Your 14.3% Defined Benefit

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1 Your 14.3% Defined Benefit Product Disclosure Statement Scan this image using your smartphone s camera to go directly to apss.com.au to learn more about your super in the APSS and check your current APSS balance. You may first need to download a free barcode reader app that suits your brand of smartphone. Date of preparation: 16 September 2014

2 PRODUCT DISCLOSURE STATEMENT THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY 2 of 40

3 14.3% DEFINED BENEFIT Contents About this Product Disclosure Statement (PDS) 4 What you get a snapshot 6 What you get the detail 8 Ceasing employment 15 Investments 17 Accessing your super 20 Significant risks 22 Fees and other costs 22 Taxation information 25 Additional information 28 Glossary of terms 30 Form Provide your Tax File Number (TFN) 39 This Product Disclosure Statement (PDS) contains general information about the APSS for eligible employees of Australia Post or an Associated Employer who have 14.3% Defined Benefit entitlements in the APSS. It is not financial product advice, and should not be relied upon as such. Before making any decisions on the basis of the information contained in this document, you should obtain independent advice that takes into account your particular circumstances. The Trustee of the APSS, and the issuer of interests in the APSS, is PostSuper Pty Limited. PostSuper Pty Limited is not required to and does not hold an Australian Financial Services Licence. Therefore, it is not licensed to provide you with financial product advice regarding your investment in the APSS. 3 of 40

4 PRODUCT DISCLOSURE STATEMENT About this PDS WHAT IS THE PURPOSE OF THIS DOCUMENT? This document has been prepared for eligible employees of Australia Post or an Associated Employer who have 14.3% Defined Benefit entitlements in the APSS whilst they are employed by Australia Post or an Associated Employer. You should read it in its entirety before making a decision about the superannuation that you receive from Australia Post or your Associated Employer in the APSS. Words and expressions that are capitalised in this PDS are defined in the Glossary of terms. References to the Trustee, us, we or our throughout this PDS are references to PostSuper Pty Limited. References to your Employer are references to Australia Post or your Associated Employer. ABOUT THE APSS In addition to the Defined Benefit the APSS also allows employee members to save their own money in the APSS or rollover money from other superannuation funds into the APSS (we call these Member Savings ). If you want to add to your Defined Benefit with your own Member Savings or open an account in the APSS for your spouse, please read the separate Your APSS Member Savings at a glance Product Disclosure Statement (PDS) and if you need more information, Your APSS Member Savings in detail. They are available at apss.com.au or by calling SuperPhone THE ROLE OF YOUR EMPLOYER Australia Post is the principal employer-sponsor of the APSS. Australia Post and the Associated Employers provide superannuation benefits for their eligible employees through the APSS. MEMBERSHIP OF THE APSS 14.3% DEFINED BENEFIT From 1 July 2012, Australia Post and its Associated Employers no longer offer membership of the APSS 14.3% Defined Benefit to new employees. Instead, new employees are offered super benefits outside the APSS. This decision does not affect the benefits of existing APSS 14.3% Defined Benefit Members. Choices you can make now You can add to your Defined Benefit with your own Member Savings or open an account for your spouse. Refer to the Your APSS Member Savings at a glance PDS for more information. You can also nominate Beneficiaries. You ll find more detail as to how on page 12. Other products and services As an employee member of the APSS, you can: save your own money in the APSS or rollover money from other superannuation funds into the APSS (we call this Member Savings) open a spouse account for your spouse in the APSS potentially commence an APSS Pre-Retirement Pension. When you cease employment, you can: retain your benefits in the APSS and continue to make Member Savings, if eligible commence an allocated pension in the APSS (if you have retired or are otherwise eligible). If you re interested in any of these options (either now or when you cease employment), please obtain a copy of the Your APSS Member Savings at a glance PDS (and associated booklet) and/or the Your APSS Pension PDS from apss.com.au. 4 of 40

5 14.3% DEFINED BENEFIT HOW YOU CAN CONTACT US go online at apss.com.au by just log on and click contact us call SuperPhone on by mail at: APSS Locked Bag A5005 Sydney South NSW 1235 INFORMATION AND DOCUMENTS AVAILABLE FROM APSS WEBSITE The APSS website at apss.com.au includes Trustee and executive remuneration details and other APSS documents and information that must be disclosed under superannuation legislation. Refer to the APSS Governance page in the About the Scheme section of the APSS website for details and links to this information and documents. by fax: (02) It s a good idea to have your member number and Personal Identification Number (PIN) handy when contacting us online or by phone. Keeping you up-to-date Information contained in this PDS may change from time to time. If changes are materially adverse to readers of this PDS, we will update or replace this PDS to reflect the changes. To find out about any up-to-date information not contained in this PDS, you can: go online at apss.com.au call SuperPhone on A paper copy of any updated information will be given to you without charge on request. 5 of 40

