Stronger Super and YOU!

Transcription

1 Stronger Super and YOU! Stronger Super and YOU! In 2011, the Federal Government announced a series of significant reforms to the superannuation industry called Stronger Super that QIEC Super has elected to implement from 1 September Through the Stronger Super reforms, the Federal Government envisages a more robust superannuation system, one that offers the highest level of protection for members, through the application of additional prudential requirements on superannuation funds. A key element of the reforms is the introduction of a MySuper product (or investment option), which superannuation funds must offer to members in the accumulation phase as the default option, so that they can continue to receive default Superannuation Guarantee contributions from employers from 1 January QIEC Super has spent a significant amount of time preparing for the reforms, most of which are behind the scenes. Only a few will have a direct impact on you. The Trustee of QIEC Super is fully prepared for the transition to the Stronger Super environment, and we d like to share with you the changes which will occur in QIEC Super from 1 September QIEC MySuper QIEC Super s application to offer a MySuper investment option has been approved by the regulator, the Australian Prudential Regulation Authority (APRA). The QIEC Super Trustee has determined that the current default Balanced Growth option will become the QIEC MySuper option from 1 September The investment objectives and strategy are to remain unchanged, with a minor change to the asset allocation. Further details on the investment profile of QIEC MySuper are outlined below. For more information, you can obtain a copy of the new QIEC Super Product Disclosure Statement (PDS) which will be available from qiec.com.au from 1 September 2013, or by calling us on after that date. What does all this mean for your QIEC Super membership? Members who are currently fully or partially invested in QIEC Super s current default option (Balanced Growth), will have their investment in this account automatically invested in QIEC MySuper on 1 September 2013,unless they elect to opt-out beforehand. For members who also have investments in QIEC Super s other investment options, these will remain unchanged. As you currently have no funds invested in the default option (Balanced Growth), your investment option(s) will remain unchanged. If you elect to change your investment option(s) from 1 September 2013, you will be able to choose from QIEC Super s offering of 10 investment options, including the QIEC MySuper option. Following is a list of QIEC Super s available investment options from 1 September You can choose to invest in any combination of these investment options (in multiples of 5%). Investment option QIEC MySuper Conservative Growth High Growth Socially Responsible Investment Infrastructure Property Fixed interest Cash Australian Equities QIEC Super Default Option QIEC Super Member Investment Choice Option International Equities

2 QIEC MySuper Investment Profile Each investment option offered by QIEC Super has a different level of risk and potential level of return. QIEC MySuper is a Balanced Growth portfolio and represents a 'moderate risk' investment product. Here is a snapshot of what QIEC MySuper will look like: Investment Return Objective 1 Description of investment return Achieve returns (after tax and other costs) in three out of four rolling five-year periods of 3% above inflation. Please note: This is an objective only, it is not guaranteed This option caters for investors with an investment timeframe of 5 to 7 years, who are willing to take moderate risks with their money. This option invests in a diversified set of asset classes with a bias towards growth assets. Minimum suggested time frame Mix of asset classes 2 Risk Band 3 Five years Strategic asset allocation Growth % Defensive % Australian Equities % (25-37%) International Equities (Hedged) % (14-26%) Property % (2-18%) Infrastructure % (2-18%) Growth Alternatives % (4-15%) Australian Fixed Interest % (0-18%) International Fixed Interest...5.5% (0-18%) Defensive Alternatives % (0-10%) Cash...3.0% (Balance) 5 - medium to high. Estimated number of negative annual returns is 3.9 over any 20 year period. 1 The investment objective is the investment return this option will seek to achieve after fees and taxes. For example, if the objective for an investment option is inflation +3% and the inflation rate is 3.3% then the objective return would be 6.3%. 2 The asset allocations for the investment option are the benchmark allocations set by the Trustee, in June The risk level is based on a standard risk measure. Please read the Member investment choice and asset classes Fact Sheet available at qiec.com.au>members>publications>fact Sheets. Please note: Information about the current and historical performance of QIEC Super s investment options is available on the Fund s website qiec.com.au>members>investment Performance. However, please note that past performance is not a reliable indicator of future performance. As outlined above, further details on QIEC MySuper will be in the new Product Disclosure Statement which will be available from 1 September In the meantime, you can use the information on the current Balanced Growth option (available in our Member investment choice and asset classes Fact Sheet at qiec.com.au>members>publications>fact Sheets) if you require detailed investment information more immediately. COULD YOU LIVE WITH HALF? 02 Did you know that at least half of the Baby Boomer generation will retire on 50% of the money they need?* Will this be you? YourSuperFuture is a free online tool that can help you look at your super and start the process of securing your financial future, so you can enjoy your retirement to the full! It s free and exclusive for QIEC Super members. Go to qiec.com.au, check out our YourSuperFuture tool and secure your super future today! qiec.com.au *According to Rabodirect, Eureka Report published 25 July This information is of a general nature and does not take account of your individual financial situation, objectives or needs. Before acting on this advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. You should obtain a Product Disclosure Statement (PDS) and consider the PDS before making any decision. If you require specific advice, you should contact a licensed financial adviser. QIEC Super Pty Ltd ABN , the Trustee of QIEC Super ABN , is Corporate Authorised Representative No under Australian Financial Services Licence No and is authorised to provide general financial product advice in relation to superannuation. This limited personal advice is provided by IFAA Pty Ltd ABN under AFSL No:

