First Super Annual Report 2012_13
The industry fund
for workers in the
timber, pulp & paper
and furniture &
joinery industries
Annual Report
2012Œ13
If you are viewing this report on line, you can obtain a hard copy from us by calling
1300 360 988
Issued by First Super Pty Ltd (ABN 42 053 472, AFSL 223988, RESL L0003049)
putting members
˜rst
First
Super
First Super
Contents
Co-Chairs™ message
01
CEO™s message
02
First Super is
your
industry
super
fund
03
Investment performance
04
Your investment options
06
Investments held by the Fund
10
Taking care of First Super
12
Directors™ remuneration report
14
Fees and charges
16
Financial information
17
Super update
18
General information
20
Contact us
00
Let us help you consolidate your
super accounts Πfree
of charge\!
Simply complete a consolidation
form and we™ll do the paperwork
to get your money
consolidated.
3
The number of
separate super
funds the average
Australian has
1
Co-Chairs™ message
The year under review saw many changes to superannuation. The Government™s Stronger Super reforms were
the driver of a number of initiatives at First Super, including development of an approved MySuper product.
Obtaining approval required a considerable investment of time from the Board and the fund™s management,
but it was important for the fund™s future viability. New members who don™t make an investment choice will
automatically be invested in First Super™s MySuper option Œ the Balanced option.
The Board also directed much of its
attention to the fund™s investment
strategies. Members bene˜tted from
our approach to manager selection,
diversi˜cation and risk mitigation with
a defensive approach for investment
strategy. The Balanced (MySuper) option
in which over 88% of members have their
super invested, returned 13.59% after
tax, exceeding expectations.
As a fund run solely to bene˜t members
Œ and not to generate pro˜ts Œ we are
always looking for ways to protect your
interests. One issue that most concerns
us is the market presence of ˜nancial
planners who advise people to invest in
superannuation and retirement products
that are more expensive Πand potentially
less bene˜cial Œ than ours.
If you™re offered a session with a ˜nancial
planner by your bank or other ˜nancial
institution, be mindful of their possible
motivations and payment structures. As a
First Super member, you have access to
reasonably priced ˜nancial planners who
understand our products and put your
interests ˜rst. The ˜rst session is free.
You can also get limited ˜nancial advice
about First Super™s superannuation
and insurance options via our Contact
Centre. This is just one of the services the
Board introduced in our ongoing quest
to improve services for members while
keeping costs down.
During the year, First Super™s ˜rst CEO,
Graeme Russell, resigned after ˜ve years
at the helm. On behalf of the Board, we™d
like to thank Graeme for his dedication
to the Fund, to our members and for his
tireless contribution to the industry fund
movement. We wish Graeme well at
Media Super.
The Board also extends a warm welcome
to Bill Watson, First Super™s new CEO.
Bill
brings with him a wealth of experience
in superannuation, business strategy
and governance. The Board welcomes
Bill™s commitment to First Super and our
members.
Finally, we™d like to thank you, our
members and employers, for your
continued support of First Super. We
will keep working hard to ensure your
industry fund meets your needs and
serves your interests.
In closing, as Co-Chairs we would like to
thank our fellow Directors and dedicated
staff for their valued contribution over the
past year. Their efforts and commitment
allows the Fund to maintain and operate
at a standard of Corporate Governance
that we as Co-Chairs are proud of.
Michael O™Connor
Construction Forestry
Mining & Energy Union
National Secretary
fi
As a member of First Super you have access
to reasonably priced ˜nancial planners who
understand our products and put your
interests ˜rst.
fl
Allan Stewart
Timber Trade
Industrial Association
President
1 January
2 014
The date employers
must offer new
employees a
MySuper product
as their default
superannuation
arrangement.
First Super is now an
authorised MySuper
product provider.
2
I am honoured to have joined an
organisation that exists for one very
important purpose: to maximise the
future ˜nancial security of its members.
Australia™s superannuation regime is the
envy of the world and industry funds,
like First Super, are at the forefront of the
industry.
First Super has an excellent track record
of delivering superior returns for members
under the stewardship of Graeme Russell
and I am committed to continuing that
tradition. I will also maintain First Super™s
commitment to providing members with
quality super while keeping fees low.
In my short time with First Super I have
been impressed by the closeness of
First Super™s ties to the communities and
CEO™s message
members it serves. We are very much
a part of the timber, pulp, paper and
furnishing industries. That involvement
enables us to understand how we can
better meet the needs of our employers
and members. I have also been
impressed by the vigour with which
the Board represents the interests of
members and drives the fund™s various
strategies.
I look forward to getting to know many of
you personally over the coming years and
to work closely with our Board to ensure
First Super continues to exceed your
expectations.
Bill Watson
CEO
fi
I have been
extremely
impressed by the
closeness of First
Super™s ties to the
communities and
the members it
serves.
fl
Did you know–
First Super is run
only to bene˜t
members. That
means unlike retail
funds, we put our
pro˜ts back into
member accounts.
As First Super™s new Chief Executive Of˜cer, I wanted to take this opportunity to speak directly to our
members and sponsoring employers.
3
First Super is
your
industry fund
Did you know–
As an industry fund, we offer low fees, including
no entry fee, and
we don™t pay commissions to
˜nancial advisors.
First Super manages $1.9 billion in
member funds for over 72,000 members.
We offer superannuation, insurance,
Transition to Retirement and Pension
products. As an industry super fund our
pro˜ts are returned to you, our members,
not to shareholders.
As
the
industry fund for all workers in
the timber, pulp and paper, furniture and
joinery industries, we are committed
to providing our members and their
employers with the bene˜ts that enhance
their long-term ˜nancial position,
well
–
being and security.
Personalised service
and
advice
We are committed to providing First
Super members with high quality,
personalised service and advice.
Our Contact Centre is available to help
you manage your super and inform you
of your options.
The Contact Centre can help you arrange
for a First Super Coordinator to visit your
workplace. Our Coordinators are available
to provide you with the information you
require to better understand the Fund,
your account and
our services.