6 PRODUCT DISCLOSURE STATEMENT What you get a snapshot The following is what your Employer provides for you in the APSS for just being an employee and it s at no cost to you. 14.3% DEFINED BENEFIT The superannuation benefit is a defined benefit. It is defined by the formula: 14.3% x Final Average Salary (FAS) x Years of full-time service This is applied to your years of service and FAS to determine your Defined Benefit. During periods of probationary employment this figure is consistent with the Superannuation Guarantee rate, which is currently 9.5%. You will find the full definition of FAS in the Glossary of terms. FAS is generally the average of your Superannuation Salaries received on your last three birthdays at your Employer. Your benefit will generally keep pace with inflation. As your salary increases so too does your Defined Benefit. This is made up of how long you work. For every day you work, your superannuation grows. It begins building up from the day you commence employment and ends on your last day of employment. Years of service are adjusted for any periods of part-time work (refer to page 10). Also, your Employer has adopted procedures to make sure that your Superannuation Salary will not go down (refer to page 9). 6 of 40

7 14.3% DEFINED BENEFIT Investment market returns do not impact on your Defined Benefit. TPD AND DEATH BENEFIT You and your family have significant protection against the financial impact of your Total and Permanent Disablement (TPD) or your death. For more information, go to pages DEDICATED MEMBER SERVICE The APSS is at your service. Our member contacts are: a website that allows you to monitor the growth of your superannuation and obtain benefit estimates online at any time at apss.com.au a dedicated phone line SuperPhone to attend to any queries you have on You can speak with our Service Representatives between the hours of 9am and 5.30pm (AEST) Monday to Friday by mail: APSS Locked Bag A5005 Sydney South NSW 1235 by fax: (02) You will receive from us: annual benefit statements regular communications notification of material changes and significant events that affect your APSS membership, as required by law. 7 of 40

8 PRODUCT DISCLOSURE STATEMENT What you get the detail Here we look in more detail at the differences between a defined benefit and a defined contribution fund. We look at how your Defined Benefit is calculated, including what happens during any probationary period of employment, what happens during periods of part-time employment and what happens if you take approved leave without pay. We also detail how the TPD and death benefit is calculated and who receives the TPD and death benefit. DIFFERENCES BETWEEN DEFINED BENEFIT AND DEFINED CONTRIBUTION The superannuation benefit your Employer provides to eligible employees through the APSS is a defined benefit. It is a benefit defined in terms of your Final Average Salary ( FAS ) and how long you have been employed by your Employer. Because your defined benefit is not influenced by investment markets and is therefore immune from investment market instability, you have peace of mind and certainty. and the difference between the APSS Defined Benefit and a defined contribution is? In a defined contribution fund the member carries the investment risk. YOUR DEFINED BENEFIT Your Defined Benefit is calculated in accordance with the following formula (adjusted for probationary periods of employment): 14.3% x FAS x years of full-time service Suppose that you become a member of the APSS and work full-time as a permanent employee of Australia Post from your first day of work to your last day of work, and you have no probationary period of employment. Suppose also that you work for 10 years (maintaining your membership all this time) and leave Australia Post with a FAS of $50,000. In this example, your defined benefit will be $71,500: 14.3% x FAS x years of full-time service = Defined Benefit 14.3% x $50,000 x 10 years = $71,500 In the APSS, your Employer carries the investment risk in relation to the Defined Benefit. In a defined contribution fund only the amount of the contribution is known with certainty the benefit depends on investment returns and expenses incurred. Defined contributions attract investment earnings or losses caused by negative returns. Administration fees and insurance premiums (neither of which currently apply in the APSS) can further reduce defined contribution benefits. 8 of 40

9 14.3% DEFINED BENEFIT What is your FAS? Final Average Salary ( FAS ) is generally the average of your Superannuation Salaries received on your last three birthdays with your Employer. Your Superannuation Salary is generally your full time equivalent salary, before tax, including recognised allowances, as at your last birthday. Salary sacrificing does not affect your Superannuation Salary. If you were not a member of the APSS on your last birthday, your Superannuation Salary is simply your before-tax salary as at the date you joined the APSS. Your Superannuation Salary is based on payroll information provided to the APSS by your Employer. Given that your FAS is made up of the average of your Superannuation Salaries on your last three birthdays, your benefit will generally keep pace with inflation. Your Employer has adopted procedures that make sure that, should your salary decrease, your Superannuation Salary (and, therefore, your FAS) will not decrease. A minimum level of FAS ( MinFAS ) applies if you retire on or after your 55th birthday. MinFAS will also apply to any benefit accrued during any period of probationary service and/or non-permanent service if you leave your Employer before age 55. The MinFAS is indexed on 1 July each year in line with general wage increases within Australia Post. As at 1 July 2014, MinFAS was $45,334. What happens during a probationary period of employment? The Defined Benefit during any probationary period (if applicable) is the Superannuation Guarantee (SG) Accrual Rate multiplied by FAS for the length of your probationary period of employment in years. Once your probationary period of employment finishes your Defined Benefit will be 14.3% multiplied by your FAS for the length of your subsequent period of full-time service with your Employer. For example, if your 10 years of full-time employment at Australia Post includes a three-month probationary period during which the SG Accrual Rate was 9%, and you end up with a FAS of $50,000, you would have a benefit of $70,838. Calculating your Defined Benefit including period of probationary employment: Rate x FAS x years of full-time service = Defined Benefit 9% x $50,000 x 0.25 years = $1,125 PLUS 14.3% x $50,000 x 9.75 years = $69,713 Total Defined Benefit = $70,838 9 of 40

