximately 5 to 6 Asset allocation ranges # : Cash Fixed Income Property International Equities Australian Equities 0.5% 4.5% Cash Fixed Income Property International Equities Australian Equities 24.5% 30.5% 0% 4% 5% 11% 6% 10% 6% 10% 21% 29% 35% 39% 37% 45% 39% 43% * CPI stands for Consumer Price Index, which is used as a measure of inflation. ^ Please refer to the asset allocation ranges for details of the parameters surrounding the investment strategy. ** The risk level is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be, nor the potential for a positive return to be less than the return an investor may require to meet their objectives. # The actual asset allocation may temporarily fall outside the ranges stated above in certain circumstances, such as asset transitions or extreme market movements.

22 About fees Additional Explanation of Fees and Costs About fees Defined Benefit Division members do not pay any fees or charges. The Company pays all fees related to your benefit in the Fund, including the cost of insurance. However, the investment returns for each of the investment options applicable to your additional accumulation accounts are net of investment management fees. Change in fees The Trustee has the right to amend the level of fees charged in the future, without your consent. Any material increase in the fees you are charged will be communicated to you at least 30 days before it is applicable. Family Law Fees The Family Law Act allows the Fund to charge fees for certain activities. These fees are current as at the time of printing this booklet. Up-to-date information on fees is available by calling SuperConnect. The Fund charges $250 for a request for information by a non-member spouse. A cheque made payable to BlueScope Steel Superannuation Fund for this amount must be received by the Fund before the information is provided to the non-member spouse. Investment management fees The investment management fee stated for each investment option is an estimate of the fee applicable to that option. Each option s investment management fee is influenced by changes to the investment managers and/or the asset classes within the funds in which the option s assets are invested and rebate levels applying to the Fund. For this reason, the investment management fee cannot be stated as an exact percentage. The estimated fee of each option is the average of the investment management fees of each asset class, weighted in proportion to the benchmark allocations of the asset classes in which the option invests. The estimated fees shown are net of the assumed manager rebates applicable to the Fund. Investment returns and daily unit prices are net of the investment management fee applied to each investment option. See pages 18 and 19 for details on the different investment fees for each option. Performance Fees The assets of each of the Fund s investment options are invested by Russell Investment Management Limited in underlying Russell funds. The assets of these underlying funds are managed by investment managers appointed by Russell Investment Management Limited. Performance fees provide an incentive for the underlying managers/ funds to achieve superior performance. Performance fees may be charged by the underlying managers/funds to which the Fund s investment options are exposed. Where an option is exposed to an underlying manager/fund that charges a performance fee, that performance fee has been estimated with reference to the performance of the underlying manager/fund over the 12 months to 31 March 2012, and included in that option s estimated investment management fee. Please note, however, that past performance is not a reliable indicator of future performance and it is impossible to accurately forecast the performance fees that will be payable. The Trustee generally reviews the estimated performance fees every 12 months. As a general rule, a performance fee will not be payable unless the underlying manager/fund has achieved a return in excess of the relevant hurdle rate, and unless any past underperformance has been recovered. Please note that for options that have exposure to performance fees, a performance fee may be payable to an underlying manager/fund that has satisfied its individual performance fee criteria even at times when the option as a whole has underperformed its benchmark. Excessive transaction fee The Fund charges a transaction fee for what the Trustee considers to be excessive investment switches. The Fund does not currently pass on the cost of buy/sell spreads that are incurred when money is invested or redeemed. Instead, this cost is borne by the Fund as a whole. The transaction fee is designed to pass on part of the associated costs incurred by the Fund to members who transact frequently. The transaction fee is 0.2% of the amount switched for any switches in excess of 5 in a financial year. Build up of Operational Risk Reserves (ORR) Legislative amendments have been made which impose new obligations on all superannuation fund trustees from 1 July 2013 to maintain and manage financial resources to cover operational risks. To comply with these requirements, the Trustee will establish and maintain a single segregated reserve within BlueScope Steel Superannuation Fund, known as the Operational Risk Reserve (ORR). The ORR is expected to initially be funded over a three-year period (in line with APRA s prudential standard) partially by amounts deducted from the investment returns of BlueScope Steel Super and not directly from Member s account balances. These amendments will take effect from 1 August BlueScope Steel Superannuation Fund Defined Benefit Division

