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Welcome to the 12th edition of CEO Online

This edition, I would like to bring you up to date with:

Your Fund's investment performance

I am pleased to report investment earnings remain positive and we continue to declare positive exit rates . As at 30 April 2004, the financial year-to-date fund return was 11.5 % (after adjustments for tax & fees), compared to our benchmark of 11.4 %. The Fund's performance has placed us 4th in the Intech Major Funds Survey of 17 major Australian super funds for the 12 months ending 31 March 2004. At 31 January 2004, the PSS had over $6.0 billion in net assets and over 220,000 members .

HOW DOES INVESTMENT PERFORMANCE AFFECT YOU IN A DEFINED BENEFIT SCHEME?

If you are a PSS contributing member , your final benefit is largely unaffected by investment returns because your total final benefit is actually ‘defined' by your Final Average Salary and an Accrued Benefit Multiple. The Accrued Benefit Multiple is determined by how many years you contribute and your rate of contribution.

If you are a preserved benefit member , investment returns have a more direct impact on your benefit. Your total benefit is no longer defined by your Final Average Salary and Accrued Benefit Multiple. Instead, the funded components of your benefit (the Member & Productivity components) will grow with investment returns and the unfunded component (the Employer-Financed component) will grow in line with the Consumer Price Index (CPI).

If you are planning to retire or claim your preserved benefit in the next 12 months , please call an Information Officer on 1300 000 377 for a detailed estimate of your benefit.

FOR MORE INFORMATION ABOUT THE PSS: See the section ‘About the PSS' in the PSS Product Disclosure Statement

FOR MORE INFORMATION ON INVESTMENTS: Take a look at our Investment Performance and Investment Strategy

Australian Government Super Co-contribution

Any PSS member who has total income, made up of assessable income and reportable fringe benefits, of less than $40,000 in a financial year may be eligible for the Super Co-contribution. The Super Co-contribution replaced the tax rebate for personal superannuation contributions from 1 July 2003, and is paid by the Australian Government to encourage personal super contributions.

If you are a contributing PSS member, the compulsory personal contributions you make (of between 2 and 10 per cent of your superannuation salary) may mean you are eligible for the Super Co-contribution. The Australian Taxation Office (ATO) will determine if you are entitled to receive a Super Co-contribution. If you would like more information about the Super Co-contribution, please visit the ATO website www.ato.gov.au/super where you will also find a handy calculator .

FOR MORE INFORMATION: see The Facts about Super Co-contribution

Family Law and Your Super

New superannuation legislation came into effect on 18 May 2004 that enables the creation of a separate interest or associate member account for the spouse of a PSS member in the event of divorce or separation. The associate member account is created when a superannuation splitting order or agreement is served on ComSuper as agent for the PSS Board.

FOR MORE INFORMATION: see Family Law and Your Super

New superannuation arrangements for future Australian Government employees

Legislation passed in March 2004 will establish new superannuation arrangements for employees who become members of the PSS from 1 July 2005. These arrangements will only apply to new employees who have never previously worked for the Australian Government. There will be no impact on people with an existing interest in the CSS or the PSS at 30 June 2005, including people with a deferred interest or preserved benefit.

FOR MORE INFORMATION: see ‘ What's New In Super' at www.finance.gov.au/super

Pension increase

As of payday 8 July 2004, PSS pensions will increase by 1.4% in line with a rise in the Consumer Price Index (CPI) for September 2003 to March 2004. Pensioners should get a letter about this increase shortly after 2 July 2004.

If you want to know more about how the CPI rate was determined, please contact the Australian Bureau of Statistics. If you want more information about your pension, please visit Pensioner Services or call 1300 000 377.

I look forward to reporting to you again soon.

Steve Gibbs
June 2004