3 Abolishing Member Benefit Protection on account balances under $1,000 from 1 July 2013 From 1 July 2013, the Federal Government abolished member benefit protection rules. Previously, under these rules, members with account balances less than $1,000 were protected. This means that for such accounts, administration fees could not exceed the investment returns credited to the member s account in a financial year. Government taxes and insurance premiums (where appropriate) were still deducted. These rules prevented erosion of small account balances (under $1,000) through the imposition of administration fees. The Government s abolition of member benefit protection from 1 July 2013 is part of the Stronger Super package of reforms. MySuper fee-charging rules require administration costs to be charged to all MySuper members on an equitable basis. This is in conflict with the member benefit protection rules. Please note that for members with an account balance greater than $1000, this change will have no impact on their account. Your Fees QIEC Super is a profit for members fund which means we only charge you the fees necessary to operate the Fund. From 1 September 2013, QIEC Super s administration fees will change with the weekly administration fee component increasing from $1.50 per week to $1.75 per week and the asset fee component increasing from 0.28% p.a. to 0.30% p.a. Your first investment switch each financial year with QIEC Super will remain free of charge, but each subsequent switch will cost $30. These fees are to cover the increased operating costs resulting from the Stronger Super reforms. This section provides a summary of the main fees and costs for QIEC Super, applying from 1 September The fees outlined below apply to all investment options, except the investment fee which will vary according to your investment option. Similar information will be included in other super QIEC fund s MySuper Product Fees Disclosure and CostsStatements, so you can compare QIEC Super s Type of fees and or cost costs with those funds. Amount Management Costs Administration Fees This fee has two components, a fixed weekly fee and an asset based component: Investment fee The fees and costs for managing your investment. The amount you pay for specific investment options may vary depending on your investment options and is shown in QIEC Super s Fees and Costs Fact Sheet (available at qiec.com.au). $1.75 per week administration fee ($91.00 p.a. per member account) PLUS Up to 0.30% p.a. of assets # PLUS 0.61% p.a. of your account balance* # Service fees Exit Fee The fee on each amount you take out of your investment. $55 deducted from your account at the time of any lump sum payment. Switching fee The fee for changing investment options Family Law Information request Split Fee First switch each financial year is free, then $30 for each subsequent switch. $40 charged at the time of request $100 (split between both parties) *These costs are an estimate, derived from the actual management costs for the Balanced Growth option for the year ended 30 June Investment fees may vary from time to time, so updated estimates are posted on our website when updated information about fees and costs becomes available. # These fees are deducted from investment returns prior to the determination of crediting rates. Also see the Fees and costs Fact Sheet (available at qiec.com.au) for more information about other fees. 03