10 PRODUCT DISCLOSURE STATEMENT What you get the detail (cont.) What happens during periods of part-time employment? The Defined Benefit you accrue as an APSS member employed part-time is calculated using your FAS full-time equivalent multiplied by your service fraction (that is, your hours of part-time service expressed as a fraction of the hours of full-time service). Your FAS during periods of part-time service is based on your full-time equivalent salary. For example, suppose that, after completing your threemonth probationary period, you work full-time for five years and nine months, then start working three days a week (i.e. three of five days) for another four years and, as before, your FAS is $50,000. Over this 10-year service period, you would end up with a Defined Benefit of $59,398: Calculating your Defined Benefit including periods of probationary and part-time employment: Rate x FAS x years of full-time = Defined Benefit service 9% x $50,000 x 0.25 years = $1,125 PLUS 14.3% x $50,000 x 5.75 years = $41,113 PLUS 14.3% x $50,000 x Total Defined Benefit 4 years x 3/5 = $17,160 = $59,398 Your FAS stays the same. Your FAS doesn t go down just because you work part-time. So your Defined Benefit doesn t go down. What happens if you take approved leave without pay? During periods of Employer-approved leave without pay that commence on or after 1 July 2014, your Defined Benefit will continue to accrue (at the full or part-time rate that applied immediately prior to starting your approved leave) for the following period, as applicable to you: 28 days for most approved leave without pay; or a maximum of 12 months in total for approved maternity, paternity or adoption leave, inclusive of both paid and unpaid periods of leave. In addition, you will still be eligible for an additional Death or Total and Permanent Disablement (TPD) benefit whilst on Employer-approved leave without pay, up to a maximum of 12 months. If your approved leave without pay extends beyond 12 months, your additional Death or TPD benefit entitlements will cease. Your leave status (including the type of leave you are on and whether it has been approved) is based on information provided to the APSS by your Employer. The APSS is not involved in leave applications and we do not have details about employees leave entitlements. What is the Superannuation Guarantee top-up? Under Superannuation Guarantee legislation, employers have to provide a minimum amount of superannuation for their employees (to avoid liability for the Superannuation Guarantee charge). This is called the minimum Superannuation Guarantee benefit. The superannuation your Employer provides for 14.3% Defined Benefit members via the APSS is usually more than is required by law. To ensure that your benefit always meets the Superannuation Guarantee requirements, a Superannuation Guarantee top-up may be calculated for you. This is the amount by which the minimum Superannuation Guarantee benefit exceeds your Defined Benefit. Most 14.3% Defined Benefit members will not have a Superannuation Guarantee top-up because the Defined Benefit is generally higher than the minimum Superannuation Guarantee benefit. If you are entitled to a Superannuation Guarantee top-up, it can go up or down when your Defined Benefit changes and when the minimum Superannuation Guarantee changes. Visit the website at apss.com.au or call the SuperPhone on if you would like to find out if you have a Superannuation Guarantee top-up. 10 of 40

11 14.3% DEFINED BENEFIT TOTAL AND PERMANENT DISABLEMENT (TPD) AND DEATH BENEFIT You and your family have significant protection against the financial impact of your Total and Permanent Disablement (TPD) or your death: Cash lump sum benefit. You re covered 24 hours a day, 7 days a week while you remain an APSS member and an employee of Australia Post or your Associated Employer. No need to sit a separate medical you don t have to provide information to the Trustee about your health status on joining the APSS to be eligible. At no cost to you because the costs are met by your Employer. TPD and death benefits provide financial support to you or your Dependants in the event of your TPD or your death. These benefits are available once you have completed any probationary period of employment. For details on the death benefit available for permanent employees during periods of probationary employment see page 12. The TPD and death benefit is a cash lump sum consisting of, in the case of permanent employees under the age of 60, an amount equivalent to: 14.3% x FAS x years from date of TPD or death to date member would have attained age 60. The TPD and death benefit is payable in addition to the member s accrued Defined Benefit as at the date of TPD or death. A top up may be applied to ensure that a member s benefits meet the minimum death benefit requirements under Superannuation Guarantee law. Calculating the benefit payable upon TPD or death In calculating the TPD and death benefit, FAS is determined as if the member s Superannuation Salary on the date of TPD or death remained unchanged from that date to the date the member would have attained age 60. For example, a 35-year-old has 25 years to age 60. Suppose this member suffers a TPD or dies having served three years employment with Australia Post the first three months being a probationary period at an SG Accrual Rate of 9%. If this member has a Superannuation Salary of $54,000, the total TPD or death benefit would be $215, Accrued Defined Benefit to the date of TPD or death SG Accrual Rate x FAS x probationary service 9% x $54,000 x 0.25 years = $1, PLUS 14.3% Rate x FAS x years of full-time permanent service 14.3% x $54,000 x 2.75 years = $21, PLUS Additional TPD/death benefit 14.3% Rate x FAS x years of potential membership between date of TPD or death and 60th birthday 14.3% x $54,000 x 25 years = $193, Total Defined Benefit payable upon TPD or death = $215, If the member had resigned, their FAS would have been the average of their last three Superannuation Salaries. Let s say they were $50,000, $52,000 and $54,000 then his FAS would have been $52,000 and his total benefit payable upon resignation would have been $21, of 40

