Welcome to the thirteenth edition of CEO Online

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

• Recent important changes to introduce a cash investment option
• your Fund's ‘Top Ten' investment performance
• an award winning property investment
• a recent increase to the Australian Government Super Co-contribution threshold
• your annual member statement pack for 2004

PSS makes a change to introduce a Cash Option

The PSS Board has made a change to the way earnings are allocated to facilitate the introduction of a cash investment option for PSS preserved benefit members in December 2004, and provide a foundation for a fuller range of investment choices in the future.

This is the first step in a transition phase to introducing a fuller range of member investment choices proposed by the Board to meet growing demand for investment options that suit different risk-tolerances, and to ensure the PSS is in line with industry standards.

This transition phase has no impact on PSS contributing members because (with the exception of some benefits transferred from other super funds) their total gross benefit is defined by their rate of contribution, length of contributory membership and Final Average Salary with investment performance only affecting the ratio of funded to unfunded components.

Change to allocations of earnings

In order to deliver these options to members, now and in the future, the Board has changed the way it allocates earnings by amending the PSS Exit Rate and Crediting Rate policies, with effect from 13 August 2004. The key changes are set out below:

• Earnings will not be allocated through annual Crediting Rates until the transition to a fuller range of member investment options is made. This means there will be no Crediting Rate determined for 2003/2004, and that the last annual Crediting Rate determined was for the period 1 July 2002 to 30 June 2003.
• Instead, earnings will be allocated through the Exit Rates which will be determined at least weekly. An Exit Rate reflects all net earnings from 1 July 2003 until the date of determination, and is applied to a member's account when they exit.

From December 2004, PSS preserved benefit members can choose a Cash Option

From December 2004, PSS preserved benefit members will be able to choose a Cash Option. This is the first step to creating a fuller range of member investment choices in the future.

A document giving details of the Cash Option will be sent to PSS preserved benefit members in October 2004.

MORE INFORMATION ON THESE IMPORTANT CHANGES

PSS delivers a ‘Top Ten' performance

In the past few years, markets around the world have delivered mixed returns as a result of the bursting of the technology bubble, terrorism, war, a global economic stall, and the exposure of questionable corporate governance practices. Consequently, the Fund's recent investment returns have been a mixture of peaks and troughs. In response to this pattern, many members have understandably tended to focus on one-year returns, despite the fact that super is a long-term investment designed to produce results over many years.

A new survey has shown that across a longer-term investment cycle, the PSS is one of the Australia's best performing funds. A recent InTech survey has, for the first time, provided a publicly available “apples for apples” analysis of Australian super funds, by comparing their investment performance after tax and investment costs. Of the 63 funds polled, the PSS is one of the top ten funds for 7-year investment returns, and along with the CSS, is the only government fund in this top investment tier.

MORE INFORMATION ON Fund type unimportant: Intech (The Australian, 28 July 2004) and the InTech Super Survey June 2004

Aurora Place – an award winning property investment

Through our investment in the Commonwealth Property Investment Trust, managed by Colonial First State Property Limited, PSS members hold a stake in Aurora Place , a major commercial property in Sydney's CBD.

This distinctive building has recently taken out the coveted NSW Royal Australian Institute of Architects 'Sulman' Award , which is the most prestigious architectural award for public and commercial buildings in New South Wales. The judges of the 2004 Sulman Award praised Aurora Place for making a powerful addition to the city skyline and streets, as well as for its energy efficient design, which provides tenants with an outstanding commercial environment in which to conduct their business.

Increase to the Australian Government Super Co-contribution

In the previous edition of CEO Online I explained that contributing members to the PSS whose total income for tax purposes was less than $40,000 per financial year could be eligible for the Australian Government Super Co-contribution. This is a payment made by the Australian Government to encourage personal super contributions.

A recent change to these arrangements means that PSS members whose total income for tax purposes is $58,000 or less per year, may now be eligible for the Super Co-contribution (from 1 July onwards).

To find the full details of the changes to the Super Co-contribution, please visit the Australian Taxation Office website www.ato.gov.au/super where you will also find some handy calculators which can help you to work out the amount of the Super Co-contribution you could be eligible to receive.

Keep an eye out for your annual member statement pack

In October, we will issue annual member statement packs. If we had your current personal postal address details by the end of July, your pack will be posted directly to you. Otherwise it will be sent to you via your employer's personnel section.

If you haven't yet provided us with your current personal postal address and you'd like the convenience of having important information about your super sent directly to you in the future, you can provide (or update) your address details by:

• using the secure Member Services Online area (if you have an active Access Number );
• using your work email account to send your postal address, name, membership/AGS number and date of birth to members@pss.gov.au ; or
• calling an Information Officer on 1300 000 377 .

I look forward to reporting to you again soon.

Steve Gibbs

September 2004