QSuper 2000 Annual report to members · pension anyway? As at 1 July 2000 the weekly age pension is $196.25 for a single person and $162.85 each for a couple. The figure is set at

QSuper 2000 Annual report to members


More choice!More great returns!

More good news on fees!More options and features!More choice of investments!

More insurance options!

More great returnsFollowing on from last year’s excellentreturns, QSuper’s investment manager,the Queensland Investment Corp-oration (QIC), has continued to producereturns that are consistently above theindustry average, achieving earning ratesof up to 14.2%.

After adjusting for CPI inflation (3.2%),the ‘real’ investment growth of QSuperAccumulation accounts was up to 8.8%.See page 14 for more details.

More good news on feesUntil now, some members with anAccumulation account have been chargeda flat ‘cents-per-week’ fee, regardless ofthe balance of their account, whilstothers have been charged a ‘percentage-of-assets’ fee. To standardise the feestructure, the Board has adopted apercentage of assets fee for administrationfrom 1 July 2000. The annual feecharged will be up to 0.35% of your totalaccount balance and often the fee will beeven less than this. For instance, for the2000/2001 year, the fee is expected tobe around 0.3%.

And remember, with QSuper you payno entry or exit fees and no commissions!

Now, even more …Last year’s report opened with the headline, “great returns, low fees, more options”.

This year Glenn Poole is delighted to report, on behalf of the QSuper Board of

Trustees, that returns are still great, fees remain amongst the lowest in Australia

and options for members have increased significantly!

More choiceTo stay ahead of the changing super-annuation needs of members and theiremployers, a range of options are nowavailable:

� choice of Defined Benefit orAccumulation accounts;

� flexible contribution rates andadditional voluntary contributionfacilities;

� investment choice for all memberswith Accumulation accounts;

� additional insurance options;

� spouse accounts;

� rollover and allocated pensioninvestments; and

� a choice of wage or investment linkedgrowth for deferred retirementbenefits.

As you read through Super Scoop,

you will notice the icon to the right.

This icon indicates there is a relevant

QSuper fact sheet available about the

topic. If you would like to obtain a fact

sheet, please turn to the back

cover for details.

2

Glenn Poole is Assistant Under Treasurer of the Education and

Justice Division of Queensland Treasury. He has acted as the

Chairman of the QSuper Board of Trustees on behalf of the

Under Treasurer for around 9 years. He is also Chairman

of Q�Invest Limited. In his spare time, Glenn enjoys

relaxing with travel and photography.

Glenn Poole,QSuper Board of Trustees Chairman


More options andfeaturesFrom 1 May 2000, most new membersto QSuper will be provided with anAccumulation account.

The former Accumulation arrangementshave been expanded to accommodate thesame levels of member and employercontribution as provided for DefinedBenefit accounts, plus death anddisability and income protectioninsurance. And most members can nowchoose the style of account which willbest suit their needs.

Very few public or private sector fundsstill offer defined benefit style funds tonew members. QSuper’s ability to givemembers this option is due, in large part,to the prudent management of its definedbenefits going back over many decades.

This restructure arose after extensiveconsultation with all interested parties, astate-wide communication exercise andsubstantial reconfiguration of admin-istration systems. The GovernmentSuperannuation Office is to be com-mended for its efforts and the smoothtransition to the new arrangements.

More choice ofinvestmentsFrom 1 July 2000, all members withAccumulation accounts are now able tochoose a personalised investment strategyfrom a choice of five investment options.See page 8 for more information.

More insurance optionsAll insurance provided by QSuper willnow be underwritten internally by theFund. Because of QSuper’s economiesof size, the Board of Trustees can providebetter coverage and more efficient claimsadministration.

QSuper now offers members a single,flexible extra insurance arrangement athighly competitive rates, to extend coverabove the standard level automaticallyprovided.

AcknowledgementsThe Board of Trustees would like tothank all of the service providers whoassisted the Board throughout the year,including the following organisationsand their staff:

� the Government SuperannuationOffice, QSuper’s administrator;

� the Queensland InvestmentCorporation, QSuper’sinvestment manager;

� Q�Invest Ltd, the retirementplanning advice provider toQSuper members; and

� the State Actuary.

The Board would also like to thank all of theemployers participating in QSuper who havehelped in the implementation of recentinitiatives by modifying their systemsand processes as required.

Contents

From left to right: Glenn Poole, Mary Montgomery, Bob Scheuber, Steve Ryan, Karen Peut, John Thompson, Helen Ringrose, Merv Vining, Terri Hamilton, Merv Bainbridge.

3

Now even more

Your retirement will happen!

How do you like us?

Enhancing your options ...

Is super still tax effective?

Commonly asked questions

Investing your money

Investment jargon

Super changes

Financial highlights

2478101214171819


Retirement is a hardconcept to grasp for many

people, especially if it is 30or 40 years away. Many

prefer to focus on otherissues closer to hand, such

as developing their careers,maybe starting and raisinga family and even investing

for nearer-term goals. But,those who do prepare for

their retirement will enjoy afar more comfortable lifestyle

when the inevitablefinally happens.

It will happen.Throughout Super Scoopyou will notice a number ofeveryday items that haveevolved over the last 40years – which, of course, isaround the number ofyears between startingyour working life andretirement.

