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Welcome to the nineteenth edition of CEO Online
In this edition I'll bring you up-to-date with:
- Investment performance
- the latest Budget news
- Annual Report and Member Statement coming to you soon
- exit rate adjustment update
- find out more about asset allocation.
Investment performance
PSS default Fund
From 1 July 2003 to 27 October 2006, the estimated performance (after adjustments for tax, fees and the reserve) is 48.70%. This translates to a daily compound exit rate of 0.032692% for exits from 1 November 2006.
PSS Cash Investment Option for preserved benefit members
From 1 December 2004 to 27 October 2006, the estimated performance (after adjustments for tax, fees and the reserve) is 9.45%. This translates to a daily compound exit rate of 0.012976% for exits from 1 November 2006.
Remember that past performance is no indication of future performance. Returns are volatile and it is impossible to predict when they will go up or down.
If you are planning to retire or claim your benefit in the next 12 months, please call us on 1300 000 377 for a detailed estimate of your benefit, and read about withdrawing your benefit in our Product Disclosure Statement.
Find out more about your Fund's investment performance , investment strategy and Cash Investment Option for preserved members.
The latest news about the Budget
The Government announced significant proposals to simplify and streamline the taxation of superannuation benefits as part of the Budget in May 2006. The Government consulted on the proposals until 9 August and on 5 September, announced the outcomes of this process. It is now expected that legislation will be brought forward by Christmas for implementation by 1 July 2007.
In summary, these proposals make taxation of super much more simple, particularly when approaching retirement.
The proposals differentiate benefits based on whether tax has or has not been paid on contributions. Your benefit includes both taxed and untaxed components. Generally your contributions, the funded employer productivity component and Fund earnings, have already been subject to tax and therefore come from a taxed source. The balance of your benefit (ie. the unfunded employer component) comes from an untaxed source
For more information visit www.simplersuper.treasury.gov.au
Annual Report and Member Statement coming to you soon
Due to additional disclosure requirements for your 2006 Member Statement, unfortunately there has been a delay in the delivery of your 2006 Member Statement and Annual Report. However, they are on the way and started being distributed from November.
In the meantime, you can view your 2006 Member Statement online through MEMBER SERVICES ONLINE. You will need an Access Number to use this service.
You can also access a copy of the 2006 Annual Report online.
Your Member Statement allows you to check that your super is on track. It shows your contributions over the year, relevant fees and what return has been made on your investment. So be sure to have a good read!
Exit Rate adjustment update
In the 2005/06 financial year our review and compliance processes identified issues with accounting information used to calculate the default Fund exit rates. This resulted in a miscalculation of exit rates used for members taking their benefit in that year, for example taking a lump sum or certain pensions.
As soon as the miscalculation was confirmed by an independent actuary we adjusted the exit rates. We also announced on our website that the rates would be revised for members who had taken their benefit in 2005/06.
We have now reviewed every withdrawal undertaken in the 2005/06 year and identified those members who were affected.
We have also started to personally contact members who were affected to arrange a payment of the additional amount. We are aiming to contact all affected members over the next few months and to start making payments from the beginning of November.
Find out more about asset allocation
It is being called new-style asset allocation and we are taking the lead within the superannuation industry. The main principle of new-style asset allocation is that a combination of lowly correlated investments will reduce the overall risk of the portfolio, notwithstanding the inherent risks within each investment.
Following a review in 2002, we have shifted away from the traditional asset allocation and over the past four years, have diversified across a number of asset “types” including long/short equities, market neutal funds, infrastructure and domestic and international private equity.
This was covered in The Right Stuff – the new wave of assert allocation: how uncorrelated assets aim to protect funds in crisis, in the October issue of Investment & Technology.
For more information, read the article.
I look forward to reporting to you again soon.
Steve Gibbs
