Folio JR - Transpension Annual Report by Jonathon Rann

Annual Report 2008

Incorporating Changing Gear September 2008

Inside: Donâ&#x20AC;&#x2122;t sweat the tough times: what not to do in falling markets

Changes to the Age Pension and what they mean for your retirement finances

What weâ&#x20AC;&#x2122;ve been up to in 2008

Simple. Sound. Strong.

elcome to your 20072008 TransPension Annual Report. I would like to take this opportunity to welcome the many new members who have joined TransPension over the last year. TransPension, TWUSUPER’s superannuation pension division, continues to grow rapidly with 66% of current members joining during the 2007-2008 financial year. This Annual Report contains references to both TransPension and TWUSUPER. Please take the time to read the information about TWUSUPER as it provides important details about the administration, fees and financial position of your Fund. Investment performance has attracted significant media attention in 2008, as the ‘sub-prime’ mortgage crisis and a lagging US economy generated volatile investment market performance in Australia. Historical data tells us that negative returns are a natural

characteristic of investment markets. This means that even in retirement, you should adopt a long-term investment strategy to focus on your investment goals and reduce the stress caused by the occasional negative year. We have worked hard to minimise the impact of poor market performance on your super, however this year negative returns were unavoidable. We are however pleased that TransPension’s investment returns remain strong over 5 years and 10 years. Read more about investments on the facing page and throughout this Report. This year, we have introduced a range of online services to make it easier to manage your pension. From July 2008 you can view your TransPension account details online as well as update your personal and pension payment details. You can also elect to receive your statements online to save paper. Read more on page 7. Into 2008-2009 we will continue to focus on providing simple, sound and strong superannuation to our members, while keeping our fees as low as possible.

Platinum rated again in 2008 TWUSUPER has again earned a Platinum rating from independent super ratings agency SuperRatings. Platinum is the highest rating awarded, and is reserved for only the top 15% of super funds assessed by SuperRatings in 2008. A platinum rating means that TWUSUPER offers best ‘value for money’ based on criteria covering:

4 Investment performance 4 Variety of investment options 4 Investment process 4 Fees and charges 4 Insurance cover and costs 4 Governance 4 A dministration services, including internet access 4 Advisory services.

C 0 M 0 Y 0 K 85

C 0 M 0 Y 0 K 60

David Galbally QC Chairman This annual report forms part of the annual reporting to members of TransPension for the year ended 30 June 2008. The annual reporting to members consists of the following parts: Part 1: Benefit Statement Part 2: Additional Information Part 3: Annual Report (this document)

TRANSPENSION ANNUAL REPORT 2008

I know it’s been a tough f inancial year – I’m just glad I’m in a strong industry f und. – TWUSUPER member (2008)

Performance update

What’s the link between share market performance and super returns?

here has been extensive media coverage about super performance in 2008 following significant falls in local and global investment markets, primarily triggered by concerns of a slowing US economy. This has meant that for the first time in several years our investment options with exposure to growth-style assets have delivered negative returns to members.

We put your money to work by investing it in shares, property, cash and other types of assets, depending on whether you selected our Cash Plus, Balanced or Equity Plus investment options when you joined (see pages 9-10). This is why you hear about super being an investment, and super returns being linked to the performance of Australian and International share markets.

Crediting rates 2007-08 Cash Plus

3.7%

Balanced

-6.8%

Equity Plus

Qualified investment professionals manage these investments on behalf of TransPension and are bound by strict investment rules set out by the Government, TWUSUPER’s Trust Deed and the TWUSUPER Board.

-10.1%

These are the crediting rates applied to members’ accounts and are net of fees and expenses including investment-related expenses.

For example, no more than 5% of Fund assets can be invested in one place without us telling you (see page 11 for these investments). While we work hard to limit this risk, an environment of widespread volatility meant that negative returns for 2007-2008 were unavoidable for investment options with exposure to growth-style assets. We always invest to maximise return for an appropriate level of risk, and these objectives will not change because of poorly performing investment markets.

Did you know? Statistics show that you are likely to live a quarter of your life in retirement. Source: www.fido.gov.au

TransPension’s strong performance history Cash Plus Year ending

Crediting rate % p.a.

Balanced

Equity Plus

Effective rate of net earnings % p.a.

Crediting rate % p.a.

Effective rate of net earnings % p.a.

CPI

Crediting rate % p.a.

Effective rate of net earnings % p.a.

% p.a.

30 June 2008

3.7

3.4

-6.8

-6.4

-10.1

-9.6

4.5

30 June 2007

5.4

5.0

17.4

16.0

20.9

19.3

2.1

30 June 2006

5.1

4.6

17.1

15.5

23.2

20.9

4.0

30 June 2005

5.1

4.5

12.8

11.3

15.1

13.4

2.5

30 June 2004

3.6

3.7

13.5

13.3

18.4

18.1

2.5

5 year compound average rate

4.6

4.2

10.4

9.6

12.8

11.8

3.1

10 year compound average rate*

5.2

4.7

7.7

7.5

7.9

7.3

3.1

* Our Equity Plus and Cash Plus investment options were established in 1999. Equity Plus 10 year compound average rates are calculated over 9.75 years and Cash Plus over 9 years. Remember that past performance is not a guarantee of future returns. TransPension’s investment income is not subject to tax. When setting the crediting rates the tax effect and the value of imputation credits are allowed for.