We also offer members access to
licenced, commission-free ˜nancial
planners who can help you plan for
your
retirement.
Call
1300 360 988
to talk to a Contact
Centre staff member or to book a free
initial consultation with a ˜nancial planner.
Investment options to suit
your needs
First Super offers members ˜ve
investment options in a mix of growth and
defensive investments. You can invest
your savings in one option or choose to
invest in a mix of options; the choice is
yours. We also make it easy to change
First Super is proud of our industry heritage. We design our products and services to meet your needs,
as
well as support and invest in your industry and the communities in which you work and live.
your investment options at any time,
providing you have at least $1,000 in
your
account.
Your super can be a safe, low-cost and
tax-effective way of saving for retirement.
We use our size and strength to ensure
our members pay low investment
management fees.
Flexible insurance options
at competitive rates
First Super provides you with ˚exible,
comprehensive insurance options
at competitive insurance rates. We
understand how important it is that
you and your family are protected if
the
worst
happens.
As a First Super Member you
automatically receive limited insurance
cover and you can choose to increase
your cover to suit your needs. Our Death
and Total & Permanent Disablement
insurance and voluntary Income
Protection cover will ensure you are
covered for all eventualities. Visit
˜rstsuper.com.au
or call
1300 360 988
for more information.
Planning for retirement
If you are nearing age 55 and starting
to think about retirement, First Super™s
allocated pension products allow you
to stay with us through your working life
and
beyond.
If you are age 55 or over and still working,
a
First Super Transition to Retirement
Allocated Pension
can provide you with
the ˚exibility to reduce your working hours
and make up for lost income by drawing
on your super. Used properly, a Transition
to Retirement Allocated Pension is a
powerful tax planning tool for
wage and
salary earners.
If you are over the preservation age
(between 55 and 60, depending on
when you were born) and looking to
retire permanently from the workforce,
a
First Super Allocated Pension
can
provide you with a regular income during
retirement. You can even draw down
lump sum amounts.
To help you plan for your retirement, call
our Contact Centre on
1300
360
988
to discuss your options or make an
appointment to see a ˜nancial planner.
The tax you pay on
investment earnings
with a First Super
Allocated Pension.
0
4
The Balanced investment option, the
investment option held by 88% of
our members, earned 13.59% after
tax. As in previous years, this return
exceeded similar funds owned by the
banking
sector.
This pleasing result can be attributed to
a
range of things including:
˜
outperformance of our Australian
equities managers
˜
continued strong performance of
our Australian and international
infrastructure investments, and
˜
a defensive approach to investment
strategy, especially early in the
˜nancial
year.
Investment performance
First Super performed well during the year to 30 June 2013, with our default option exceeding expectations.
Bene˜ts of diversi˜cation were also
apparent in our results. Investment
options with a range of asset classes,
such as shares and infrastructure,
exceeded their performance benchmarks.
The Growth investment option, which
has a similar asset allocation to many
other funds™ default options, returned
an excellent 17.04%. The Shares
option returned 19.62% and the
Conservative Option returned 11.53%.
The Cash option returned 3.42%, which
represented a reduction from the previous
year due to record-low interest rates.
During the year, Perpetual were
appointed to manage some of First
Super™s Australian shares portfolio.
Perpetual replaced BT and their results to
date have been outstanding, beating their
benchmark targets.
Other Australian and international equity
managers performed well, contributing to
First Super™s strong investment returns.
Outlook
The outlook for 2014 is mixed. The
recovery from the 2009 Global Financial
Crisis remains weak, despite the efforts of
central banks to boost economic activity.
Locally, the extraordinary level of mining
investment that™s fuelled recent growth
seems to be coming to an end. However,
the reduction in the value of the Australian
dollar is expected to give a boost to other
industry sectors and exports generally.
The First Super Board and its Investment
Committee will continue to maintain a
healthy scepticism towards investing
in emerging markets due to concerns
in regard to the level of governance
and the availability of outperformance
opportunities in a cooling market.
13.5 9
%
The Balanced
(default)
option
return
for the year
5
Below are the crediting rates for the ˜nancial year ending 30 June 2013 and prior periods.
Superannuation
Investment Option
1 year
% p.a.
2 years
% p.a.
3 years
% p.a.
5 years
% p.a.
10 years
% p.a.
Return since
inception
Inception
date
Return over
CPI since
inception
Balanced (default)
13.59
7.9
7.5
3.4
6.8
8.2
1 Jul 1988
5.2
Shares Plus
19.62
8.6
8.8
3.3
7.3
4.1
1 Mar 2001
1.3
Growth
17.04
10.1
n/a
n/a
n/a
11.9
14 Oct 2011
10.1
Conservative Balanced
11.53
7.9
7.7
4.5
n/a
4.5
1 Jul 1988
2.2
Cash
3.42
4.4
4.4
4.0
4.3
4.8
1 Mar 2001
2.0
*The composition of the Balanced option was fundamentally different prior to 1 July 1988.
Pension
Investment Option
1 year
% p.a.
2 years
% p.a.
3 years
% p.a.
5 years
% p.a.
10 years
% p.a.
Return since
inception
Inception
date
Return over
CPI since
inception
Balanced (default)
15.44
9.1
8.6
4.0
n/a
6.3
18 Mar 2005
3.6
Shares Plus
21.54
9.6
9.7
3.6
n/a
5.7
1 Jul 2005
2.9
Growth
n/a
n/a
n/a
n/a
n/a
n/a
1 Jul 2013
n/a
Conservative Balanced
12.90
9.0
8.7
5.1
n/a
5.1
1 Jul 2008
2.8
Cash
4.01
5.2
5.2
4.7
n/a
4.7
1 Jul 2005
1.9
Note:
5-year and 10-year rates are based on the crediting rates for similar investment options in the former Timber Industry Super Scheme up to 30 June 2008 and First
Super since. ‚N/A™ indicates there were no similar investment options available 5 or 10 years ago. Rates are not guaranteed and may not be the same as those allocated
to your account for reasons including the date you joined and the timing of contributions. Past performance is not a reliable indicator of future performance.