23 Leaving BlueScope Steel? You have four options for your superannuation benefit 1. BlueScope Steel Super s Retained Benefits Division When you leave BlueScope Steel your benefit will automatically be transferred to the Retained Benefits Division (RBD) of the BlueScope Steel Superannuation Fund. If your benefit is $2,000 or more you are eligible to remain a member of the RBD for as long as you choose. As a member of the RBD, the RBD fee arrangements will apply, including investment management fees based on your investment option(s) and an administration fee of 0.70% p.a. of your account balance, capped at a maximum administration fee of $2,000 per Fund year. This fee is deducted from your account balance on the last day of each month. For the first two months after your benefit is moved to the RBD, you will not have to pay the administration fee. This means that this fee will not be deducted if the last day of the month falls within the two month fee free period. Your super will remain in the RBD unless you instruct otherwise. When your money is transferred to the RBD, it will be invested in Option A until you make an alternative investment choice. If you have any Additional Accounts, these will remain invested in your chosen investment option(s). You can change your investment option(s) at any time. You should note that for the period between your date of exit and transfer to the RBD your defined benefit component will accrue earnings at the Fund s earning rate this is the rate earned on the Fund s defined benefit assets. However the Company has agreed to protect this component of your benefit from any negative investment returns so that the earning rate will be not less than 0% during this period. Once your payment has been processed and has been transferred to the RBD the defined benefit balance will be invested in Option A until you decide to change it. You can change your investment option, from Option A, at any time after your benefit has been moved to the RBD. You should refer to the RBD PDS for details of the administration fees and insurance costs payable by RBD members. 2. Purchase a Pension If you are at least age 55 or have qualified for a total and permanent disablement benefit, you may be eligible to purchase a pension. The Fund does not offer account-based pensions, but such pension products are available through various financial institutions. As a BlueScope Steel Super member you are able to purchase a Russell Private Active Pension from the Russell SuperSolution Master Trust, subject to satisfying the relevant eligibility criteria. For more information about the Russell Private Active Pension or an application form refer to the Product Disclosure Statement available on the Fund s website or call SuperConnect. 3. Cash withdrawal If you have non-preserved funds (see page 15), you can withdraw them in cash net of tax. 4. Rollover to a new superannuation fund You can roll your benefits into another superannuation fund. If your benefit is less than $2,000 and you do not give payment instructions within 90 days of leaving BlueScope Steel, your benefit will be transferred from the RBD to the nominated Eligible Rollover Fund (ERF): Colonial SuperTrace Locked Bag 5429 Parramatta NSW 2124 Telephone: A benefit transferred to the ERF continues to be subject to the preservation guidelines. Superannuation regulations place restrictions on the level of administration fees that an ERF can charge to your account. Once your benefit is paid to the ERF it cannot be transferred back to BlueScope Steel Super unless you are re-employed by BlueScope Steel. You should check the investment strategy of the ERF to ensure that it is suited to your personal circumstances. Defined Benefit Division BlueScope Steel Superannuation Fund 21

24 Benefit payment processing Benefit payments are processed as quickly as possible after all required information has been received by the Fund. If you have ceased employment with the Company or have lodged a combined choice of fund and portability request, the Fund will require your employer to confirm that the final contributions have been paid to the Fund on your behalf and, if applicable, your date of termination of employment. You have the opportunity to request a partial payment of your benefit (subject to any minimum account balance restrictions), pending receipt of all of the necessary documentation and contributions or you may be happy to wait until the benefit can by paid in full. If you elect to have your benefit paid to you via direct deposit, you will need to provide evidence in the form of a pre-printed bank deposit slip, original bank statement or confirmation letter from the bank that the bank account you nominate is yours. These requirements are in place to protect the security of all members benefits. During the processing period, your Additional Accounts will remain in your chosen investment option(s). You can change your investment option(s) for your Additional Accounts at any time. Your defined benefit crystallises into a dollar amount on the date of termination of employment. In the time it takes to process your benefit payment, this amount will accrue earnings at the Fund s earning rate this is the rate earned on the Fund s defined benefit assets. For more information about benefit payment processing, please call SuperConnect. How to claim your benefit Call SuperConnect or visit the website at for the appropriate forms. Once the Fund has received all the required documentation, as advised on the Benefit Payment Application Form, we will be able to process your benefit payment. The Fund cannot take any action prior to this. If the Fund does not have all required documentation, you will receive a follow-up letter requesting relevant documentation. Processing times will vary on a case by case basis, but benefits are generally paid within 5 business days after we are satisfied that all requirements have been met. 22 BlueScope Steel Superannuation Fund Defined Benefit Division