4 Examples of fees and costs This table gives an example of how fees and costs in the QIEC MySuper investment option can affect your superannuation investment over a one-year period. You should use this table to compare the investment option with other MySuper products. Example QIEC MySuper Amount Balance of $50,000 with contributions of $5,000 during the year Management costs 0.61%*p.a +0.30%p.a. +$91.00 p.a. ($1.75 pw) For every $50,000 you have in the Fund you will be charged $455 each year plus $91.00 in investment fees, regardless of your balance. Equals Cost of Fund $ Therefore, if you put in $5,000 in during a year and your balance was $50,000, then for that year you will be charged fees of $546.00* What it costs you will depend on the investment option(s) you choose. *The percentage management costs shown in this example are the actual management costs for the Balanced Growth investment option for the year ended 30 June The actual costs in any financial year may be different. For full details on fees and costs, including the increase in the administration fees effective 1 September 2013, refer to the new QIEC Super Product Disclosure Statement and Fees and costs Fact Sheet, which will be available at qiec.com.au from 1 September Until then, the current Product Disclosure Statement and Fees and costs Fact Sheet reflects the existing fee levels. Why are our administration fees increasing? Some of the new requirements of the Stronger Super reforms impose significant new costs on superannuation funds, including the need to fund an Operational Risk Financial Reserve. This reserve is intended to be a buffer on which the Trustee can call upon if an operational risk eventuates, rather than having to call directly on members funds. While this is a new prudential requirement of APRA, in reality the trustee has every confidence in its risk management strategies and robust controls, and expects the likelihood to ever have to call on this reserve to be rare. APRA guidelines impose a minimum financial level on the Operational Risk Financial Reserve, with provision for this amount currently not existing within QIEC Super. Unfortunately, based on the required level of this reserve, the Trustee has determined that an increase in administration fees is required to meet the cost of this new requirement. There are also other new obligations imposed as part of the Stronger Super reforms, which will result in significant additional costs to the Fund. This includes significantly enhanced reporting to APRA, as well as the requirement to prepare for and commence processing transactions electronically from 2013/14, requiring investment in upgraded administration systems. 04

5 Your Insurance If you have insurance with QIEC Super, for most members, your cover and premium will remain the same. Please refer to to the Insurance Guide (available at qiec.com.au>members>publications>fact Sheets) for more comprehensive details about the terms and conditions of insurance cover. There will be no change to the standard Income Protection insurance cover (with a 5 year benefit payment period). This cover will still cease at age 65. However, changes will apply from 1 September 2013 for members who have applied and been accepted for additional Income Protection benefits (i.e. benefit payment period to age 65 ). Important changes to QIEC Super additional Income Protection insurance from 1 September 2013 What does this mean for you? If you only have standard Income Protection insurance cover (with a maximum 5 year benefit period), there is no change to your cover. For members who currently hold additional Income Protection benefits to age 65, cover will automatically be replaced with the extended to age 67 benefit period. If you have previously elected additional income protection benefits with a benefit payment period to age 65 the following insurance premiums will apply from 1 September 2013 to align with the extended benefit period to age 67. These premiums apply in addition to the premium you pay for the standard 5 year Income Protection benefit. QIEC Super s income protection insurance currently ceases at age 65 however we have recognised that a number of members are now working past age 65, and are in need of income protection after this age. QIEC Super has negotiated with CommInsure, the Fund s income protection insurer, to be able to offer income protection insurance to age 67. Outlined below are the increased premiums applying to additional Income Protection insurance cover from 1 September 2013, based on a 60 day waiting period (Table 1) and a 30 day waiting period (Table 2) which commences after expiry of standard Income Protection cover. Table 1: Premium rates for additional (to age 67) Income Protection insurance cover (60 day waiting period) 16 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

6 Table 2: Premium rates for additional (to age 67) Income Protection insurance cover (30 day waiting period) 16 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $6.11 Full details of the insurance changes will be outlined in the new QIEC Super Product Disclosure Statement (PDS) and associated Insurance Guide from 1 September 2013 which will be available on the Fund s website, qiec.com.au. For more information If you have any questions about these changes, or your superannuation account in general, please contact your QIEC Super Administration on between 8:00 am and 5:00 pm Monday to Friday or us at info@qiec.com.au This information is of a general nature and does not take account of your individual financial situation, objectives or needs. Before acting on this advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. You should obtain a Product Disclosure Statement (PDS) and consider the PDS before making a decision. The new PDS will be available at from 1 September If you require specific advice, you should contact a licensed financial adviser. QIEC Super Pty Ltd ABN , the Trustee of QIEC Super ABN , is Corporate Authorised Representative No under Australian Financial Services Licence No and is authorised to provide general financial product advice in relation to superannuation. For more information contact QIEC Super on