Crediting rates
Investment returns are calculated and ‚declared™ each week. After the end of the ˜nancial year (30 June), the weekly rates are combined
into an annual crediting rate, which is applied to your account balance. The crediting rate can be positive or negative.
If you are paid a bene˜t before the end of the ˜nancial year, an interim crediting rate is applied to your account balance when you
receive your bene˜t. This interim rate is based on the declared weekly returns for the period during which your bene˜t was in the fund.
The crediting rates for super and pension accounts are different. This is because pension accounts don™t pay tax on investment earnings.
The risk/return pro˜le of
the main asset classes
This graph illustrates the relationship between
higher returns and greater risk. It does not
re˜ect the actual returns or risks.
The link between risk and return
Generally, investment in high risk assets will produce
higher returns over the long term, with a greater chance
of a negative return over the short term.
Each of the four main asset classes Πshares, property,
˜xed interest and cash Œ has different levels of risk and
different potential for returns.
Potential Return
Risk
0
Fixed
Interest
Cash
Property
Shares
Higher
Higher
Lower
6
First Super members can choose to
invest in any one or a combination of
the following
options:
1.
Shares Plus
2.
Growth
3.
Balanced (default option)
4.
Cash
5.
Conservative
You can mix your investment in any
percentage split across the ˜ve investment
options or you can choose to invest in just
one option. The choice is yours.
Making an investment choice
Before making an investment choice you
should consider your personal situation and
understand the relationship between risk
and return. This is essential to making an
informed investment decision.
You can change your investment mix at any
time, provided you have an account balance
of at least $1,000.
First Super provides all members with access
to low cost ˜nancial planning services. Our
˜nancial planners receive no commissions.
They work on a fee for service basis so
you know what it is going to cost you
up front. Your initial consultation is free.
Call
1300
360
988
for more information or to
arrange for a ˜nancial planner to contact you.
Investment options
For more information, read the
Investing your
super IBR
available at
˜rstsuper.com.au
.
Your investment options
First Super lets you choose how your super is invested. Our mix of growth investments and defensive
investments offers you an investment mix that suits your risk pro˜le and your investment timeline.
Change to Asset Class Names
A change in Government legislation requires superannuation funds to use standard
terms to describe the assets classes in which they invest. While the new names
provide less information than the old, the change has not signi˜cantly affected how
or where First Super invests, only the names used.
The table below shows the old and new asset class names.
Old Asset class names
New Asset class names
Australian Equities
Australian listed equities
International Equities (Unhedged)
International listed equities
International Equities (Hedged)
International listed equities
Australian Private Equity
Australian unlisted equities
International Private Equity
International unlisted equities
Timber, Furniture and Pulp
Other
Australian Infrastructure
Australian unlisted infrastructure
International Infrastructure
International unlisted infrastructure
Property
Australian unlisted property
Australian Broad Based Bonds
Australian ˜xed income
International Broad Based Bonds
International ˜xed income
Floating Rate Debt
50% Australian ˜xed income/
50% international ˜xed income
Cash
Cash
Did you know–
From late 2013, you will be able to have the cost of personal
˜nancial advice deducted directly from your super account.
7
Shares Plus
Objectives
˜
Achieve an investment return (after tax and
investment expenses) that exceeds in˚ation, as
measured by the Consumer Price Index, by at least
4.0% per annum over rolling ten year periods;
˜
Con˜ne the chance of the rate credited to members
falling below zero in any ˜nancial year to less than
one in ˜ve; and
˜
Achieve an investment return (after tax and
investment expenses) that exceeds the median of the
SuperRatings High Growth (91-100) Option Survey
over rolling ˜ve year periods.
Investor pro˜le
This investment option is likely to appeal to members
with a long-term view of their superannuation savings
and/or who are prepared to accept higher risk in the
search for higher returns.
Risk pro˜le
The Shares Plus option is likely to provide a high degree
of volatility and ˚uctuations in returns and is at the high
end of the risk/return range. The risk may increase by
the nature of overseas investments, which means that
this option is subject to the considerable extra risk of
currency ˚uctuations and international events. It is likely
to outperform the other investment options offered in
the longer term.
Standard risk
4.1 years
Risk band:
6
Risk label:
High
Asset allocation and ranges
Asset Class
Target %
Range %
Cash
0.0
0 Π5
Australian ˜xed income
0.0
0 Π5
International ˜xed income
0.0
0 Π5
Australian listed equities
42.0
30 Π60
Australian unlisted equities
5.0
0 Π20
International listed equities
32.0
0 Π40
International unlisted equities
1.0
0 Π5
Australian listed property
0.0
0 Π20
Australian unlisted property
10.0
0 Π20
International listed property
0.0
0 Π20
International unlisted property
0.0
0 Π20
Australian listed infrastructure
0.0
0 Π10
Australian unlisted infrastructure
5.0
0 Π10
International listed infrastructure
0.0
0 Π10
International unlisted infrastructure
5.0
0 Π10
Commodities
0.0
0 Π5
Other
0.0
0 Π5
Total
100.0
8
Growth
Objectives
˜
Achieve an investment return (after tax and investment
expenses) that exceeds in˚ation, as measured by the
Consumer Price Index, by at least 3.75% per annum over
rolling ten year periods;
˜
Con˜ne the chance of the rate credited to members falling
below zero in any ˜nancial year to less than one in six; and
˜
Achieve an investment return (after tax and investment
expenses) that exceeds the median of the Super Ratings
Default Option Survey over rolling ˜ve year periods.
Investor pro˜le
This option is likely to appeal to members who are prepared to
accept higher investment risk in the search for higher returns,
but also wish to reduce the risk of very large investment losses
by diversifying into some defensive assets.