Crediting Rate: The earnings that are applied to your account net of fees. Effective rate of net earnings: The total net earnings of an investment option. CPI: The Consumer Price Index (CPI) is a measure of inflation. If your super doesn’t grow at least at the rate of the CPI, then your money will buy less tomorrow than it does today.

Unlocking the Age Pension The Federal Government is constantly reviewing the way it delivers income support to retirees, and we want to make sure that you are aware of the changes to the Age Pension over the last financial year so you can make the most of your entitlements. Changes to the assets test

rom 20 September 2007, the pensions assets test taper rate was halved so that the Age Pension is reduced by only $1.50 (rather than $3.00) per fortnight for every $1,000 of assets above the allowable asset limits. If you are already receiving a pension from Centrelink, your payments will have automatically increased if this change applied to you. If you were previously ineligible to receive the Age Pension because of the value of your assets, now might be the right time to check if you are now eligible for the Age Pension. A couple who own their home can have $856,500 in assets and qualify for a part-pension with associated allowances and concessions. A couple who retire at age 65 with super savings of $243,500 between them could qualify for the full rate of the age pension of $456.80 each per fortnight. There was no change to the income test for pensions.

Extra benefits for pensioners Additional entitlements like reduced rates and healthcare are available to Age Pension holders. Even if you are only eligible for a small part-pension, it can be worth claiming for the additional concessions.

Consider the impact of negative returns Negative returns and spending over the last financial year may mean that you are now eligible for the Age Pension if you weren’t before.

Claiming the Age Pension Qualifying for the Age Pension can be complicated, so we encourage everyone to seek professional guidance before committing to any decisions about the Age Pension so you can make the most of your entitlements. Call Money Solutions on 1800 046 144 for straightforward advice about your finances with no hidden fees. We’ll pay for your first single-issue superannuation phone call. Fees for further superannuation advice can be deducted from your TransPension account. For more information about Money Solutions and the advice they provide to TransPension members, turn to page 5. If you think your eligibility for the Age Pension has changed, get in touch with Centrelink by visiting your local Centrelink Customer Service Centre, calling 13 23 00 or visiting the Centrelink website at www.centrelink.gov.au.

How can I keep up to date with changes to the Government Age Pension? – TransPension member (2008)

The Age Pension Bonus Scheme The Government currently pays a lump sum bonus to reward people who defer taking the Age Pension and continue to work. To receive the bonus, you must: ■

c ontinue to work past the date you would otherwise qualify for the Age Pension, and

■

ave registered as a member h of the Scheme with Centrelink (visit www.centrelink.gov.au), usually once you have met Age Pension eligibility, and

■

eet a flexible work test m with a minimum of 960 working hours of gainful work each year and at least 640 of these hours must be worked in Australia.

Once you have registered to become a member of the Scheme, you must then pass a flexible work test for at least 12 months from the date you register. The bonus, which is calculated as a percentage of the age pension, is payable when the pension eventually commences and will be exempt from tax. Remember, Age Pension payments cannot commence before you lodge a claim for the Pension Bonus, otherwise you will be deemed ineligible.

TRANSPENSION ANNUAL REPORT 2008

I think I should take my money out of Balanced and put it in the Cash option. – TWUSUPER member (2008)

Many of us are concerned about the impact of recent market activity and negative returns on our super. It is time in markets, not timing, that counts We know one thing for certain; markets move in cycles. Boom times always follow gloom, and vice versa. We know from looking at the long-term performance of the share market that despite short-term ups and downs, investment markets always recover and increase in value over time.

Money Solutions’ Money Coaches are paid a salary, and their advice is provided to you on a fee for service basis. This means that you don’t pay trail fees, commissions or ongoing payments to us or other financial product providers when you receive advice from Money Solutions. You simply get reliable, professional advice about your finances for a flat fee.

If you are worried about the impact of negative returns on your pension savings, you should talk to a professional. They can talk you through the do’s and don’ts of investing in volatile markets, and help you to develop an investment strategy that is right for your risk profile.

We believe that advice in retirement is just as important as advice when you’re starting out. That’s why we’ll get you started by paying for your first single-issue superannuation advice phone call to Money Solutions. Fees for any further superannuation advice can be paid from your TransPension account, so you aren’t out of pocket.

TWUSUPER has teamed up with Money Solutions* to provide our members with access to straightforward and reliable professional advice. Good planning in retirement can help you enjoy your retirement without financial worries.

Talk to a Money Solutions Money Coach today about developing a long term investment strategy for your super. Call us on 1800 222 071 and ask to be put through to a Money Solutions Money Coach.

What should I do?

The S&P/ASX 300 returned

13.9% p.a. over the last 10 years. However, an investor who missed out on the best 15 trading days (out of over 2,500 trading days) saw their annual return reduced by 4.4% p.a., down to 9.5% p.a.

