ABCD KPMG Superannuation Services Pty Limited ABN: 90 094 584 755 Australian Financial Services Licence No. 241366 Telephone: +61 2 9335 7000 10 Shelley Street Facsimile: +61 2 9335 7001 Sydney NSW 2000 DX: 1056 Sydney www.kpmg.com.au P O Box H67 Australia Square 1213 Australia To ASC Superannuation Fund members Date 24 March 2009 From KPMG Superannuation Services Pty Limited Ref Super News March 2009 Super News March 2009 Welcome to the fourth edition of Super News, a quarterly newsletter for members of the ASC Superannuation Fund ( the Fund ). The purpose of this newsletter is to provide information to members on new products and services offered by the Fund, an update of the Fund s investment performance and a general update on industry news. This newsletter contains information in relation to the following: Salary Continuance Insurance; Superannuation for temporary residents; UK pension transfers; Monthly and year-to-date performance returns to 31 January 2009; Investment market update; and Comparison of the Fund s performance with similar superannuation funds. Salary Continuance Insurance (SCI) The following section of the newsletter is of particular relevance to employees of ASC not currently covered by Salary Continuance Insurance ( SCI ) within the Fund. These employees include members of the ASC Superannuation Fund who did not apply for salary continuance cover when joining the Fund and employees who elected under Choice of Fund legislation to have their superannuation guarantee contributions paid to another superannuation fund. If you fall within either of these categories, you may wish to reconsider your options in light of the benefits of SCI cover available within the Fund. Salary Continuance Insurance, also known as Income Protection Insurance, can provide valuable financial assistance and peace of mind for you and your family during a time of potential uncertainty. In the event that you were temporarily unable to work due to an illness or accident, having SCI cover would still provide you with an income equivalent to 75% of your salary each month. Furthermore, salary continuance insurance payments may continue after you have returned to work on a full-time or part-time basis. If your post-disability salary is less than your predisability salary, you may be entitled to receive a partial salary continuance benefit to top up your income. KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.
The ASC Superannuation Fund provides SCI cover under the following arrangements: Benefit provided = 75% x salary (maximum $25,000 per month) Payment period = Maximum of 2 years Time you need to be absent from work before you can claim = 30 days Premiums for SCI are payable from your member account within the Fund and are calculated as: PT and NOTE members = 0.4329% of salary NC members = 0.4218% of salary. The reason for the difference in cost is that members of the PT and NOTE categories of membership also receive a 9% superannuation contribution in addition to the 75% of salary SCI benefit. SCI Eligibility Criteria To be eligible to apply for SCI cover through the ASC Superannuation Fund you must meet the following conditions: You must be a member of the ASC Superannuation Fund; You must be under 65 years of age; You must be currently employed and working more than 15 hours a week with ASC (i.e. not on a casual basis); If you have exercised choice of fund, you will only be eligible for SCI where your superannuation account balance is retained within the ASC Fund. Provided you meet all of the above eligibility conditions, you can apply for SCI cover within the Fund. Process for approval of Salary Continuance Insurance Download the Personal Statement and Declaration of Health form from the Forms page on the Fund website. Alternatively, contact the Fund Administrator confirming that you wish to apply for SCI cover and a form will be sent to you. You must return the completed form to KPMG. The insurer will assess the application and KPMG will send you additional documentation requesting medical information from both you and your treating doctor. Once you have undergone medical underwriting you must return all the completed documentation to KPMG. KPMG will forward the completed documentation to the Fund s insurer. The Fund's insurer will assess the application and the documentation that you have sent through, and will either accept your application for SCI cover, will request further medical information or will deny your application. 2
