Happy birthday, IPE Super! Welcome to IPE Super News – the quarterly newsletter for members of the Incitec Pivot Employees Superannuation Fund. It’s IPE Super’s first birthday, so we’ve packed this issue of IPE Super News full of useful information to help you understand and manage your super better. Inside, we: • Review IPE Super’s first year to see how we’ve done; • Tell you how your super has performed; • Profile JANA, IPE Super’s investment adviser, and how they manage your super; • Provide a checklist of IPE Super’s many features and benefits to help you grow your super; • Tell you about the coming IPE Super Policy Committee election; and more. If you have a query about any of the information provided in this issue of IPE Super News or an idea for an article in a future issue, please call the IPE Super Helpline on 1800 257 135. December 2007 Our first year The Incitec Pivot Employees Superannuation Fund was born on 1 November 2006. Small but big on potential, the new Fund was immediately registered and christened “IPE Super” by its proud parents (IPL and the Trustee). Friends and neighbours were delighted, with Government regulators, insurers, investment managers and many others dropping by to have a look at the new fund and give their approval. The newborn had many wonderful qualities (features and benefits – see pages 4 and 5) that made it the envy of its peers. Dressed in its new clothes (Product Disclosure Statement (PDS), member booklets and a MySuper website), it wasn’t long before IPE Super was ready to venture out into the wide world. Yes, our story may be a little ‘corny’, but there are a lot of parallels between the birth of a new baby and creating a super fund. There’s a name to choose, plenty of regulatory paperwork and lots of organising to do – although perhaps it’s not quite as painful! Ultimately though, it’s a super fund’s ability to attract and retain members that’s important. For IPE Super, this process began on the Fund’s birthday – 1 November 2006 – when the benefits of employees who were members of the Orica Flexible Benefits Super Fund (FBSF) were transferred to IPE Super. Soon after, an invitation was extended to the remainder of IPL employees to transfer their benefits to IPE Super, specifically those employees who were members of the Incitec Pivot Super Plan and the WMC Super Plan (both with Plum). At the end of our first eight months, the Fund had 989 members and $133.3 million in assets at 30 June 2007 – a great effort! Another important aspect of managing a super fund is to obtain input from members – after all, it is your Fund. So, in early 2007, an election was held to appoint two member-representatives to the Fund’s Policy Committee. As a result, Ken Thomas and Andrew Cox were appointed as the first member representatives to the Committee. This Committee plays a vital role in assisting the Trustee to manage the Fund – not only in representing members’ interests, but also in monitoring the performance of the Fund’s investments and service providers. See page 6 for more information on the forthcoming Policy Committee election. So, twelve months on, how have we done? We’ll let the figures speak for themselves – refer below. y F i r s t b i r t h d a November 2007) sn apshot (at 1 (over 95% of total 5 8 ership base: 9 • S teady memb employees) 138 million increasing asset base: $ • Steadily 2007 at September The Fund’s vestment performance: ons • Strong in sset class opti investm ent options, a pre-packaged ved strong Benefit sec tion all achie 06 to and Defined November 20 rns for the year 1 tive positive retu e Fund’s Ac 007. F or example, th 31 October 2 r the year, tion achie ved 14.9% fo nd. Balanced op * for the averag e Growth Fu 12.4% compared to ce Survey to 31 October 20 07. t Performan Ltd Investmen son Wyatt Australia Pty * Source: Wat How your super has performed How JANA helps The Australian share market started the financial year on a strong note, reaching a new the Trustee manage high in mid July. However, the market finished down 2.09% for the month as concerns about the US sub-prime mortgage market spread to Australia. your super Sub-prime mortgages are those issued to borrowers who have a higher risk of One of the IPE Super Trustee’s most important defaulting on their loans. Recently, defaults on sub-prime mortgages in the US responsibilities is to manage your super. The increased substantially due to a combination of poor lending standards, slowing Trustee is assisted in this role by the Fund’s growth in the US housing market and higher US interest rates. This combined to investment adviser, JANA Investment Advisers create poor market sentiment in US markets, which fell significantly during July. Pty Limited (JANA). While the Australian share market returned positive results overall during August, JANA was established in September 1987 it fluctuated dramatically throughout the month and some shares continued