Most of these ‘best’ days occurred during periods of volatility. Source: Russell Investment Consulting, January 2008

Volatility is a fact of life Investment success usually results from having a long-term plan and sticking to it. It can be difficult to look past short-term performance, but history shows that the rewards are there if you can ride out the tough times. *The Trustee is not responsible for, and does not accept liability for, the products or services or actions of Money Solutions. You should use your own judgement before taking up any product or services offered by Money Solutions (AFSL 258145).

Pay less tax, get more super T

he Australian Government’s transition to retirement legislation is designed to keep Australians in the workforce for longer by giving them access to their super without having to retire or leave their job. The concessional tax rates that apply to super make this an attractive option for maximising super and minimising tax.

sacrifice (arrange to have super deducted from your pre-tax salary) some or all of your wage into super, paying only 15% tax on your contribution rather than being taxed at your marginal rate which can be up to 46.5%. Paying less tax on your income means your dollars go further.

making any decisions about your retirement finances. You should also check with your employer whether salary sacrifice will affect the level of SG contributions made on your behalf and/or any other entitlements. To learn more about TWUSUPER’s Transition to Retirement Pension (TRAP) refer to TransPension’s Member Information Booklet. Download it from www.transpension.com.au or call us on 1800 222 071 to be mailed a copy.

You can make up the difference in your take-home salary with regular income from the TRAP.

How does it work?

Although the tax savings make a transition to retirement strategy attractive, you should seek professional advice (see page 5) before

A Transition to Retirement Pension (or TRAP) gives you the flexibility, subject to certain limits, to salary

Meet Jim Jim is 60. His annual ordinary time earnings (salary) is $65,000. Jim salary sacrifices $30,000 a year into his super account to take advantage of super’s concessional tax rates. He establishes a TRAP with $200,000 of his super, and uses payments from his TRAP to maintain the same take-home salary*. By combining salary sacrifice with a TRAP, Jim’s superannuation position improves significantly over 5 years.

Even though Jim is drawing down nearly $20,000 from his pension each year, the combined benefits of reduced tax from salary sacrificing his income plus zero tax on investment earnings and income payments from the TRAP mean that he is in a better position over 5 years than he would be if he relied solely on 9% SG contributions from his employer.

Super only

Super + TRAP

$205,000

$5,000 super + $200,000 TRAP

$5,850

Nil

$30,000

-$878

-$5,378

Tax-free drawdown

Nil

-$19,500

Investment income

$12,449

$13,580

Jim’s position after year 1

$222,421

$229,552

Jim’s position after year 2

$240,889

$255,544

Jim’s position after year 3

$260,464

$283,056

Jim’s position after year 4

$281,213

$312,177

Jim’s position after year 5

$303,208

$343,004

Opening account balance SG contributions Salary sacrifice contributions Contributions tax

* Allowance is made for Low Income Tax Offset ($550) and Mature Age Worker Tax Offset ($500) ** Assumes that the employer will still pay SG contributions on Jim’s pre salary sacrifice ordinary time earnings. Assumptions: no income other than from salary, no salary increases, standard Medicare levy of 1.5%, tax rates and offsets as applicable for the year to 30 June 2008, drawdown from the TRAP is the amount required to produce same total after-tax income, contributions and drawdown from TRAP occurs in the middle of the year, investment return of 6% pa on the super account and 6.5% pa on the TRAP and no additional expenses are associated with moving to and maintaining a TRAP. A residual balance of $5,000 must be held in the non-pension super account.

Important Dates February 2009

Mid-year statement to be mailed

July 2009 PAYG payment summary to be mailed (if you are paying tax on your pension you will need this for your tax return). August 2009 Centrelink schedule to be mailed. This includes information about your updated minimum and maximum payment limits for the next financial year. September 2009 Annual Statement to be mailed.

TRANSPENSION ANNUAL REPORT 2008

I’d like to access my pension on the internet instead of waiting f or my statement. – TransPension member (2008)

Managing your pension online

ransPension’s MemberAccess (www.transpension.com.au) provides you with an easy and secure way to check your pension account as often as you like. To view your TransPension account online, all you need is a computer with internet access, your Member Number and a password. If you don’t have a password, or you would like more information about MemberAccess and how to make the most of its features, call 1800 222 071.

Here’s what you can do online 1. Check and print your pension account balance. 2. Update contact details like your address, phone number and email address online. 3. View transaction details including payments, fees and charges. 4. View an instant quote showing the full value of your TransPension account, including investment earnings that haven’t yet been credited to your account balance. 5. Change the frequency of your pension payments.

Receive your statements online instead of in the mail Electronic statements save time, money and are kind to the environment by reducing paper usage. They are also issued earlier than paper statements.

If you would like to receive your TransPension statements electronically, register at www.transpension.com.au or call us on 1800 222 071.

Click here to login to your super account online

Improvements in 2007-2008

TransPension is the pension division of TWUSUPER.