Where the insurer requests further information, they will contact KPMG and KPMG will liaise with you directly as to the additional information required by the insurer to assess your application. Written notification of the insurer s decision regarding your application for insurance cover will be sent to you from KPMG. Superannuation for Temporary Residents Departing Australia Superannuation Payment (DASP) Workers in Australia on temporary resident visas are eligible to claim their superannuation money once their visa has expired or been cancelled and they have permanently departed Australia. This payment, called the Departing Australia Superannuation Payment ( DASP ), is distributed as a cash benefit subject to relevant withholding taxes. The government has recently amended the legislation to increase the withholding tax rate to 35% from 1 April 2009 replacing the current rate of 30%. Applications for the DASP payment can be submitted using the online payment system accessible at the website of the Australian Tax Office ( ATO ) or via a paper application. Unclaimed Super In addition to amending the legislation in relation to withholding tax rates the government has also changed the legislation such that certain temporary residents super is to be paid to the government as unclaimed super. Any unclaimed super in respect of temporary residents who have departed Australia more than six months ago and who no longer hold a current temporary visa will now be transferred to the ATO. Departed temporary residents will be able to later claim back their money as their superannuation will remain on account at the ATO. Those who return later as permanent residents have the option of having their balance at the ATO (with interest accrued) transferred to a superannuation fund or paid as a retirement or death benefit in accordance with the relevant legislation. Please contact the Fund Administrator if you have any questions in relation to this. UK Pension Transfers recent announcements Subsequent to the Fund becoming an Australian Qualifying Recognised Overseas Pension Scheme ( QROPS ) in 2008, members can elect to transfer any monies they hold in a UK Pension Fund in to the ASC Superannuation Fund. Members considering such a transfer should be aware that the UK authorities have recently released further guidance surrounding the tax implications of such a transfer. The guidance relates specifically to transfers that are in excess of the non-concessional contributions cap ($150,000 per year or $450,000 over rolling three-year periods for those under the age of 65). Under current rules, where the amount transferred to the Fund exceeds your non-concessional contributions cap the benefit will be subject to excess contributions tax at the rate of 46.5%. Where you are liable for additional tax, you can elect to pay the additional tax directly to the ATO or alternatively, request the Trustee deduct the amount from your benefit in the Fund and pay it to the ATO on your behalf. 3
The recent announcement from the UK authorities confirms that, where you are under the UK retirement age, any payment out of the Fund to cover the additional tax will be considered an unauthorised payment and will be subject to additional UK tax. The release confirms that an additional 40% UK tax applies to any Unauthorised Payment and an additional 15% surcharge applies if more than 25% of the original amount transferred is required to be withdrawn. As can be seen from the above, the transfer of monies to Australian funds can be complex. As such, members should seek appropriate advice prior to considering overseas transfers and in particular, amounts that are in excess of the non-concessional contribution cap. Monthly performance returns The following table outlines the current performance for each of the Fund s three investment options for the Superannuation and Pension divisions: Superannuation Investment option Month Aggressive Growth Cash July 2008-2.85% -1.79% 0.41% August 2008 4.39% 2.71% 0.48% September 2008-6.26% -4.65% 0.51% October 2008-6.57% -7.11% 0.76% November 2008-4.01% -3.72% 0.38% December 2008 0.03% -0.19% 0.32% January 2009-1.46% -2.63% 0.24% February 2009-4.99% -5.56% 0.21% Financial Year to Date -20.15% -21.05% 3.36% Pension Investment option Month Aggressive Growth Cash July 2008-2.66% -1.51% 0.78% August 2008 5.36% 1.89% 0.59% September 2008-7.34% -6.83% 0.57% October 2008-7.24% -9.81% 0.62% November 2008-4.55% -4.26% 0.33% December 2008 0.04% 1.41% 0.38% January 2009-1.39% -2.72% 0.29% February 2009-4.49% -5.84% 0.23% Financial Year to Date -20.72% -25.01% 3.85% 4