25 Tax and your super All complying superannuation funds, like the BlueScope Steel Superannuation Fund, receive concessional tax treatment. Superannuation is one of the most tax-effective investments available to Australians. The following covers the taxes that you should be aware of in relation to superannuation at all stages: while you are contributing to your super, when you withdraw your super and when you start a pension. You should take the time to review the current taxation regime and consider how it may apply given your personal circumstances. Tax on your contributions Refer to the table on page 12 for a description of concessional contributions and non-concessional contributions and how they are calculated for you as a member of the Defined Benefit Division. As a defined benefit member, 15% tax will be deducted from your before-tax Additional Voluntary Contributions and from any Basic Member Contributions that you make from your before-tax salary. Your defined benefit formula benefits will not be affected by tax on contributions. Contributions tax for people with a total income of $300,000 or more will increase to 30% from 1 July The definition of income includes concessional superannuation contributions. However, if your income excluding your concessional contributions is less than the $300,000 threshold, but the inclusion of your concessional contributions pushes your total income over the threshold, the 30% tax rate will only apply to contributions in excess of the threshold. Excess contributions tax Concessional contributions For the financial year, the concessional contribution limit is $35,000 per annum for individuals aged 60 or over and $25,000 per annum for individuals aged under 60. This limit includes any additional employer contributions as well as any salary sacrifice contributions. You will be required to pay additional tax if the sum of your Notional Taxed Contributions and your before-tax Additional Voluntary Contributions exceeds the concessional contribution limit. We recommend that you monitor the level of your concessional contributions neither the Fund nor your employer will do this on your behalf. You can monitor the total amount of concessional contributions you have made to Bluescope Steel Super by logging onto the Fund s website and checking your concessional contributions in the Your Benefits section. If you make concessional contributions in excess of the annual limit, you will later receive an excess contributions tax assessment from the Australian Tax Office. For the financial year ending 30 June 2014 and onwards the excess concessional contributions will be included in your assessable income for the corresponding year and taxed at your marginal tax rate (plus the Medicare levy). In addition, you will be liable for the excess concessional contributions charge. However, you will be able to elect to have the excess contributions refunded (plus an interest charge). Note that if you make contributions in excess of the concessional contribution limit, the excess contributions will count towards the non-concessional contribution limit for that financial year. Non-concessional contributions Non-concessional contributions, also known as after-tax contributions, are contributions made from after-tax money. Nonconcessional contributions cannot be accepted by the Fund if your Tax File Number (TFN) has not been provided to the Fund by you or your employer. If the Fund receives a non-concessional contribution and if we have not received your TFN within 30 days from the date of receipt of the contribution, we must return it. The non-concessional contribution limit is $150,000 for the 2012/2013 financial year. If you are under age 65 on 1 July in a financial year, you can bring forward 2 years contributions, giving you a higher fixed dollar limit of i.e. $450,000. If you are considering making contributions in excess of the annual non-concessional contribution limit, please call SuperConnect to obtain further information about how this bring forward provision operates. As a DBD member, the Fund s actuary will calculate your Notional Taxed Contributions. You should note that Notional Taxed Contributions are not the same as the actual contributions made by you (as Basic Member Contributions) and your employer to your defined benefits. The actual contributions may be higher or lower than your Notional Taxed Contributions. Refer to pages 10 and 11 for more information. Defined Benefit Division BlueScope Steel Superannuation Fund 23