12 PRODUCT DISCLOSURE STATEMENT What you get the detail (cont.) What if a member is aged 60 or older? From age 60, the benefit payable on TPD or death will be the same as the benefit that would have been payable had the member left employment on that date. Death benefit for members during probationary period During a probationary period (if applicable), you are provided with a fixed age-based level of death benefit that is payable in addition to your Defined Benefit. Your Employer meets the cost of the death benefit that is calculated in accordance with the table below. may reduce your benefit payment by an amount it believes the insurer would have declined or refused. This may occur if your death or TPD was a result of a pre-existing illness or injury at the time your death or TPD benefit cover commenced (for most members, this is at the date employment commenced; for members who have opted out of the APSS Defined Benefit and back in again, it will be at the date they opted back in). The Trustee will assess your entitlement to a TPD benefit only after your employment has ceased. No additional death or TPD benefit applies if you are on approved leave without pay beyond one year, i.e. your benefit will be the same as your withdrawal benefit. Age Level of death benefit We define TPD in the Glossary of terms. Under 20 Nil From 20 to 34 $50,000 from 35 to 39 $35,000 from 40 to 44 $20,000 from 45 to 49 $14,000 from 50 to 55 $7, or older Nil Eligibility Evidence of TPD or proof of death is required before these benefits can be paid. When you join the APSS, the Trustee does not separately require information as to your current state of health. However, the Trustee may rely on information you supply to your Employer on your employment, or information provided by a doctor, to determine your eligibility to these benefits when a claim is made. If you or your personal legal representative do not provide consent for your Employer to provide this information to the Trustee, you may not be eligible for death and TPD benefits. If the Trustee considers that an insurer would have declined or reduced any death or TPD benefit available to you, it Who receives the death benefit? By law, the Trustee will pay or apply the death benefit to or for the benefit of one or more of the following persons: the member s Dependant(s) the legal personal representative of the member s estate any other person permitted by law. A Dependant includes your Spouse and Child(ren) as at the date of your death. A Dependant also includes a person with whom you had an Interdependent Relationship at the date of your death and a person who was financially dependent on you at that time. We define Spouse, Child and Interdependent Relationship in the Glossary of terms. Nominating Beneficiaries provides the Trustee with a guide as to whom you would like your death benefit to be paid to. You can nominate Beneficiaries: online at apss.com.au by calling SuperPhone on of 40

13 14.3% DEFINED BENEFIT However, remember that the Trustee is not bound by your nomination and is guided by the purposes of the APSS, which include providing superannuation benefits for members upon their retirement from service and, on the death of members, for their Dependants. By law the Trustee cannot pay a benefit to a person that does not fit one of the categories listed on the previous page. Your benefits must be paid out of the APSS in the event of your death. Change in Member Savings upon Notification of Death If the APSS is notified of your death any Market Return Member Savings you have will be automatically switched to Cash Return Member Savings at the end of the fortnight in accordance with the normal APSS switching timeframe (which is usually the next fortnight, based on Australia Post s payroll dates, but in some instances may be the following fortnight refer to Your APSS Member Savings at a glance PDS or call SuperPhone for details). This means that from that point on, these Member Savings will be allocated investment returns using the Cash Return Crediting Rate that cannot be negative and will preserve the dollar value of your Member Savings. IMPORTANT INFORMATION CONCERNING YOUR BENEFITS Tax File Numbers The APSS is authorised by law to ask members for their Tax File Number ( TFN ). For new employees, your Employer is also required to pass on your TFN to the APSS. If you do not provide your TFN, the APSS may have to pay additional tax that could result in a reduction to your APSS benefit. If your Member Savings are sufficient it will be deducted from your Member Savings account but, if this account is not sufficient, your Defined Benefit may be reduced by the establishment of an offset account. If an offset account is established for you, any additional tax the APSS may be required to pay which cannot be deducted from your Member Savings would be credited to this offset account. The account balance would increase or decrease according to the Crediting Rates for Market Return Member Savings. When your Defined Benefit becomes payable, the balance of the offset account would be deducted or offset from the benefit payable. Because the Market Return Crediting Rates are applied to these offset accounts, the balance of the offset account can be expected to increase beyond the initial amount of Defined Benefit used to pay the tax. The Your APSS Member Savings at a glance PDS provides more information about Member Savings including how Crediting Rates are calculated. If you quote your TFN within four years, we may be able to reclaim the tax paid from the ATO. If this occurs, and your Defined Benefit has been reduced for the tax paid, the amount reclaimed would first be debited to your offset account with any excess added to your Member Savings. However, the ATO will not compensate the APSS for the forgone investment earnings so even if this occurs you still may have an offset account. Also, it may not be possible for the APSS to reclaim the tax from the ATO or to reduce the amount of tax deducted from your benefit. If you would like to provide the APSS with your TFN, just complete the Provide your Tax File Number form on page 39 and return it to APSS, Locked Bag A5005, Sydney South NSW You can also provide your TFN by calling SuperPhone on Concessional (before-tax) contributions For employee members, concessional contributions include: the notional amount your Employer contributes to provide your Defined Benefit (your Notional Taxed Contribution, explained on the next page); and any salary sacrifice contributions you make from your before-tax salary. 13 of 40