Risk pro˜le
The Growth option is likely to provide a high degree of volatility
and ˚uctuations in returns. It has a lower investment risk/return
pro˜le than the Shares Plus option because it has a higher
exposure to defensive assets. Over the long term it is likely to
outperform the other investment options except for Shares Plus.
Standard risk
3.4 years
Risk band:
5
Risk label:
Medium to high
Balanced
(default option)
Objectives
˜
Achieve an investment return (after tax and investment
expenses) that exceeds in˚ation, as measured by the
Consumer Price Index, by at least 3.5% per annum over
rolling ten year periods;
˜
Con˜ne the chance of the rate credited to members falling
below zero in any ˜nancial year to less than one in ten; and
˜
Achieve an investment return (after tax and investment
expenses) that exceeds the median of the SuperRatings
Default Option Survey over rolling ˜ve year periods.
Investor pro˜le
This investment option is likely to appeal to members
seeking mid to long-term growth of their superannuation
along with diversi˜cation across asset classes.
Risk pro˜le
Designed to provide good growth over the mid to longer
term while reducing risk through diversi˜cation. Likely to
slightly under-perform against the First Super Shares Plus
and Growth options over the long term.
Standard risk
2.0 years
Risk band:
4
Risk label:
Medium
Asset allocation and ranges
Asset Class
Target %
Range %
Cash
2.0
0 Π20
Australian ˜xed income
6.5
0 Π20
International ˜xed income
6.5
0 Π20
Australian listed equities
33.0
25 Π45
Australian unlisted equities
5.0
0 Π25
International listed equities
26.0
0 Π45
International unlisted equities
1.0
0 Π10
Australian listed property
0.0
0 Π20
Australian unlisted property
10.0
0 Π20
International listed property
0.0
0 Π20
International unlisted property
0.0
0 – 20
Australian listed infrastructure
0.0
0 Π10
Australian unlisted infrastructure
5.0
0 Π10
International listed infrastructure
0.0
0 Π10
International unlisted infrastructure
5.0
0 Π10
Commodities
0.0
0 Π5
Other
0.0
0 Π5
Total
100.0
Asset allocation and ranges
Asset Class
Target %
Range %
Cash
4.0
0 Π15
Australian ˜xed income
14.5
0 Π40
International ˜xed income
14.5
0 Π40
Australian listed equities
22.0
15 Π40
Australian unlisted equities
5.0
0 Π25
International listed equities
17.0
5 Π40
International unlisted equities
1.0
0 Π5
Australian listed property
0.0
0 Π20
Australian unlisted property
10.0
0 Π20
International listed property
0.0
0 Π20
International unlisted property
0.0
0 Π20
Australian listed infrastructure
0.0
0 Π10
Australian unlisted infrastructure
5.0
0 Π10
International listed infrastructure
0.0
0 Π10
International unlisted infrastructure
5.0
0 Π10
Commodities
0.0
0 Π5
Other
2.0
0 Π5
Total
100.0
Your investment options
continued
9
Conservative Balanced
Objectives
˜
Achieve an investment return (after tax and investment
expenses) that exceeds in˚ation, as measured by
increases in the Consumer Price Index, by at least 3.0%
per annum over rolling ten year periods;
˜
Con˜ne the chance of the rate credited to members falling
below zero in any ˜nancial year to less than one in ˜fteen; and
˜
Achieve an investment return (after tax and investment
expenses) that exceeds the median of the SuperRatings
Conservative Balanced (41 Π59) Option Survey over
rolling ˜ve year periods.
Investor pro˜le
Members investing for the short to medium term who want a
more secure option with less chance of ˚uctuations than the
Shares Plus, Growth or Balanced options and/or members
looking for lower risk options for their superannuation savings.
Risk pro˜le
Designed to provide more stable returns than the Shares Plus,
Growth or Balanced options. It is at the lower end of the risk/
return range and is likely to under perform against the Shares
Plus, Growth or Balanced options over the medium to long term.
Standard risk
1.1 years
Risk band:
3
Risk label:
Low to medium
Cash
Objectives
˜
Achieve an investment return (after tax and investment
expenses) that exceeds in˚ation, as measured by
increases in the Consumer Price Index, by at least 1.0%
per annum over rolling ˜ve year periods;
˜
Con˜ne the chance of the rate credited to members falling
below zero in any ˜nancial year being negligible; and
˜
Achieve an investment return (after tax and investment
expenses) that exceeds the median of the SuperRatings
Cash Option Survey over rolling ˜ve year periods.
Investor pro˜le
Members investing for the short term and/or those who
want a secure option with a low chance of investment
˚uctuations. May be suitable for members intending to
realise or reorganise their investments in the near future who
want to avoid the possibility of a loss over that period.
Risk pro˜le
Designed to provide very stable returns at the lowest end of
the risk/return range. However, it is likely to under
–
perform
all other investment options offered over all but the
shortest
periods.
Standard risk
0.0 years
Risk band:
1
Risk label:
Very low
Asset allocation and ranges
Asset Class
Target %
Range %
Cash
20.0
5 Π25
Australian ˜xed income
15.0
5 Π45
International ˜xed income
15.0
5 Π45
Australian listed equities
17.0
10 Π30
Australian unlisted equities
0.0
0 Π5
International listed equities
13.0
5 Π20
International unlisted equities
0.0
0 Π5
Australian listed property
0.0
0 Π20
Australian unlisted property
10.0
0 Π20
International listed property
0.0
0 Π20
International unlisted property
0.0
0 Π20
Australian listed infrastructure
0.0
0 Π10
Australian unlisted infrastructure
5.0
0 Π10
International listed infrastructure
0.0
0 Π10
International unlisted infrastructure
5.0
0 Π10
Commodities
0.0
0 Π5
Other
0.0
0 Π5
Total
100.0
Asset allocation and ranges
Asset Class
Target %
Range %
Cash
100.0
100%
Australian ˜xed income
0.0
0
International ˜xed income
0.0
0
Australian listed equities
0.0
0
Australian unlisted equities
0.0
0
International listed equities
0.0
0
International unlisted equities
0.0
0
Australian listed property
0.0
0
Australian unlisted property
0.0
0
International listed property
0.0
0
International unlisted property
0.0
0
Australian listed infrastructure
0.0
0
Australian unlisted infrastructure
0.0
0
International listed infrastructure
0.0
0
International unlisted infrastructure
0.0
0
Commodities
0.0
0
Other
0.0
0
Total
100.0
10
Investments held
by the Fund
11
Listed below are the investment funds employed by First Super and the direct investments made for the
˜nancial year ending 30 June 2013.