Electronic statements – go paperless

he Fund introduced electronic statements for members in 2008. Electronic statements save time, money and the environment by reducing paper usage. To register, go to www.transpension.com.au.

TransPension newsletter TransPension introduced a newsletter just for our pension members, Changing Gear, in June 2008. Every second month you’ll have helpful information about super delivered to your mailbox, designed to help you make the most of your retirement savings.

TWUSUPER signed up to the United Nations’ Principles of Responsible Investment (UNPRI) In November 2007, TWUSUPER became one of a small number of superannuation funds who are signatories to the UNPRI. These principles are an investor initiative and provide a framework of global standards recognising a direct link between environment, social and governance practices to investment performance and risk for the long term.

New investment consultant The Fund has appointed a new investment consultant. In August 2008, JANA Investment Advisers were appointed to replace Mercer Investment Consulting.

Changing Gear Your pens ion

news

June 2008, Issue 1

In this iss ue…

Will your sup the distanc er go e? Manage you r pension online Investment update

Keeping you inform ed

For previous issues of Changing Gear visit: www.transpension.com.au

Welcome to the first issue of Changin g Gear, a publication just for TransPensio n members . We’ll

be sending you a copy Changing of Gear every second mon Inside each th. issue will be tips on to make the how most of your retirement super in , as well as updates on super legis lation that might affec you or your t pension. If you’d prefe r to receive Changing your copy Gear elect of ronically, visit www please .transpen sion.com. follow the au and prompts to register.

Now you

can manage

your pension

From 1 July 2008, you will be able manage your to TransPens logging on ion account to www.tran by spension. com.au MemberA ccess banking, and works just like inter net will allow you to: Check and print account balan your pension ce;

Update

contact address, phon details like your e address onlin number and emai l e;

View trans

action deta ils including fees and charges; instant quot e showing full value the of your Tran sPension account, inclu ding inves earnings tment that have n’t yet been credited to your acco unt balan ce; payments,

View an

online

Change the frequ ency of your pension paym ents. You will cont inue to recei payment ve an annu summary al at the end each finan of cial year, plus acco statement unt s twice a year. To register for MemberA for more ccess or informati on, please call TransPen sion’s Cust omer Serv Team on ice 1800 222 071.

MemberA ccess TransPen sion’ service will s free MemberAcces s provide you date infor with up-to mati account onlin on about your pens ion e.

TRANSPENSION ANNUAL REPORT 2008

Investing your super Members with an account balance of $1,000 or more can choose an investment option or a mix of options that suits their needs. TWUSUPER’s investment policy

WUSUPER is an accumulation fund, which means that the eventual size of a member’s benefit entitlement (on resignation, death or retirement) will depend on the level of contributions made by the member and their employer on their behalf, and also on the investment returns earned on those contributions, less fees, expenses and insurance premiums plus the proceeds of any insurance claims (if applicable).

The investment choice that is right for you will depend on factors like: ■■

how long you are investing your money,

■■

how much risk exposure you are comfortable with, and

■■

the level of return you want.

2008 Federal Government budget With a change in Government, there was much speculation that the 2008 Federal Budget would introduce further changes to super. This proved to be largely unfounded, and there was little immediate change announced when the Budget was handed down in May 2008.

Staying the same 4 Superannuation Guarantee (currently 9%)

> CASH Plus

If you switch investment options, an interim crediting rate (as at the date your switch is processed) will be applied to your account. If you are still with TransPension at the time the annual crediting rate is determined, you will receive the annual crediting rate in place of the interim crediting rate on the amount you switched.

> BALANCED

You can change your investment options once a month, free of charge.

4 Tax-free status of super payments to over 60’s

Changing your investment strategy can have a big impact on your retirement savings so we recommend that you first seek professional advice (see page 5).

Looking ahead

TransPension offers members three investment options:

> EQUITY Plus If you do not choose an investment option when you join TransPension, your account will be automatically invested 100% in the Balanced investment option.

You should also read TransPension’s Member Information booklet in full to understand the impact of changing investment options.

I really should take a closer look at my investment options. – TWUSUPER member (2008)

4 Tax on super contributions (except where a member has not provided their Tax File Number – see page 13) 4 Tax on superannuation earnings 4 Measures to reunite members with their lost super

From 1 July 2009, salary sacrifice contributions to super will be counted as ‘income’ for the Government co-contribution and certain other government benefits. This means high income earners will no longer be able to claim the co-contribution if salary sacrificed contributions drops their income below $60,342 (the 2008/2009 co-contribution maximum threshold).

TWUSUPERâ&#x20AC;&#x2122;s investment options > Cash Plus Objective An annual return greater than the UBS Bank Bill Index.

Strategy Invests in cash and short term, interest-bearing securities. Investments are more stable than in Equity Plus or Balanced with low risk of capital loss but also a low potential for higher investment returns over the long term.