to be with the objective of providing high quality affected by the US sub-prime mortgage crisis. As a result, August was another investment advice to large asset holders, uncertain month for the US share market which dropped early in the month, before typically superannuation funds and tax-exempt rallying later. foundations, on all aspects of investments and asset management. JANA specialises in providing In response, the Reserve Bank of Australia increased the official cash rate by 0.25% tailored investment advice based on extensive to 6.50% during August. Fixed interest markets were down during the month, both in and detailed market and fund manager research. Australia and internationally. As investment adviser to IPE Super: September saw the Australian share market hit new highs, mainly due to the excellent performance of the Resources sector. Markets in Europe and the US rebounded, while • JANA assists the Trustee in developing and oil prices hit record highs amid hurricane fears. setting appropriate long-term objectives and strategies for investing the Fund’s assets; Global share markets slowed during October, reflecting continuing investor uncertainty over the US mortgage market and economic outlook. In contrast, the Australian • On an ongoing basis, JANA reviews and share market made further gains, hitting another record high during the month. implements the relevant asset allocations for Also in October, the Australian dollar rose to its highest level in 23 years against the IPE Super; ‘greenback’, exceeding US90 cents. • In implementing the Fund’s investment The Australian economy is less exposed than many others to the US mortgage crisis strategies, JANA’s role includes appointing and continues to perform strongly, supported by high commodity prices. On the back professional investment managers for of this strong performance and in a bid to address inflationary pressures, the Reserve the Fund and continually monitoring their Bank increased interest rates by a further 0.25% during November to 6.75%. performance. If necessary, JANA also terminates the services of managers who are Recent returns achieved by IPE Super’s investment options, asset class options and under-performing or whose investment style Defined Benefit section are shown in the table below. no longer matches the Fund’s investment objectives. IPE Super investment returns In managing IPE Super’s assets, JANA uses a multi-manager approach. This means that JANA Investment options Year-to-date Annual return appoints and combines one or more independent and asset class options (1 Jul 07 to 31 Oct 07) (1 Nov 06 to 31 Oct 07) (%) investment managers to manage a single asset class. The aim of this approach is to reduce the Conservative 3.1 8.5 overall risk of market volatility (ups and downs) Active Balanced 4.5 14.9 by spreading the Fund’s investments across a number of managers. It also provides the Fund Assertive 5.1 16.1 with access to a range of investment styles, Assertive Plus 5.2 17.0 as well as different markets and investment Cash 1.8 5.5 opportunities. This multi-manager approach is Diversified Fixed Interest 2.3 3.2 supported by JANA’s intensive manager research program. JANA commits 40% of its annual budget Australian Shares 7.8 25.3 to investment research each year. International Shares 0.7 6.4 To find out more about JANA’s approach to Defined Benefit section* 4.0 13.1 investment management, visit their website at Notes: www.jana.com.au. Alternatively, see IPE Super’s Investment returns shown in the above table are net of taxes, and administration and investment fees. Annual Report for information on how your super A table of the Fund’s latest investment returns can also be accessed on the Fund’s website at is invested, including the Fund’s investment www.ipesuper.com.au. objectives and strategies. * You should refer to the Member Booklet, Your Benefits in IPE Super for Defined Benefit Members, for information on how the Fund’s performance affects Defined Benefit members. IPE Super features and benefits can help you grow your super As a member, IPE Super provides you with access to a range of features and benefits. Depending on your personal and financial circumstances, you can use some or all of these features and benefits to: • Give your super the best chance of growing into a substantial retirement nest egg; and • Ensure that you and your family are financially protected should the unexpected happen. Use the checklist below to find out if you are making the most of the Fund’s features and benefits to grow your super and protect your family. Your choices What you should know What you need to do All members Pay more money You can make additional voluntary contributions from To commence making additional voluntary contributions or into super your before-tax salary (i.e. by salary sacrifice) with change your existing voluntary contribution arrangement: Company approval, or