Australian Equities
30 June 2013
($,000)
Listed Equities
Perpetual Mandate
129,397*
Eley Grif˜ths Small Co Mandate
30,023
IFM Enhanced
131,447*
Invesco Small Cap Australian Equity
30,767
Orbis SM Australian Equity Fund
82,775
Total Listed Equities
404,409
Australian Private Equity
Frontier Advisers Pty Ltd
309
ING Private Capital Fund 1
21
Industry Super Holdings Pty Ltd
10,470
Members Equity Bank Pty Ltd
21,178
Macquarie Alternative Investment Trust 3
13,844
Macquarie Alternative Investment Trust 4
22,081
Quay Australia First Trust Portfolio
28,173
Quay Australian 3 Fund
4,981
Quay Australian 4 Fund
2,408
Super Bene˜ts Administration Pty Ltd
1,565
Total Australian Private Equity
105,030
International Equities
30 June 2013
($,000)
International Equities (Unhedged)
BlackRock Unhedged World ex Australia
Equities Index
3,571
Capital International Global Equity
Unhedged
115,730*
Global Thematic Partners
59,181
Orbis Global Equity Fund
104,342*
Total International Equities
(Unhedged)
282,824
International Equities (Hedged)
BlackRock Global Equity Hedged
61,511
Total International Equities Hedged
61,511
International Private Equity
IFM Global Unit Trust
3,115
Wilshire AU Market PST G & H
6,402
Wilshire AU Market PST J & K
5,123
Total International Private Equity
14,640
Australian Infrastructure
30 June 2013
($,000)
IFM Fund
74,249
Hastings UTA
10,939
Total Australian Infrastructure
85,188
International Infrastructure
30 June 2013
($,000)
AMP Strategic Infrastructure Trust EUR
8,948
IFM International Infrastructure
62,263
Total International Infrastructure
71,211
Property
30 June 2013
($,000)
AMP Property Income Fund
5,815
Fortius Active Property 1
6,137
Franklin International Real Estate 2
2,612
ISPT Development Opp Fund 1
4,966
Industry Super Property Trust Core
99,734*
QIC Property Fund
63,147
Total Property
182,411
Fixed Interest & Floating Rate Debt
30 June 2013
($,000)
BlackRock Indexed Australian Bond Fund
100,253*
BlackRock Global Bond Index
42,755
IFM Alternative Fixed Income Fund
29,949
IFM Credit Opportunities
75,266
PIMCO Global Bond
74,739
Super Loans Trust (Members Equity
Bank)
12,761
PIMCO Target Return Fund
108,125*
Westbourne Yield Fund No 1
46,902
Total Fixed Interest
490,750
Cash
30 June 2013
($,000)
IFM Transaction Fund
35,307
Short Term Cash Account
163,727*
Total Cash
199,034
Total Investments
$1,897,008,000
*
These assets represent 5% or more of the Fund.
12
Taking care of
First Super
The Trustee
The Trustee of First Super is a company,
First Super Pty Ltd (ABN 42 053 498 472,
AFSL 223988, RSEL L0003049).
The Trustee is responsible for managing
over approximately $1.9 billion in funds
under management and overseeing its
investments on behalf of 72,000 members,
in accordance with the Trust Deed and
relevant legislation.
the Board by the CFMEU (Forestry
and Furnishing Products Division)
while employer representatives are
nominated by employers or employer
associations. One Independent
director is jointly appointed by the
other members of the
Trustee Board.
The Co-Chair persons are elected
annually by the Board.
The Board generally meets four
times a year and undertakes an
annual review of its performance.
Every second year an independent
external review of the Board (and its
subcommittees) is
commissioned.
$153,806,972
The value of contributions made to First Super
member accounts for the 2012/13 ˜nancial year.
The Trustee Board
The First Super Trustee Board
is comprised of ˜ve member
representatives, ˜ve employer
representatives and one
independent
director.
Directors are appointed to the Board
following consideration of a nominee™s
suitability and quali˜cations. Member
representatives are nominated to
13
Board subcommittees
The First Super Trustee Board has established subcommittees
to deal with issues and to make recommendations to the Board.
Each subcommittee generally meets four times a year, with
additional meetings scheduled as required.
The Directors of First Super and their subcommittee
representation as at 30 June 2013 were as follows:
Member representative
Subcommittee
representation
Michael O™Connor
(Co-Chair)
Member since 2008
Audit & Compliance
Investment (Chair)
Remuneration
Nominations
Administration & Marketing
David Kirner
Member since 2010
Audit & Compliance
Administration & Marketing
Group Insurance
Alex Millar
Member since 2008
Investment
Kevin Millie
Member since 2008
Administration & Marketing
Frank Vari
Member since 2008
Investment
Nominations
Remuneration
Employer representative
Subcommittee
representation
Alan Stewart
Member since 2008
Investment
Remuneration
Administration & Marketing (Chair)
Nominations
Group Insurance
Martin Lewis
Member since 2008
Investment
Nominations
Lisa Marty
Member since 10 August
2012
Administration & Marketing
Lindsay Morling
Member since 2008
Audit & Compliance
Administration & Marketing
Group Insurance
Mike Radda
Member since 2008
Investment
Independent director
Subcommittee
representation
Bob Smith
Member since 2008
Audit & Compliance (Chair)
Remuneration (Chair)
Group Insurance (Chair)
Nominations (Chair)
Service Providers
First Super work with a range of independent advisors and
service providers to assist with running your Fund on a day-
to-day basis. Each advisor and service provider is appointed
following a due diligence process. Advisors and service
providers may change from time to time. As of 30 June 2013,
First Super used the following advisors and service providers:
Actuary
Mercer Consulting (Australia) Pty Ltd
Administrator
Super Bene˜ts Administration Pty Ltd
External Auditor
KPMG
Financial Advisor
IFS Financial Planning
Internal Auditor
Ernst & Young
Insurer
MetLife
Insurance Advisor
IFS Insurance Broking Pty Ltd
Asset Consultant
Frontier Investment Consulting Pty Ltd
Legal Advisor
Madgwicks
Master Custodian
National Australia Bank Ltd
Tax Advisor
Ernst & Young
First Super Coordinators
First Super™s Coordinators are available to help with complicated
issues. They can help you over the phone or visit you in your
workplace to discuss the ˜nancial planning services available
to
you.