Asset allocations and benchmarks as at 30 June 2008* Growth Assets Australian shares International shares Direct property Listed property Private equity Infrastructure DEFENSIVE Assets Cash/Interest bearing securities Australian fixed interest International fixed interest Absolute returns funds

ACTUAL % Nil (Nil) Nil (Nil) Nil (Nil) Nil (Nil) Nil (Nil) Nil (Nil) ACTUAL % 100 (100)

BENCHMARK % Nil (Nil) Nil (Nil) Nil (Nil) Nil (Nil) Nil (Nil) Nil (Nil) BENCHMARK % 100 (100)

Nil (Nil) Nil (Nil) Nil (Nil)

> Balanced Objective Over rolling five-year periods, having an earning rate greater than the change in the CPI plus 3.0% pa.

Strategy Invests approximately 75% in growth assets such as shares, property and infrastructure, with the rest in defensive assets such as fixed interest and cash. Investments are expected to have less risk of loss of capital and less shortterm fluctuations in returns than investments in the Equity Plus option. Over the long term, Balanced investment option returns are expected to be lower than Equity Plus returns, but higher than Cash Plus returns.

ACTUAL % BENCHMARK % 23.4 (25.7) 25.0 (25.0) 22.5 (24.0) 21.0 (21.0) 6.0 (5.6) 8.0 (11.0) 6.1 (7.6) 8.0 (8.0) 5.9 (4.5) 5.0 (2.0) 11.0 (7.3) 8.0 (8.0) ACTUAL % BENCHMARK % 4.9 (5.6) 4.0 (5.0)

4.1 (4.0) 7.0 (6.9) 9.1 (8.8)

4.0 (5.0) 7.0 (5.0) 10.0 (10.0)

> Equity Plus Objective Over rolling five-year periods, having an earning rate greater than the change in the CPI plus 3.5% pa.

Strategy Invests mostly in shares, both Australian and international. History shows returns from this option are likely to move up and down from year-to-year with short-term risk of capital loss but, over the long term, should perform better than the Balanced and Cash Plus options.

ACTUAL % BENCHMARK % 40.8 (41.4) 41.0 (41.0) 33.5 (34.9) 34.0 (34.0) 3.4 (3.1) 3.0 (9.0) 5.3 (6.3) 7.0 (7.0) 10.1 (9.8) 10.0 (4.0) 6.6 (4.5) 5.0 (5.0) ACTUAL % BENCHMARK % 0.3 (0.0) 0.0 (0.0)

0.0 (0.0) 0.0 (0.0) 0.0 (0.0)

There can be periods when the less-liquid asset classes, primarily property, infrastructure and private equity, differ from the benchmark asset allocations. * Actual asset allocations and benchmarks at 30 June 2007 are shown in brackets.

TRANSPENSION ANNUAL REPORT 2008

Investment strategy update We continue to invest your superannuation with the goal of growing and preserving your retirement savings.

he rollout of the Fund’s Strategic Asset Allocation approved by the Board in late 2005 was finalised in the 2007-2008 financial year, with the Fund’s assets now being further diversified across asset classes, investment managers and investment strategies.

The Trustee also sets specific performance targets for each investment manager and monitors their progress in achieving them. The Trustee’s Chief Investment Officer oversees and manages the investment managers.

Investment managers

Each year, the Trustee declares an interest crediting rate for each investment option, which is then used to update members’ account balances. Returns on TransPension’s investment option(s) are not guaranteed. Crediting rates can be positive or negative. The crediting rate is the amount rounded to one decimal place represented by the effective rate of net earnings for each investment option. The effective rate of net earnings is calculated by deducting all investment related expenses and fees from the earnings rate for each investment option.

The Board of TWUSUPER has appointed the following investment managers: Acadian Asset Management Adam Smith Asset Management AllianceBernstein AMP Capital Investors ANZ Infrastructure Services Barclays Global Investors Limited BlackRock Calibre Capital Capital National Alliance Colonial First State Global Asset Management Cooper Investors Eureka Funds Management Franklin Templeton Investments Goldman Sachs JB Were HarbourVest Partners LLC Industry Funds Management Industry Super Property Trust INVESCO Asset Management Lazard Asset Management Lexington Partners Loomis Sayles Mellon Global Investments Members Equity MFS Investment Management National Australia Bank Northcape Capital Orbis Investment Management Pantheon Ventures Ltd Perennial Investment Partners Limited Russell Investment Group Tactical Global Management Warakirri Asset Management Wellington Management Company Zurich Financial Services The Trustee provides each investment manager with guidelines specifying the types of investment that may be held and the proportion of assets which may be allocated to each.

Annual crediting rate

Interim crediting rate If you leave TransPension, change investment options or (from 1 July 2008) make a partial withdrawal (other than your regular pension payments) part way through a financial year or before annual crediting rates have been declared, you will receive an interim crediting rate. The Trustee regularly reviews the interim crediting rates for each investment option during the year to ensure that they reflect the performance of the Fund’s investments. The rates can be positive or negative. If you are still with TransPension at the time the annual crediting rate is determined, you will receive the annual crediting rate in place of the interim crediting rate on the amount which you switched or transferred.

Reserves The Fund can hold reserves due to the rounding of the earnings rate credited to each member’s account at 30 June each year and year-end adjustments. The Trustee also maintains a reserve of $250,000 required by its RSE Licence.