26 If your non-concessional contributions to the Fund are below your non-concessional contribution limit, but you have made contributions to another fund and together these exceed the non concessional contribution limit, then any contributions received by the Fund in excess of the non-concessional contribution limit will be taxed at the top marginal tax rate plus the Medicare levy. The Australian Tax Office (ATO) will issue you with an assessment for the additional tax. The additional tax is imposed on you but must be paid from the Fund (or your other superannuation fund). You must provide the release authority issued to you by the ATO to the Fund, within the specified time period. The Fund will then pay the tax on your behalf and deduct it from your account balance. Tax on investment earnings Your investment earnings in the Fund are taxed at a maximum rate of 15%. Withdrawing your super There is no longer a requirement to withdraw your superannuation at a particular age it can remain invested in superannuation for as long as you wish. If you do wish to withdraw all or part of your benefit, the tax you pay will depend on: your age at the time of withdrawal; the circumstance under which your benefit is withdrawn; and the components of your benefit. Special arrangements apply to death and disablement benefits, as explained below. If you are age 60 or over If you are 60 or over, you will receive your benefit tax-free. No tax is payable on lump sum or pension benefits paid (from a taxed fund such as the BlueScope Steel Superannuation Fund) to members aged 60 and over. If you are under age 60 If you are between age 55 and 60, no benefits tax is payable on amounts that are below a lifetime tax-free threshold that is indexed annually. For the current tax-free threshold call SuperConnect on The amount of tax payable on any amount above the tax-free threshold will depend on the components of the benefit and will be taxed at a maximum rate of 15% (plus Medicare Levy). Death benefit payments If you die while a member of the Fund your benefit is automatically moved from whichever Option(s) it is invested in, to Option A on receipt of the death certificate by the Fund. This is to ensure that the benefit is not unduly influenced by any downward movement in investment markets pending receipt of any insured death benefit and while the Trustee decides to whom the benefit is to be paid. Any insurance proceeds received will also be invested in Option A on receipt from the insurer, pending payment from the Fund. A lump sum death benefit paid to your dependants is tax free. Please be aware, however, that a child will only be treated as a dependant for tax purposes if the child was under 18, was financially dependent on you or was in an interdependency relationship with you at the date of death. If the benefit is paid to a non-dependant, tax will be payable on the taxable component of the benefit, at a maximum rate of 15% (plus the Medicare Levy). Disablement benefit payments If you receive a total and permanent disablement (TPD) benefit at or after age 60, it will be tax free. Tax at concessional rates may apply to TPD benefits paid to members between ages 55 and 60. Concessional tax rates may apply to your TPD benefit if it is paid to you prior to age 55. If you lodge a claim for a Total & Permanent Disablement benefit, there will be no change to the way in which your account balance is invested, but you can make an investment switch in the usual manner. If your claim is successful, the insurance proceeds will be invested, on receipt from the insurer, as per your prevailing investment choice(s). Your account balance will generally be paid to your dependants or Legal Personal Representative as a lump sum. Taking a pension? Tax-free investment earnings Investment income earned on pension account(s) is exempt from tax. This means that the investment returns from pension accounts are slightly higher than for other accounts, as pensioners benefit from not paying tax on their investment earnings. Income tax on pension payments Pension payments are taxable if you are under the age of 60, otherwise they are tax-free. Where applicable, tax is deducted from pension payments on a pay as you go (PAYG) basis in the same way you would pay tax on your earnings as an employee. Tax rebate on pension payments A 15% tax rebate applies to most taxable pension payments. 24 BlueScope Steel Superannuation Fund Defined Benefit Division

27 Fund administration The Trustee The Fund s Trustee is responsible for your superannuation. BlueScope Steel Super s assets are controlled by a trustee company, Total Risk Management Pty Limited (TRM), ABN TRM is a subsidiary company of Russell Employee Benefits Pty Ltd, the company that manages the day-today operation of BlueScope Steel Super. The assets of BlueScope Steel Super are managed by Russell Investment Management Limited and are held separately from the assets of BlueScope Steel and Russell. The Trustee has directors who have extensive experience in all facets of superannuation management. Policy Committee BlueScope Steel Super has a Policy Committee with four members. Two members are company-appointed and two are member-elected. The Policy Committee: provides strategic guidance to the Trustee; represents members interests; and monitors service providers. Members who are employees of BlueScope Steel can nominate and vote for member representatives every three years. Member-elected representatives must resign from their positions every three years but remain eligible for re-election. If you have any concerns or suggestions about the Fund or member services, you should feel free to approach a representative of the Policy Committee. The Fund s website lists all Policy Committee members and their contact details. Defined Benefit Division BlueScope Steel Superannuation Fund 25