For more information about First Super™s Coordinators call
1300
360 988
.
Funds Under Management
2008
2009
2011
2010
2012
2013
$1,900,000
$1,800,000
$1,700,000
$1,600,000
$1,500,000
$1,400,000
$1,300,000
$1,200,000
$1,000,000
First Super
14
Directors™
remuneration report
The fees paid to the Board are set and
examined regularly by the Remuneration
Committee. Independent advice may be
sought from time to time to ensure Board
remuneration is in line with the market.
Based on information available, the
Remuneration Committee is satis˜ed that
the level of remuneration paid to First
Super Directors is reasonable.
Director™s fees
The fees paid to Directors are paid in
respect of:
Board meetings
. Covering preparation
for and attendance at Board meetings.
Payment includes an allowance
for travel and accommodation for
interstate
Directors.
Workshop & training courses
.
Covering Director participation in all
approved workshop and training courses
and relevant incurred expenses.
Conferences
. Covering Director
participation in approved conferences
and relevant incurred expenses
for travel and accommodation for
interstate
Directors.
Extra Duties
. On occasion the Board
may requite Directors to take on extra
duties. An additional fee may be paid to
the Director at the Board™s discretion.
Professional development
On accepting a chair on the Board, all
Directors are required to participate in a
thorough induction program leading up to
and following their appointment.
Directors are required to undertake a
minimum of eight hours of professional
development each year to maintain their
skills and competencies. Professional
development may include participation
in industry programs, seminars,
conferences, relevant presentations at
Board and subcommittee meetings and
other approved workshop and training
courses.
Hospitality and gifts
First Super Directors and senior
management may on occasion accept
hospitality and gifts within the constraints
of the Hospitality & Gifts policy. All
hospitality and gifts that are accepted
are recorded in the Hospitality & Gifts
Register. The Register is provided to the
Audit & Compliance subcommittee at
each meeting and is published on the
First Super website.
In their positions as Directors of First Super Pty Ltd, the Board is paid for the work they do. In some cases,
payment may also be made to the Director™s employer to compensate for time spent by the Director
managing the business of the Fund and the Trustee.
15
Board fees
The fees for the Director™s of First Super have not increased since they were ˜rst established in 2008.
The Director™s fees for the year ended 30 June 2013 are as follows:
Co-Chairs ($)
Directors ($)
Board meetings intrastate
5,250
3,000
Board meetings interstate
6,350
4,100
Committee meetings intrastate
2,250
1,500
Committee meetings interstate
3,350
2,600
Workshops & training courses intrastate
1,350
1,350
Workshops & training courses interstate
1,350
1,350
Workshops & training courses Πexpenses
1,100
1,100
Conferences Πper day
1,100
1,100
Reference committees
Reimbursement
of expenses
Reimbursement
of expenses
2012/13 attendance and remuneration
Listed below is the Board™s meeting attendance and remuneration (including GST where applicable) for the year ending 30 June 2013:
Director
Board
meetings
Committee
meetings
Professional
development
hours
Remuneration
($)
Payments
made to:
Michael O™Connor
4/4
22/22
28.5
88,495
CFMEUŒFFPD
David Kirner
4/4
12/12
5.5
56,430
CFMEUŒFFPD
Alex Millar
3/4
5/6
32.5
29,040
CFMEUŒFFPD
Kevin Millie
4/4
7/7
36
48,950
CFMEUŒFFPD
Frank Vari
4/4
8/9
12.5
29,590
CFMEUŒFFPD
Allan Stewart
4/4
22/22
55.55
141,955
Allan Stewart &
Associates Pty Ltd
Martin Lewis
4/4
13/15
24.5
51,920
Martin Lewis
Lisa Marty
4/4
5/6
34
23,900
Lisa Marty
Lindsay Morling
4/4
10/10
31
47,900
Lindsay Morling
Mike Radda
4/4
5/6
5.5
22,660
UCI Projects Pty Ltd
Bob Smith
4/4
13/13
12
78,980
Bob Smith
Total Remuneration
$619,820
The total salary package of First Super™s CEO for the year ending 30 June 2013 was $270,000.
16
Fees and charges
These fees and costs may be deducted
from your account, from the returns on your
investment or from the fund assets as a whole.
You should read all of the important
information about fees and costs because
it is important to understand their impact on
your investment.
The fees and costs you may be charged are set out below.
Did you know–
Small differences in both investment performance and fees and
costs can have a substantial impact on your long-term returns.
Type of fee or cost
Amount
How and when paid
Management costs
Investment fee
Πthe fees and costs for
managing your investment.
Indirect Cost Ratio*:
The amount you pay for speci˜c
investment options.
Shares Plus
0.77%
Growth
0.61%
Balanced
0.68%
Conservative Balanced
0.50%
Cash
0.09%
The Indirect Cost Ratio (ICR) is not deducted
from member accounts. It is deducted from
investment earnings before investment
returns are declared.
Administration fee
Πthe fees and costs
for administration of the Fund.
$1.35 per week ($70.20 p.a.)