Investment market update In 2008 the United States sub-prime mortgage crisis developed into the worst global economic and financial crisis since the Great Depression. Although it had initially been hoped that the crisis and its effects could be contained within the financial system, it was evidently clear following the release of final quarter data for 2008 that the effects of the crisis had well and truly proliferated from Wall Street through to Main Street. In the December quarter 2008 the US economy experienced its biggest decline since 1982 as consumer spending posted its worst slide in the post-war period. Elsewhere at least another 18 countries fell into recession including the European Union and Japan. As economic activity and data worsened global shares continued to fall. During the fourth quarter of 2008 international markets as measured by the MSCI World Index fell by 11.5%. Despite the hope that a new year would bring about fresh investor optimism the extent and depth of negative sentiment was apparent as the US benchmark S&P 500 Index fell 8.6% for the month of January, while markets in Europe (-8.7%), the UK (-6.4%) and Japan (-9.8%) also declined over the same period. While the Australian economy continues to hold up well relative to other developed nations, investors at home were not spared from the impacts of deteriorating global conditions. Declining global growth and the resulting worldwide sell-off of commodities and commodity stocks weighed heavily on the local market as did news of China s rapidly slowing expansion. During the December quarter the Australian market was characterised by unprecedented levels of volatility and overall the market retracted 18.5% over the same period. Similarly in January 2009 the S&P/ASX Accumulation Index declined 4.9% The January fall represented the fifth consecutive negative month for the Australian share market, with the December quarter representing the fifth consecutive negative quarter. In response to the deteriorating economic data and commodity prices the Reserve Bank of Australia enacted an aggressive series of interest rate cuts, while the Rudd government announced a pre-christmas AU$10.4 billion stimulus package to seniors and low-income earners. In times such as these, it is important to remember that superannuation is designed as a longterm investment over many years. For example, investments with higher long-term earning potential, such as shares, equities or property trusts, will experience more short-term volatility and fluctuation in their value. Before making any decisions regarding the investment of your superannuation, we recommend that you consult a professional financial adviser, who will consider your situation and objectives in detail before providing you with advice. Comparison of Fund performance The table below provides a comparison between the three ASC Superannuation Division investment options and similar products in the market for the period 1 July 2008 to 31 January 2009: 5
Aggressive options Year-to-date crediting rate Growth options Year-to-date crediting rate Cash options Year-to-date crediting rate ASC Aggressive -15.96% ASC Growth -16.40% ASC Cash 3.14% Colonial First State High Growth -18.61% Colonial Balanced -9.01% Colonial Capital Secure 3.22% AustralianSuper High Growth -18.46% AustralianSuper Balanced -13.23% AustralianSuper Cash 4.93% Asset Super High Growth -18.66% Asset Super Medium Growth -14.66% Asset Super Cash 0.70% MLC Masterkey Accelerated Growth -37.16% MLC Masterkey Growth -23.37% MLC Masterkey Cash 2.21% Statewide Shares -20.08% Statewide Growth -15.14% Statewide Cash 3.51% Who to contact Should you have any questions relating to the ASC Superannuation Fund, please contact the Fund Administrator on the details below: Fund Administrator Email: AU-FMNATASC@kpmg.com.au Phone: (02) 9335 7441 Fax: (02) 9335 7001 General advisory disclaimer This newsletter has been prepared by KPMG Superannuation Services Pty Limited (AFSL No. 241366). This newsletter provides you with information only and does not take into account your personal objectives, financial situation or needs. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on the information contained in this newsletter. Before acting or relying on any information, you should consider whether it is appropriate for your circumstances having regard to your personal objectives, financial situation or needs and also whether or not any financial product is appropriate for you. Trust Company Superannuation Services Limited (ABN: 490 064 216 38, Registrable Superannuation Entity Licence ( RSEL ) No. L0000635 AFSL No. 235153) as trustee for the ASC Superannuation Fund (ABN: 22 686 138 434, Registrable Superannuation Entity Registration ( RSER ) No. R1067699) C/- KPMG Superannuation Services (Fund Administrator) P.O. Box H67 Australia Square NSW 1213 For further enquiries, please contact Sussan Deng on (02) 9335 7441 6