from your after-tax salary. Both • Accumulation members – complete Parts A, E and F of an types of contributions are subject to Government limits. Application & Change Form for Accumulation Members. You can also change your contribution rate at any time. • Defined Benefit members – complete Parts A, C and E of a Your Super Choices Form for Defined Benefit Members. When complete, return your form as directed. Transfer super If you have super with other funds, perhaps relating to Complete a Rollover Form (which is available from the Fund’s from other funds your previous employment, consider rolling over these MySuper website at www.ipesuper.com.au). into IPE Super amounts into IPE Super. If so, your super will be easier to You should complete a separate Rollover Form for each keep track of and it also means potentially paying fees rollover you wish to make. to only one fund. When you have completed the form, send it to your previous IPE Super charges no fees for rollovers. However, you super fund. should check to see if your previous fund(s) charges you an exit fee. Help your spouse to Spouse contributions are a convenient and easy way to To find out more about spouse contributions, refer to the save for retirement help your partner to save, particularly if your spouse has booklet, IPE Super and your Spouse, which is available from taken time out of the workforce to study or raise your family. the IPE Super website at www.ipesuper.com.au. To apply to open a spouse account, you and your spouse should If your spouse has a low assessable income, you may complete the IPE Super Spouse Form at the back of this be entitled to claim a savings rebate of up to $540 on booklet and return it as directed. your tax return. Nominate who you If you die, the law requires the Trustee to investigate To make or change your beneficiary nomination: want to receive your your personal circumstances prior to death and act in • Accumulation members – complete Parts A, D and F of an death benefit the best interests of your dependants in paying your Application & Change Form for Accumulation Members. death benefit. While not binding on the Trustee, your nomination will help the Trustee to make a decision, • Defined Benefit members – complete Parts A, D and E of a particularly if you have regularly reviewed your Your Super Choices Form for Defined Benefit Members. nomination and kept it up-to-date. Remember to specify the share of your benefit that you would like each beneficiary to receive (i.e. shares must total 100%). When complete, return your form to the Fund Administrator as directed on the form. If you’re about to retire If you are retiring after age 60, you can choose to take To find out more, refer to the PDS, Your IPE Super Allocated or wish to access your super as a lump sum or roll it over into an IPE Super Pension Guide, which is available from the IPE Super website your super while Allocated Pension. You can also roll your super into an at www.ipesuper.com.au or by calling the IPE Super Helpline continuing to work, IPE Super Allocated Pension under the Government’s on 1800 257 135. consider applying for “transition to retirement” laws if you are still working but To apply for an Allocated or Transition to Retirement Pension, an IPE Super Allocated have reached your preservation age (between ages 55 complete an Application & Change Form for Allocated Pension or Transition and 60 depending on your date of birth). Pension Members and return it as directed. to Retirement Pension Your choices What you should know What you need to do Accumulation members only Choose an If you haven’t already, consider making an investment To make or change your investment choice, complete Parts investment strategy choice for your super that is consistent with your A, B and F of an Application & Change Form for Accumulation for your super that particular financial situation, taking into account: Members and return it as directed. suits your personal • Your financial needs in retirement; financial situation • How long you have to save; and • How you feel about investment risk. IPE Super offers you a choice of four pre-packaged investment options – Assertive Plus, Assertive, Active Balanced and Conservative – or you can design your own hybrid investment option by choosing from a range of asset classes. You can make or change your investment choice at any time. The first switch each year is at no cost to you. If you have not previously made an investment choice, your super will be invested in the Active Balanced option (the default option). Ensure your level If you are a permanent employee* and you die or If you wish to change your level of death and total and of death and total become totally and permanently disabled, you may permanent disablement cover, complete Parts A, C and F of and permanent be entitled to an insurance benefit in addition to the an Application & Change Form for Accumulation Members