14 PRODUCT DISCLOSURE STATEMENT What you get the detail (cont.) Limits on concessional contributions The Government imposes limits on the amount of contributions that can be made to your super in each financial year that are taxed at concessional rates. If you exceed these limits you could potentially pay extra tax. For the financial year, the limit for concessional (before-tax) contributions is: $30,000 p.a. for person under age 50 at the end of the financial year; and $35,000 p.a. for persons aged 50 or over at the end of the financial year. These limits may increase by indexation or be changed by Government in later years. For employee members, your Notional Taxed Contribution and any salary sacrifice contributions count towards your concessional contributions limit. Therefore, this limit is an important consideration for employee members who are making salary sacrifice contributions to their APSS Member Savings or another super fund. Employee members can see an estimate of their concessional contributions for the financial year to date online at apss.com.au (refer to Concessional Contributions under My APSS Information). Excess contributions Concessional (before-tax) contributions are generally taxed at 15%** when received by the APSS. Excess concessional contributions will be included in an individual s assessable income and taxed at their marginal tax rate (subject to a tax offset for the 15% contributions tax already paid) plus an additional interest charge. In addition, persons who exceed their concessional contributions limit may also elect to have up to 85% of their excess concessional contributions released from their superannuation. If you have sufficient APSS Member Savings to make the release, you will have this option available to you, however if your Member Savings are insufficient, the option to release an amount from your Defined Benefit is not currently available. An individual s excess concessional contributions also count towards their non-concessional (after-tax) contributions limit for the relevant financial year. This may be relevant to any voluntary after-tax contributions made to your APSS Member Savings or another super fund. Refer to the Your Member Savings at a glance PDS for further information about non-concessional (after-tax) contributions. Notional taxed contribution (NTC) The Government has prescribed a standard formula to calculate the notional amount your employer contributes to provide your Defined Benefit. For most 14.3% Defined Benefit members, your NTC is your Superannuation Salary at the start of the financial year (1 July), adjusted for part-time service, multiplied by 10.8%.* Therefore, if you are earning $50,000 at the start of the year and work full time your NTC for the financial year is $5,400. Special grandfathering arrangements generally apply to employee members who had a Defined Benefit on 12 May 2009 and whose notional contributions would otherwise exceed the before-tax contribution limit. If eligible, their NTC is capped at the concessional contributions limit. However, salary sacrifice contributions can still cause such members to exceed their concessional contributions limit. * This rate applies for the financial year. A higher rate applies if your superannuation salary is less than $40,270. A different rate applies for SG Defined Benefit members and some 14.3% Defined Benefit Members. For more details on this call SuperPhone on of 40

15 14.3% DEFINED BENEFIT Please note that for the and earlier years, excess concessional contributions were generally subject to additional tax at a rate of 30% plus the Medicare levy. ** If you do not provide your TFN, additional tax may apply (refer page 25). Additional tax of 15% may also apply to very high income earners whose income and concessional contributions (excluding excess contributions) exceed $300,000 in a financial year. Low Income Superannuation Contribution (LISC) The Government has introduced the Low Income Superannuation Contribution for the financial year onwards. This is an additional superannuation contribution by the Government of between $10 and $500 for individuals with an adjusted taxable income of $37,000 or less for a financial year who have Concessional Contributions made for them in that year. To be eligible, at least 10% of your income must be derived from employment or business. Temporary residents are not eligible. The contribution will be calculated at 15% of the individual s Concessional Contributions, up to a maximum contribution of $500. Employee Members eligible for this contribution will receive their payment automatically into an APSS Member Savings Account from the Australian Taxation Office (ATO) once they complete their annual tax return. If Employee Members do not already have a Member Savings Account, this payment will automatically open an APSS Member Savings Employee Account and the contribution will be deposited into Cash Return Member Savings (the default) until we are advised otherwise. As a result of recent legislative change, the LISC could be abolished from 1 July Defined Benefit offset accounts An offset account may be established for you if: part of your Defined Benefit has been released early on compassionate grounds or for severe financial hardship (refer page 20-21); we don t have your TFN (refer page 13); you have used part of your Defined Benefit to commence an APSS Pre-Retirement Pension (refer to the APSS Pensions PDS); and/or you have a Family Law Account or a Surcharge Tax Account (defined in the Glossary). The APSS deducts the balance of your offset accounts from your APSS benefit when it becomes payable. The opening balance of the account will be the amount of your Defined Benefit that has been released or paid. This amount will accumulate at the relevant interest rate or according to the Crediting Rates for APSS Market Return Member Savings (as applicable) until your benefit is payable. Your annual APSS Periodic Statement will provide details of how your offset accounts (if any) have been adjusted each year. Ceasing employment When you cease employment with your Employer, you can choose to: continue your APSS membership by: transferring your benefits to the APSS Rollover taking your APSS retirement benefit in the form of an APSS Pension leave the APSS. What happens to your Defined Benefit when you leave employment? Once your Employer notifies the APSS of you leaving and provides all the necessary information about your service, we will send you an estimate of your Defined Benefit. This Defined Benefit estimate may not be the same as the final APSS benefit paid because adjustments must be made for interest that accrues to the date your Defined Benefit is actually paid. The interest rate used is the Crediting Rate of the Cash Return Member Savings (refer to the Your APSS Member Savings at a glance PDS for more information). Your estimate will be sent to you, together with a Benefit Payment Direction form. You will need to complete and return this form within 60 days in order for the APSS to act on your instructions. 15 of 40