Futures and options The Fund allows its investment managers to use derivative securities. Derivatives include futures, options and swap contracts. They are used to protect the value of portfolios against falling prices and to enable managers to change their investment exposure in different markets or sectors without buying or selling the actual securities.

Investments valued over 5% The Trustee is required to include in this report details of each investment that has a value of more than 5% of TWUSUPER’s total assets. TWUSUPER held the following investments that had a value of more than 5% of TWUSUPER’s total assets as at 30 June 2008: Investment

% (30/06/08)

Barclays Global Investors Australian Equities Tilts and Timing Fund

5.88%

BlackRock Quant Australian Equity Trust

5.07%

Perennial Value Australian Shares Trust

5.31%

Investment charges Investment-related expenses such as investment management fees, brokerage and custodial charges are not met from weekly member fees. These expenses are charged against the Fund’s income, and are typically capped as follows: % Fund assets

1/07/07 to 31/10/07

1/11/07 to 30/6/08

Cash Plus option

0.14%

0.12%

Balanced option

0.50%*

0.58%*

Equity Plus option

0.53%*

0.64%*

* includes performance-based investment manager fees (based on 1% outperformance) of: % Fund assets

1/07/07 to 31/10/07

1/11/07 to 30/6/08

Balanced option

0.04%

0.06%

Equity Plus option

0.03%

TWUSUPER ANNUAL REPORT 2008

Representing you David Galbally QC

Alex Gallacher

Jim McGiveron

Bill Noonan

Tony Sheldon

Peter Garske

Independent Chairman

Member Representative

Employer Representative

TWUSUPER is a complying super fund

n an uncertain world, it’s good to know that the management of your super is in good hands. The Fund’s success in being granted and maintaining a Registrable Superannuation Entity licence shows that we meet the rigorous capacity and competency standards set by the Australian Prudential Regulation Authority (APRA). Importantly, it reassures our members and employers that the Fund: ■■

■■

cts in the best interests of a our members and continues to deliver the highest standards of superannuation service and management meets APRA’s ‘fit and proper’ test for Trustees follows sound administration procedures c omplies with extensive risk management strategies across all its operations, and maintains well-resourced, well-trained staff and service representatives.

Indemnity insurance The Trustee has indemnity insurance to protect the Trustee Directors and the Fund against the financial effects of any errors, inaccuracies or oversights that might occur in the management of TWUSUPER.

Fund compliance

Your industry fund

To receive concessional tax treatment, the Fund must operate in accordance with all relevant superannuation laws. The Trustee lodges a return each year with APRA, indicating the Fund’s compliance with the relevant laws. The Trustee is not aware of any matter that would cause the Fund to lose its complying status. The Trustee is required to lodge its 2008 Annual Return with APRA prior to 31 October 2008.

We are proud to represent members nationally in a wide range of areas as part of the transport and logistics industry.

Advisers and service providers

■■

Airlines

■■

Baggage handling

■■

Buses

■■

Catering/food

■■

Coaches/tours

■■

Concrete/cement

■■

Couriers

■■

Earthmoving

■■

Equipment e.g. bobcats, forklifts

■■

Freight

■■

Livestock

■■

Mechanical

■■

Mining

■■

Packing

■■

Personnel/recruitment

■■

Ports

Communications Consultant Publicity Works

■■

Removalists

■■

Security

Custodian Services National Custodian Services (NCS)

■■

Towing

■■

Trucks

■■

Warehousing

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Waste and recycling

The Trustee appoints independent specialists to advise on particular aspects of the Fund’s management. Actuary Mercer Administrator Australian Administration Services (AAS) Auditor Ernst & Young

Eligible Rollover Fund AUSFund Investment adviser Mercer (to 6 August 2008), JANA (from 7 August 2008) Legal adviser DLA Phillips Fox

TRANSPENSION ANNUAL REPORT 2008

TWUSUPER’s Trustee Board represents your best interests TWUSUPER is managed by a Trustee Company, TWU Nominees Pty Ltd (ABN 67 002 835 412). The directors of TWU Nominees (known as the Trustee Directors) are responsible for managing TWUSUPER in the interests of all members.

TWUSUPER’s Trustee Board is made up of nine Directors, one being an Independent Chairman, four member representative Directors and four employer representative Directors. In addition, there is provision for up to six Alternate Directors; three member representative Alternate Directors and three employer representative Alternate Directors.

At at 30 June 2008, three of the Alternate Director positions were occupied. The Trustee Directors of TWUSUPER must ensure that the Fund is run in accordance with its Trust Deed and the relevant laws. Not pictured:

Wade Noonan, member representative Alternate Director (resigned 18/09/2007)

Ian King

Philip Lovel

Paul Ryan

Michael Kaine*

Hughie Williams*

Robin Phillips*

Employer Representative

Member Representative

Employer Representative

* Indicates Alternate Directors

Legislative update

t’s true that the rules around super can be complicated and change often.

Changes to the way the Superannuation Guarantee is calculated from 1 July 2008

Here are some of the major changes to super legislation in the last financial year, and what they mean for you. Some of these will only be relevant to you if you are still receiving or making contributions into your super fund.