Deducted on the last working day of the month,
except if the member is leaving the Fund, in
which case it is applied as at the date of exit.
Service fees
Investment switching fee
Πthe fee for
changing investment options.
Nil for the ˜rst two switches in any
year, $30 for any subsequent switch
in the
year.
Deducted from the member™s account at the
time the switch is processed.
Exit fee
* Πthe fee on each amount you
take out of your investment.
Nil for retirement bene˜ts, death
and disablement bene˜ts, ˜nancial
hardship and compassionate
payments.
$75 for full or partial withdrawals.
Deducted from your account at the time of
withdrawal.
Financial planning
Πthe fee for obtaining
˜nancial advice.
Fees may be paid to your ˜nancial
advisor.
You may agree to have these fees deducted
from your account.
* Indirect Cost Ratio, see explanation in next section.
17
Financial information
The following is an abridged version of First Super™s Financial Statements for the ˜nancial year ending
30
June 2013. A copy of the audited Financial Statements is now available to download at
˜rstsuper.com.au
.
Statement of ˜nancial position
30 June 2013 ($)
30 June 2012 ($)
Assets
Investments
1,897,008,572
1,671,178,419
Other Assets
12,996,179
22,114,222
Total Assets
1,910,004,751
1,693,292,641
Liabilities
Trade and other payables
(4,728,205)
(5,025,810)
Bene˜ts payable
(471,585)
(308,347)
Current tax liabilities
(8,783,858)
(9,500,095)
Total Liabilities
(13,983,648)
(14,834,252)
Net assets
1,896,021,103
1,678,458,389
Represented by liability for accrued bene˜ts
Member funds
1,878,272,911
1,667,241,369
Reserves
14,748,192
11,217,020
Liability for accrued bene˜ts
1,896,021,103
1,678,458,389
Operating statement
30 June 2013 ($)
30 June 2012 ($)
Revenue from investments
247,114,624
42,414,700
Revenue from contributions
153,806,972
160,164,924
Other revenue
12,796,576
11,935,300
Total revenue
413,718,172
214,514,924
Total expenditure
(28,399,827)
(20,225,765)
Bene˜ts accrued before tax
385,318,345
194,289,159
Tax expense
(30,583,353)
(18,131,510)
Bene˜ts accrued after tax
354,734,992
176,157,649
$224,7 7 3 ,5 7 2
The amount of earnings distributed to member
accounts for the 2012/13 ˜nancial year.
18
Increase in Superannuation
Guarantee*
The legislated minimum contribution
rate that employers must make
to superannuation (known as the
Superannuation Guarantee rate)
increased from 9.0% to 9.25% for
the 2013/14 ˜nancial year. This rate
is proposed to increase from 9.25%
to 12% in small increments from
1 July 2014 to 1
July 2019.
Super update
There were a number of changes to superannuation either passed by Parliament or announced by
Government during the year.
Maximum age limit
removed
Effective 1 July 2013, the upper age
limit for Superannuation Guarantee
contributions was removed. This
means that from the 2013/14 ˜nancial
year employers are required to make
Superannuation Guarantee contributions
for eligible employees over the age of 70.
Low-income contribution*
From 1 July 2012, individuals with an
adjusted taxable income of less than
$37,000 are eligible for a Low Income
Superannuation Contribution (LISC).
The LISC, paid directly into an individual™s
superannuation fund, will rebate the 15%
contributions tax paid by the fund.
This measure aims to ensure that
low-income earners pay no tax on
superannuation contributions by
increasing their superannuation savings
by up to $500.
* The Government is in the process of reconsidering
both of these changes. Please contact us on
1300 360 988
for current information.
3,7 9 0
The number of
new members
for 2012/13.
19
Reduction in tax
concession provided to
high-income earners
From 1 July 2012, the contribution tax
rate for individuals earning income of
more than $300,000 increased from 15%
to 30%. Where an individual exceeds
the income level of $300,000 due to
the inclusion of concessional (before
tax) contributions, the higher tax rate
of 30% will apply to that amount of the
contribution exceeding $300,000.
Contribution cap changes
There are limits on how much
an individual can contribute to
superannuation before incurring extra
tax. The concessional (before tax)
contributions cap for 2013/14 is $25,000.
However, the concessional contributions
cap for individuals aged 60 and over at
any time during the 2013/14 ˜nancial
year is $35,000. From 1 July 2014, the
higher cap will also apply to individuals
aged 50 and over.
Changes to excess
contributions tax
From the 2013/14 ˜nancial year,
contributions made in excess of the
concessional contribution cap will no
longer attract an additional 31.5% penalty
tax. Instead, the excess concessional
contributions will be taxed at the
individual™s marginal tax rate, less a tax
offset of 15% of the excess amount. An
interest charge, to be calculated by the
Australian Taxation Of˜ce, will also be
incurred for the deferral of tax.
The individual will have the option to
withdraw any excess concessional
contributions made from 1 July
2013 from their superannuation fund
without
penalty.
Stronger Super
reforms
Stronger Super
is a package of
Government reforms to superannuation
that have started to come into effect. The
package contains three main initiatives:
1.
The introduction of a new default
superannuation product, ‚MySuper™,
which must meet minimum standards
in relation to bene˜ts, investment
strategy and fees. From 1 January
2014, all employers must make
contributions for employees who
have not made a choice of fund to a
superannuation fund that is authorised
to offer a MySuper product.
2.
Strengthening the governance,
integrity and regulatory systems
supporting the superannuation system,
ensuring that those responsible for
managing superannuation monies do
so professionally and act in the best
interests of members.
3.
Introducing new data and reporting
standards intended to make the
processing of superannuation
transactions easier and faster, including
the ability to identify and consolidate
accounts individuals may have with
other funds.
First Super is a MySuper
Accredited Fund
First Super is now an authorised
‚MySuper™ product provider. MySuper
is a Government legislated default
superannuation arrangement that must
meet minimum standards in relation to
bene˜ts, investment strategy and fees.