16 PRODUCT DISCLOSURE STATEMENT Ceasing employment (cont.) Advise us within 60 days If you do not tell the APSS what you want to do with your benefit within 60 days of us writing to you with details of your estimate, your benefit will be paid automatically as soon as practicable to an Eligible Rollover Fund (ERF), unless we are prevented from doing so by law. Details of the current ERF and further information can be found on page 29. If you would like to continue your APSS membership after leaving employment with your Employer, you can get more detail about the APSS Rollover and APSS Pensions: online at apss.com.au by downloading copies of the Member Savings PDS (Your APSS Member Savings at a glance) or Pensions PDS (Your APSS Pension), as applicable call SuperPhone on If you would prefer to transfer your benefits to another complying superannuation fund, you will need to provide details of the fund in the Benefit Payment Direction form. PROVIDING PROOF OF IDENTITY The security of your super entitlements in the APSS is a key priority for the Trustee. We have procedures in place to manage risks associated with fraud and other illegal activities. At times, these procedures may cause inconvenience to you. Please remember that they are being applied to protect your entitlements. In addition, under the Anti-Money Laundering and Counter- Terrorism Financing Act 2006, superannuation funds are required to have an anti-money laundering and counterterrorism financing program in place. A key element of this program is customer identification and verification procedures. Typically, you will be required to provide proof of your identity before you withdraw benefits from the APSS or commence a pension. As a result, some requested transactions cannot proceed until we receive and verify the necessary identification documents. The Trustee does not accept liability for any loss you may incur as a result of circumstances such as a delay in payment of a benefit or commencement of an income stream where the delay arises from our need to comply with legislative requirements. We may be required to request additional customer identification or related information from you at other times. If we cannot obtain the required information from you, we may be unable to process your requested transaction. The Trustee must also report specified matters to the regulator, AUSTRAC, and this may include the provision of personal information about you. If this happens, the Trustee is not permitted to advise you that such a report has been made. 16 of 40

17 14.3% DEFINED BENEFIT Investments The Trustee of the APSS invests the funds contributed by your Employer to provide the Defined Benefit. Here we outline how the Trustee invests this money by looking at the: specific investment objective for Defined Benefit assets investment strategy to meet this objective implementation of the investment strategy. All investments involve some risk. These risks include the chance that the amount invested could fall in dollar value, that the rate of return could be less than expected or that the re-payment of the investment could be delayed. The Defined Benefit is safe and secure because your Employer takes on all these investment risks. You have peace of mind and certainty because you bear no investment risk at all. INVESTMENT OBJECTIVE FOR DEFINED BENEFIT ASSETS The Trustee s investment objective for Defined Benefit assets is to formulate and implement an investment strategy that will, in conjunction with the APSS sponsoring employers funding strategies, enable the APSS to pay benefits as well as other costs as they become due. In particular, the Trustee aims to formulate a strategy that has: a high likelihood that the APSS will have adequate liquidity to pay benefits and costs at all times as they become due; and a relatively high expected long-term average net investment return (defined, until otherwise agreed, to be 7.25% per annum, measured over rolling five year periods). The Trustee accepts that, to achieve a relatively high longterm investment return, the annual investment return is likely to be relatively volatile. In particular the Trustee accepts the likelihood that: the investment return may be negative once in every four to five years on average; and the APSS Vested Benefits Index (VBI) is likely to fluctuate in a tolerance range of 90% to 110%. The Trustee recognises that together these objectives cannot be met with certainty. Therefore the Trustee invests in a way that results in the greatest likelihood of achieving these outcomes in combination. Remember you do not bear any investment risk associated with the Defined Benefit. 17 of 40