From 1 July 2008, all employers are required to use ‘Ordinary Time Earnings’ to calculate Super Guarantee (SG) contributions for employees. If you are still employed, your employer may already be calculating your SG contributions in this way.

Changes to the way your super is taxed if you haven’t provided your Tax File Number to your super fund If you haven’t supplied your Tax File Number (TFN) to your super fund, you could lose almost half of your future super contributions in tax. As well as the usual 15% Government Contributions tax on your super, new rules mean that if your fund doesn’t have your TFN, you’ll be charged an additional 31.5% ’No TFN Contributions’ tax — bringing tax on your super contributions up to 46.5%! You can provide your TFN to TWUSUPER or TransPension by: • calling 1800 222 071, • logging in to your account, online via MemberAccess (www.transpension.com.au), • completing a Tax File Number declaration form which you can download at www.transpension.com.au.

Changes to the co-contribution thresholds from 1 July 2008 From 1 July 2008, people who earn up to $60,342 a year can claim the Government co-contribution when they make voluntary contributions into their super. The 2007-08 maximum threshold was $58,980. The maximum co-contribution of $1,500 per $1,000 voluntary contribution is payable to people who earn less than $30,342 a year (up from $28,980 in 2007-08).

Changes to the identification you must provide when moving money into or out of super In December 2006, the Federal Government reformed legislation aimed at preventing money laundering and terrorism financing in Australia. From December 2007, if you want to move money out of your super account, establish a new pension, make a partial withdawal (other than regular pension payments)

or close your pension account, you must provide us with proof of your identity that satisfies Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) legislation.

Changes to the terminal illness provision New rules allow for terminal illness benefits to be paid tax free.

Continuation of award superannuation Award Superannuation is not to be abolished due to the changes in the Workplace Relations Amendment (Transition to Forward With Fairness) Act 2008. TWUSUPER continues to be a federal award superannuation fund.

Financial summary

hese are the total Fund accounts which include TransPension. The accounts for the year ended 30 June 2008 are unaudited. The audited accounts and audit report for the year ended 30 June 2008 will be available on request from the Customer Service Team (call 1800 222 071) in early November 2008. The Trustee does not expect any material changes to the unaudited accounts.

Statement of Financial Position

Statement of Change in Financial Position

Opening Balance at 1 July

2008

2007

2008

2007

$000’s

2,229,065

1,767,023

Investments

2,211,165

2,267,282

Cash at bank

14,860

2,773

Contributions receivable

18,629

11,302

Plus Money Received Net investment income

244,548

Changes in net market value of investments

91,493

Assets

(389,141)

225,614

Other

Contributions

261,176

238,244

Total Assets

Transfers

86,322

81,277

Less

6,339

4,432

Payments Due

209,244

641,060

Other Total Income

3,184

4,056

2,247,838

2,285,413

14,258

10,488

795

2,022

13,076

28,779

Benefits payable Other amounts payable

Less

Provision for income tax

Money Paid Out Benefits paid

155,938

104,977

Administration costs

15,878

15,633

Insurance premiums

12,479

7,146

192

27,894

51,070

212,217

179,018

2,226,092

2,229,065

Surcharge tax Income tax expense Total Expenses

Deferred tax liabilities

(6,383)

15,059

Total Liabilities

21,746

56,348

2,226,092

2,229,065

Equals Net Assets at 30 June

Equals Closing Balance at 30 June

Staying in touch Keep your details up to date

Access to Fund documents

uper is one of the biggest investments that most of us will ever have, so it’s important that you contact us if your details change.

As a TransPension member, you have a right to view documents relating to the management of the Fund, such as: ■■

TransPension’s current Product Disclosure Statement (PDS)

You should advise us when your name, address, phone number, email, employer, employment status, or spouse and beneficiary details change.

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The Fund’s Trust Deed

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The Fund’s latest audited accounts and auditor’s report

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The Trustee’s investment policy and risk management statement

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Rules for the appointment and removal of member representative Trustee Directors.

Update your contact details by calling 1800 222 071, completing our Change Member Details form or by logging on to MemberAccess at www.transpension.com.au.

Please contact our Customer Service Team on 1800 222 071 if you would like to view any of these documents.

TRANSPENSION ANNUAL REPORT 2008

Fund changes Fees

From 1 November 2008

rom 1 November 2008, the Fund’s estimated management costs will increase from 0.38% per annum to 0.43% per annum. This consists of an estimated expense recovery fee of 0.41% per annum and an estimated member benefit protection fee of 0.02% per annum. Investment management fees that apply to your account will vary depending on the investment option or options you choose. From 1 November 2008, the investment management fees for each investment option will be: CASH Plus

0.13% per annum

BALANCED

0.78% per annum

Equity Plus

0.79% per annum

The above fees are inclusive of performance-based fees of 0.00% for Cash Plus, 0.09% for Balanced and 0.06% for Equity Plus. These fees are based on investment manager outperformance of 1%. The member fee remains unchanged at $1.10 per week.