First Super members that are 100%
invested in the Balanced option will
become a MySuper member of First Super
later this year. Nothing about your bene˜t
will change, except you will receive some
additional protections.
From 1 January 2014, all employers
must provide their new employees with
a MySuper product as their default
superannuation arrangement.
$ 2 5,000
The maximum amount
you can contribute (before
tax) to your super account
before incurring extra
tax.
For individuals aged 60
and over the maximum is
$35,000.
Want to know more?
For the latest information on changes that affect superannuation,
go to the Australian Taxation Of˜ce website at www.ato.gov.au
20
General information
21
Fund Reserves
A reserve has been maintained for
administration and operational purposes
only, such as paying costs and receiving
investment income.
The reserve is invested in the Balanced
investment option. The value of the
reserve at 30 June each year, for the past
˜ve years, is shown below:
Year ending
30 June
Reserve balance
($)
2013
17,748,192
2012
10,967,020
2011
15,127,326
In addition to the Reserve, First Super
holds liquid assets of no less than
$250,000 as a condition of the Fund™s
licence, issued by the Australian
Prudential Regulation Authority (APRA).
From 1 July 2013 the Fund has
established a separate Operational Risk
Financial Reserve (ORFR) to address
potential losses arising from operational
risks as required under superannuation
legislation. There are speci˜c guidelines
and processes surrounding the operation
and utilisation of this reserve which are
contained in the Fund™s Operational Risk
Requirement Policy.
The ORFR was funded by a transfer of
funds from the administration reserve
after the annual audit was completed
for the 2013 ˜nancial year. Though
initially invested in cash and ˜xed interest
securities, the ORFR may be partially
invested in other assets, including listed
shares and other liquid securities, at
a future time. Please call First Super
on
1300 360 988
to obtain current
information.
Trust Deed
The Trust Deed contains the rules of the
Fund. No changes were made to the
Trust Deed for the ˜nancial year ending
30 June 2013.
Eligible Rollover Fund (ERF)
In accordance with superannuation
legislation, First Super has nominated
Australia™s Unclaimed Super Fund
(AUSfund) as our nominated Eligible
Rollover Fund (ERF). AUSfund will
receive the accounts of lost members or
members with small, inactive accounts.
Under Government legislation, lost
or inactive members with an account
balance of $2,000 or less will be
transferred to the Australian Taxation
Of˜ce (ATO) instead of AUSfund.
If your account is transferred to AUSfund
or the ATO:
˜
You will cease to be a member of
First
Super
˜
Any insurance cover you had with
First
Super will cease, and
˜
Your account becomes subject to the
rules of the institution that receives it.
Both AUSfund and the ATO will generally
protect accounts from erosion due to the
levy of any administration fees.
You can contact AUSfund at:
AUSfund Administration
PO Box 2468
Kent Town SA 5071
T:
1300 361 795
F:
1300 366 233
E:
admin@AUSfund.net.au
W:
unclaimedsuper.com.au
You can contact the ATO by calling
13
10
20 or by visiting ato.gov.au.
Complaints
The Trustee has established a procedure
to deal fairly with member complaints.
All complaints will be handled in a
courteous and con˜dential manner and
will be properly considered and dealt with
within 90 days. If you believe you have a
complaint, please write to:
Superannuation Complaints Of˜cer
PO Box 666
Carlton South VIC 3053
The Trustee may contact you during its
investigation of your complaint. Once the
investigation is complete, you will receive
a written reply from the Trustee explaining
the outcome of their investigation. If you
are not satis˜ed with the outcome, you
may choose to escalate your complaint
to the Superannuation Complaints
Tribunal
(SCT).
Established by the Government, the SCT
is an independent tribunal charged with
reviewing certain decisions made by
Trustees. The SCT will seek to resolve
your complaint through conciliation. If
conciliation is unsuccessful, the SCT
will
make a ˜nal, binding judgement.
You can contact the SCT at:
Superannuation Complaints Tribunal
Locked Bag 3060
Melbourne VIC 3001
T:
1300 884 114
F:
03 8635 5588
E:
info@sct.gov.au
W:
sct.gov.au
If your complaint is outside the jurisdiction
of the SCT, we suggest contacting the
Financial Ombudsman Service (FOS) at:
Financial Ombudsman Service
GPO Box 3
Melbourne VIC 3001
T:
1300 780 808
W:
fos.org.au
Privacy
First Super takes the utmost care with
your personal information and collects
only information that is necessary for your
membership. If we share your information
with other organisations, we ensure it is
only for the purpose of administering your
account or as authorised by you.
A copy of our Privacy Policy is available
on request.
If you believe that a breach of your
privacy may have occurred in relation to
your First Super membership, write to:
First Super Privacy Of˜cer
PO Box 666
Carlton South VIC 3053
Did you know–
Time limits apply to certain complaints made to the
Superannuation Complaints Tribunal such as Death and
TPD bene˜ts. We suggest contacting the SCT promptly if
you are unhappy with our response to your complaint.
˜rstsuper.com.au
This report was prepared by First Super Pty Ltd (ABN 42 053 472, AFSL 223988, RESL L0003049), Trustee of First Super superannuation fund (ABN 56 286 625
181, RESR 1067385). The material in this report is a summary only. The rules of the Fund are located in the Trust Deed and relevant law. In the event of inconsistency
between this report and the rules, the rules of the Fund prevail. This report was prepared without taking into account your objectives, ˜nancial situation or needs.
Should you consider the appropriateness of the material in light of your own objectives, ˜nancial situation or needs before making any decisions. You can obtain a copy
of the Product Disclosure Statement by contacting us. Facts and ˜gures appearing in this report were accurate at October 2013 but may change without notice.
Contact us
If you require information or assistance regarding your First Super account, contact us
In person
Level 3, 200 Arden St
North Melbourne
VIC 3051
Mail
PO Box 666
South Carlton
VIC 3053
Phone
1300 360 988
Fax
1300 362 899
Email
mail@˜rstsuper.com.au