18 PRODUCT DISCLOSURE STATEMENT Investments (cont.) TRUSTEE S INVESTMENT STRATEGY The Trustee s investment strategy is to allocate the Defined Benefit assets of the APSS in a way that is most likely to achieve these investment objectives. The funds in the APSS are divided into two investment portfolios, the Market Return Portfolio and the Cash Return Portfolio. Member Savings are allocated between these two portfolios. The Defined Benefit assets are invested in the Market Return Portfolio. The Market Return Portfolio is a diversified portfolio of assets that are mainly invested for the long-term. The way that the Trustee invests the Market Return Portfolio rests on some simple but important beliefs. The Trustee believes that: economic activity in the world is creating wealth investors can participate in and benefit from this wealth creation by investing in Financial Assets the total stock of the world s Financial Assets can t be lost even though some Financial Assets may fail (resulting in the loss of money invested in them) because investors require higher expected returns as compensation for accepting higher expected risks, investing in riskier assets results in higher returns in the long-term. In line with these beliefs the Trustee s investment strategy for the Market Return Portfolio involves making allocations between classes of the world s Financial Assets that have different degrees of risk (and therefore different levels of expected return) and ensuring that each allocation includes a wide array of Financial Assets in that asset class to reduce the overall impact if some investments fail. The main asset classes that the APSS recognises are: Bonds Shares IMPLEMENTING THE TRUSTEE S STRATEGY The investment strategy for the Defined Benefit assets consists of target allocations to four asset classes shown in the table below: Asset Class Target Normal Range* Allocation Bonds 20% 18 22% Shares 55% 50 60% Private Market 17.5% 15 20% Assets Property 7.5% 5 10% * The actual asset allocation is normally expected to fluctuate (go up or down) within these ranges over time. If it moves outside the normal ranges, the Trustee will take prudent and commercially responsible steps to re-balance to the target allocation. Bonds The Bond assets in the Market Return Portfolio may be invested in government and semi-government debt, highgrade corporate debt and cash. Government debt and cash is invested in indexed portfolios in the Public Market. The Trustee believes that it is unlikely that it will have reliable information about these assets that other investors won t have. Without more information than other investors, it is very difficult to pick the investments that will do better in the future than others - in other words, it is difficult to beat the market. Indexed portfolios are a low cost way for the Trustee to invest in these markets. The Trustee has not currently invested in semi-government or corporate debt but may do so in the future. The Trustee s high-grade debt investment manager is Vanguard Investments Australia Ltd. Vanguard is also appointed to manage the Cash Portfolio. Private Market Assets Property. 18 of 40

19 14.3% DEFINED BENEFIT Shares This includes Public Market Shares as well as core Private Market equity instruments (through funds that invest in private companies). The Trustee intends to scale down the private equity investments in the Market Return Portfolio over the 3-5 years from June 2013 and this asset class will ultimately consist of Public Market Shares only. Like government debt, the Public Market Shares are invested in indexed portfolios because the Trustee believes it is difficult to beat the market because it is unlikely to have reliable information about these assets that other investors won t have. This means that investments are made in a way that this is designed to give the same return as the whole market, measured by commonly recognised market indexes, such as the ASX200 index for the Australian share market. The Trustee s Public Market Shares investment manager is Vanguard Investments Australia Ltd. Private Market investment involves the purchase of privately-traded assets such as companies and buildings. Core Private Market equity involves investing in established and start-up privately traded companies. More detail on how the Trustee invests in Private Market investments is provided below under Private Market Assets. The Trustee expects to make no further commitments to core Private Market equity. Over time more and more of the assets in the Shares asset class will become Public Market Shares. Private Market Assets This will include Private Market investments that are not included in Shares or Property asset types. In particular, it includes privately-traded debt and privately-traded noncore equity. Information about privately traded investment opportunities and access to them is quite restricted. Very few people or groups have the resources, business relationships, skills and money to make a bid for a privately-traded asset. Privately-traded assets within Shares, Property and Private Market Assets are invested by the Trustee on the advice of APSS Management, who retains advisers with specialist expertise and access to privately-traded assets around the globe. The Trustee has made investments in investment vehicles, most of which invest in a number of individual assets, resulting in a globally diversified portfolio for the APSS. Property This includes Private Market Property and Infrastructure investments. Private Market Property includes privatelytraded buildings, including building development. Infrastructure includes privately-traded assets. More detail on how the Trustee invests in Private Market investments is provided under Private Market Assets. Managing currency risk The APSS s investments cover all major financial regions of the world as well as Australia. This introduces currency risk the risk that the value of overseas investments will be affected by unpredictable movements in exchange rates. The Trustee has appointed a currency risk manager Macquarie Investment Management Limited to manage the effect of exchange rate movements. Labour standards and environmental, social and ethical issues The Trustee does not take into account labour standards, environmental, social or ethical considerations ( SRI ) in the selection, retention or realisation of the APSS s investments or in the appointment or termination of the APSS s investment managers. The APSS s investment managers do not take into account SRI considerations in the selection, retention or realisation of investments. These considerations may be taken into account if they have the potential to materially affect the value of investment, but no specific methodology is applied. 19 of 40