disablement cover is balance of your IPE Super account. This insurance and return it as directed. enough to financially benefit is calculated as: protect you and your A percentage – either 5%, 10%, 15% or 20% family (as chosen by you) X years to age 65 (pro-rata for complete months) X your super salary**. You choose the percentage that best suits your needs. If you don’t make a choice, you automatically receive the Fund’s default level of cover (15%). If you choose 20% cover, you then have the option of purchasing additional voluntary insurance through the Fund if you feel that you need extra protection. Purchase income The Fund’s income protection cover provides a regular To find out more about income protection cover, including protection cover monthly income of up to 75% of salary** if you become the premium that applies based on your age and gender, through the Fund ill or suffer an injury and (in the insurer’s opinion) cannot refer to the flyer, Optional Income Protection Insurance for to provide you with work for a minimum period of three months. Accumulation Members. financial protection if This benefit is payable for up to two years or to age To apply for income protection cover, call the IPE Super you are temporarily 65 (whichever is earlier) and is reduced by any other Helpline on 1800 257 135 to obtain the appropriate forms. disabled and cannot sickness or accident benefits you may receive. This may include providing evidence of good health if work. required by the insurer. * Cover for death and total and permanent disablement is not available to casual employees. ** Your super salary means your annual salary at the time of your death or disablement. For more information on any of the above features, refer to your PDS, Your Benefits in IPE Super. The PDS and the Fund’s forms are available from the MySuper website at www.ipesuper.com.au. Remember, if you need help in making or changing your super choices, speak to a licensed financial adviser. Refer to your PDS to find out how. Have a say in running your Fund If you would like to have a say in the management of IPE Super and represent the interests of your fellow members, consider standing as a candidate in the forthcoming Policy Committee election. Andrew Cox recently resigned from the Policy Committee and the initial one-year term of the other member-representative Policy Committee member, Ken Thomas, will soon expire. Now that all employees of the Incitec Pivot Group have had an opportunity to join IPE Super, the Policy Committee is being expanded to six members – three member representatives and three Company-appointed representatives. An election to appoint the three member- representatives will be held early in 2008. In the meantime, Richard Ibbott (Geelong) has been appointed (as the candidate with the next highest number of votes at the last election) to replace Andrew Cox in the lead up to the election. Information about the election, including a call for nominations for the three member- representative positions on the Committee, will be sent to all members in early 2008. In the meantime, if you would like to see a copy of the Fund’s election policy, call the IPE Super Helpline on 1800 257 135. IPE Super’s first Annual Review In September 2007, you received your first Annual Review Pack from IPE Super. Inside was: • IPE Super’s 2007 Annual Report, providing information on the Fund’s investment performance for the period 1 November 2006 (the date the Fund was established) to 30 June 2007, the latest super news and up-to-date information on the fees and taxes that currently apply to your benefits in the Fund. • Your 2007 Benefit Statement, providing details of your personal benefits in IPE Super, including the balance of your account as at 30 June 2007 and the transactions into and out of your accounts since 1 November 2006. Your Benefit Statement also contains details of your benefits in the Fund should you die or become disabled, and your current beneficiary nomination(s). If you haven’t already, please read both documents carefully. If you have any queries about the information in your 2007 Annual Review Pack, or if you did not receive one, contact the IPE Super Helpline on 1800 257 135. The information in this publication is general information only and does not take into account your particular objectives, financial circumstances or needs. It is not personal or tax advice. You should consider obtaining professional advice about your personal circumstances before making any financial or investment decision based on the information contained in this document. Please note that past investment performance is not an indication of future performance. Issued by Watson Wyatt Superannuation Pty Ltd (ABN 56 098 527 256, AFSL 236049, RSE Licence Number L0000185), as Trustee of the Incitec Pivot Employees Superannuation Fund (ABN 68 569 795 856, RSE Registration Number R1069631). December 2007.