Use this table to compare TransPension’s fees to other funds.

Example: The Balanced investment option

Balance of $50,000 with total contribution of $5,000 during the year

Contribution fees

For every $5,000 you put in, you will be charged $0.

Plus Management costs

1.12%* per annum Plus $57.20 ($1.10 per week)

And for every $50,000 you have in the Fund you will be charged $560.00 plus $57.20 each year in management costs regardless of your balance.

Equals Cost of Fund

If you put in $5,000 during the year and your balance was $50,000, then for that year you will be charged fees of $617.20 ** What it costs you will depend on the investment option you choose.

* T his percentage is made up of 0.41% per annum expense recovery fee, 0.02% per annum member benefit protection fee and 0.69% per annum indirect cost ratio (ICR). The ICR, an annual fee, is a percentage of the Fund’s investment management costs and excludes estimated performance fees of 0.09% per annum. The ICR varies for each investment option and is deducted from the investment earnings of the Fund before crediting rates are determined. It is not deducted from a member’s account. These fees change each year and vary for each investment option. ** Additional fees may apply: You will be charged a fee of $5 for each pension payment or withdrawal made by cheque.. If you make a partial withdrawal (other than your regular income payments) or leave the Fund, you will also be charged a withdrawal fee of $50 for every payout (including any partial or full payout). For illustrative purposes, the above example assumes that management costs were calculated on a year-end balance of $50,000, which includes a contribution of $5,000 made at the start of the year.

Partial withdrawals From 1 July 2008 you will receive an interim crediting rate on partial withdrawals (other than your regular pension payments) from your TransPension account. These interim rates will be applied to your TransPension account balance at the time of processing. Refer to page 11 for more information about interim crediting rates and how they apply to partial withdrawals.

Transport Investment Fund wind-down The Trustee previously appointed the Transport Investment Fund (TIF), a unit trust owned by TWU Nominees Pty Ltd (ABN 67 002 835 412), to manage a portion of the assets of TWUSUPER. In 2007 a resolution to wind-up TIF was made by the Trustee Board, and assets from TIF were gradually moved out of TIF and into TWUSUPER. A small balance existed at 30 June 2008 pending the wind-up of TIF.

Not happy? If you have a complaint, the first thing to do is call our Customer Service Team on 1800 222 071 to discuss your problem or issue. If the matter isn’t resolved, you will be asked to put your complaint in writing (please include your date of birth and member number) and address it to: The Complaints Officer TWUSUPER Locked Bag 5094 Parramatta NSW 2124 Your complaint will be considered by the Fund’s complaints and appeals sub-committee, which reports to the Trustee board. Super law requires that we deal with a complaint within 90 days of the complaint being made.

If you are not happy with our response to your complaint, you can take your concerns to the Superannuation Complaints Tribunal (SCT). The SCT is an independent body set up by the Australian Government to help you resolve superannuation complaints. Note that the SCT will not consider your complaint if: ■■

you have not first tried to resolve it with us

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court proceedings have started

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i t is a general management complaint, as opposed to a decision relating personally to you, or

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it is about the payment of a death benefit where those people who have been advised about the payment have not raised any concerns within 28 days of being notified of the Trustee’s intention.

You can contact the SCT on 1300 780 808.

Need some help with your pension? We offer our members one-on-one help with their super, for free. Our Client Relations Team can answer your questions in person or on the phone.

The team can answer questions like…

“Can I make lump sum withdrawals from my pension?” “How can I change the amount or frequency of my pension payments?” Call our Client Relations Team direct: Michael Galey 02 9912 0730 or 0408 303 611

QLD, WA

VIC, SA, TAS, NT

NSW, ACT Rodney Nyols 02 9912 0710 or 0417 213 063

Lou Stepanoski 03 9635 5963 or 0408 294 937

Stephen Shelton 03 9635 5962 or 0417 203 820

Yvonne Jones 07 3324 0487 or 0418 218 655

Feel like you need to talk to someone? The odds are that you know someone who is struggling with depression, anxiety, mental health or relationship problems. Sometimes it helps to just know that someone is listening. For confidential and anonymous help call:

Lifeline 13 11 14 | beyondblue 1300 22 4636 | Mensline 1300 78 9978

Contact TransPension: Locked Bag 5042, Parramatta NSW 2124 Customer Service Team: 1800 222 071 Email: pensions_team@aas.com.au Web: www.transpension.com.au

TWU Nominees Pty Ltd ABN 67 002 835 412, AFSL 239163, RSE Licence No L0000246 is the trustee of TWUSUPER (Registration No R1000283). The information in this annual report is correct as of the date of publication. Statements about past performance are not indicative of future performance and the information contained in this annual report is of a general nature only. The annual report does not take into account your objectives, financial situation or needs. A Product Disclosure Statement is available by calling 1800 222 071 or visiting www.twusuper.com.au. Registered office: Level 27, 150 Lonsdale Street, Melbourne VIC 3000. TransPension is a division of TWUSUPER.

TWUS 28719

TA/AR 591.6 07/08 ISS1