20 PRODUCT DISCLOSURE STATEMENT Accessing your Super Superannuation is about investing for the long-term. After all, it s meant to be your retirement income. For these reasons, legal restrictions and Trust Deed restrictions exist on accessing your superannuation. Let s first look at the legal restrictions, then the restrictions imposed by the Trust Deed and then we ll look at when you can access your superannuation. LEGAL RESTRICTIONS ON ACCESS The law requires you to keep (or preserve ) your superannuation in a superannuation fund. Since 1 July 1999, all contributions to superannuation funds and all interest earned on amounts held in superannuation funds are preserved. Preserved superannuation may be paid upon permanently retiring from the workforce on or after your Preservation age (see table below). Date of birth Preservation age Before 1 July July 1960 June July 1961 June July 1962 June July 1963 June After June Preserved superannuation may be paid earlier if another condition of release is satisfied. Conditions of release include the following: death permanent incapacity terminal medical condition (as defined in superannuation law) attaining age 65 (whether you have retired or not) specific compassionate grounds approved by Medicare (partial release only - limits apply) severe financial hardship (as defined in superannuation law) (partial release only - limits apply) ceasing gainful employment with an employer on or after attaining age 60 permanent departure from Australia, if you are a temporary resident (except New Zealand citizens) ceasing employment with your Employer where the benefit payable is less than $200. If you have reached your Preservation Age, you can commence a Pre-Retirement Pension using any components of your superannuation benefit. Refer to the Your APSS Pension PDS for more information including the APSS requirements that need to be satisfied. 20 of 40

21 14.3% DEFINED BENEFIT TRUST DEED RESTRICTIONS ON ACCESS Under the Trust Deed, your accrued Defined Benefit generally cannot be paid to you in cash while you are employed by your Employer except where some of your accrued Defined Benefit is approved for release prior to this - either to commence an APSS Pre-Retirement Pension, if approved by Medicare on compassionate grounds, or if you meet the criteria for severe financial hardship prescribed under superannuation law. If any of your Defined Benefit is released early, we will establish an offset account that will be deducted from your APSS benefit when it becomes payable (refer to page 15). The balance of this account will accumulate according to the Crediting Rates for Market Return Member Savings until your benefit is payable. PRESERVATION COMPONENTS As a result of these legal and Trust Deed restrictions, your superannuation benefit may be made up of three components: Unrestricted non-preserved component payable in cash at any time; Preserved component must be retained in a superannuation fund or other approved superannuation arrangement until you satisfy a relevant condition of release); and Restricted non-preserved component although not preserved, you are restricted from accessing this component while you are employed by Australia Post or an Associated Employer. Your annual APSS Benefit Statement will show what proportion of your superannuation is preserved, unrestricted non-preserved and restricted nonpreserved. Also refer to the Glossary for explanations of these terms. Age barriers Members can keep their superannuation in the APSS, regardless of their age and working status. A Member s Defined Benefit will cease to accrue with additional years of service when: they cease employment with your Employer; or they reach age 65 unless employed on at least a part-time basis (i.e. at least 40 hours in a period of 30 consecutive days during the most recent financial year); or they reach age 75. The minimum Superannuation Guarantee benefit will continue to accrue after age 75 for Members who remain in employment with their Employer. For details on how to retain your benefit in APSS refer to page Transferring your Defined Benefit out of the APSS The portability laws that allow superannuation to be transferred to another complying fund at any time (subject to certain restrictions) do not apply to your accrued Defined Benefit. That is you cannot generally take your Defined Benefit out of the APSS while you remain employed by your Employer. However, if you are over Preservation Age, you are able to commence a Pre-Retirement Pension while you remain employed (refer to Your APSS Pension PDS for more information). Temporary residents Where a temporary resident does not claim their benefits (net of tax) from the APSS within six months of permanently departing Australia, the Trustee may be required to transfer these benefits to the ATO. Exceptions apply to New Zealand citizens or persons who are applying for permanent residency status. Thereafter, the former temporary resident will need to claim the benefits directly from the ATO. The amount transferred to the ATO will not earn interest, so it is a good idea to quickly claim such benefits after permanently leaving Australia. 21 of 40

22 PRODUCT DISCLOSURE STATEMENT Significant risks APSS-SPECIFIC RISKS The Defined Benefit is a defined benefit, which means your Employer carries the investment risk rather than you. However, there is no guarantee that the assets of the APSS will at all times be sufficient to meet the accrued benefits of members (including the accrued Defined Benefits of employee members). If there is a deficit, your Employer is under no liability under the Trust Deed to meet the shortfall. Similarly, your Employer has the right under the Trust Deed, following consultation with the Australian Council of Trade Unions, to reduce, terminate or suspend its future contributions to the APSS. Many of the costs of running the APSS are borne by Australia Post and Associated Employers. There is a risk that these arrangements may be discontinued or amended in future. The APSS governing rules or our policies may also change from time to time and this may impact your membership and benefits. There is also the risk that the APSS may terminate in accordance with the procedures of the Trust Deed. CHANGES IN SUPERANNUATION REGULATION Superannuation and taxation laws change often. These changes can impact on the value of your superannuation, or your ability to access your benefits or your entitlements to social security. INVESTMENT RISKS Your Defined Benefit is not affected by investment returns, which means that the risk of low, variable or negative investment returns on funds contributed by your Employer to provide your Defined Benefit is carried by your Employer. Fees and other costs Fees or other costs do not impact on your Defined Benefit. We are required by law to include the table below in this PDS. DID YOU KNOW? Small differences in both investment performance and fees and costs can have a substantial impact on your long-term returns. For example, total annual fees and costs of 2% of your account balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $100,000 to $80,000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. Your employer may be able to negotiate to pay lower administration fees. Ask the fund or your financial adviser. TO FIND OUT MORE If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website ( has a superannuation fee calculator to help you check out different fee options. 22 of 40