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Not many of us can pictureourselves at retirementwhen we start our first job.However, you will one dayfinish paid employmentand need to live from eitherthe money you have saved,or the age pension.

This is, of course, ifGovernments of the futurecontinue to provide thecurrent level of socialsecurity. In fact, bothcurrent and past Liberaland Labor Governmentshave indicated this isunlikely, which is the mainreason all workingAustralians are nowrequired to build asuperannuation nest egg tofund their own retirement.

What will myretirementbe like?The answer to thatquestion is different foreveryone. Most of uspicture ourselves relaxingand doing things we onlydream of during ourworking lives. For some,that might be taking anannual overseas holiday,playing golf two or threetimes a week or eating outand going to the theatre as

Whether you are nearing retirement or whether it is still a distant40 years away, one thing you should bank on is that …

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��LIFE EXPECTANCIES

FEMALE MALE

1960 74 682000 81 762040 87 84(expected)


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So, each year you work mayneed to fund more than ayear of your retirement!

Will my superbe enough?To provide a weeklyincome of $500 from anallocated pension, it isestimated that a 60 year oldmale would need to have$344,000 to invest atretirement, and a femaleslightly more due to alonger life span.* You needto consider how much youwill want to live on andwhether the benefit you are

currently due to receive willbe enough. If it’s not, thenyou should make plans tostart saving more.

How much is thepension anyway?As at 1 July 2000 theweekly age pension is$196.25 for a single personand $162.85 each for acouple. The figure is set at25% of Australian averageweekly ordinary timeearnings, which is not a lot

of money for a care freeretirement. Currently,75% of retirement ageAustralians are dependenton the age pension as theirmajor source of income.

Continued over page

Everyone’s idea of ‘comfortable’is different but here are just a fewitems you might have on yourweekly budget when you retire.

And, of course, you’ll still needsomewhere to live and someluxuries for yourself, not to mentiona few treats for the grandkids!

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Power

11.50

Movies/theatre

14.50

Telephone

14.40

Sports/leisure

24.10

Transport

55.20

Restaurants/cafes19.00

Clothing

14.20

Groceries/household85.10

Health

8.50

Papers/magazines13.50

Weekly total

$260

Annual total

$13,520

often as you want – ratherthan as often as you canafford. But the unfortunatereality for many Australianscurrently in their lateryears, is that retirement is aless than lavish existenceand often one where verycareful planning is requiredfor even the simplestluxuries in life. In fact, areliance on the age pensionwill mean surviving on just25% of the averageweekly wage.

So, how muchwill I need?This, of course, will dependon the lifestyle you want,and how many years youwill live after leaving work.

The table on page 4 showsaverage life expectanciesand how these ages areexpected to increase due toadvances in medicine andtechnology.

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* This would provide an income streamuntil age 80, indexed at 2.5% p.a. andearning 7% p.a.


At 101 years of age, DoreenFielding is QSuper’s oldestmember. Doreen beganworking life as a schoolteacher at Mungar StateSchool near Maryborough,where she still lives today.

Remembering those earlydays Doreen says “ I wasasked to become a studentteacher, which I was for 5years. I then had to sit anexam each year before Ibecame an actual teacher in 1921”. It was then that Doreen began contributingto superannuation. QSuper has now been helping Doreen finance her futurefor almost 80 years!

Teaching was Doreen’s greatest love and she continued in that role all her life.When she retired in 1964 her super provided her with a pension for life.Doreen hasn’t required the full old age pension at any time in the 37 years ofher retirement since.

Doreen has appreciated the lifestyle that her QSuper benefits have given her.“I’ve sailed to England and Europe on a cruise ship a number of times andI’ve been able to pursue my love of painting. I even travelled to Melbourneto complete a Certificate in Art.” Doreen believes that “without my QSuperbenefit I would never have been able to travel as much as I did”.

When she first began contributing in 1921, Doreen never imagined that herQSuper benefits would fund such a comfortable lifestyle for so long, but herretirement did happen, and it still is! ��

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other more immediategoals, the magic ofcompounding interest maymean that you can’t affordnot to start now. Of course,it’s never too late to startand even if your retirementis less than 10 years away,you could still make a realdifference by acting now.

So remember, yourretirement may seem farenough away to worryabout later on, but everyday you wait may make itharder to reach the sum ofmoney you will need. And,after all, your retirementwill happen, one day! ��

When shouldI start?As soon as you can, in factyou already have! By beinga member of QSuper, you’vegot a great start towardfinancing your future.

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Although it can be hard tostart a savings programme,especially when you have

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“I used to dreamof catching a fishlike this ...eventuallyit happened”

QSuper’s oldest member,Doreen Fielding

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6 QSuper 2000 Annual report to members


Merv Vining is an Industrial Consultant for the Australian Workers’

Union. Merv has been a QSuper Trustee since 1994 and a Union

Official since 1964. He is currently a Director of the Queensland

Local Government Superannuation Board and in his spare time

enjoys photography and cabinet making.

During the year, AC Nielsen wasengaged by the Board to undertake amarket research study. I’m pleased toreport the results show QSuper isregarded very h ighly by our members,both in terms of the services andproducts QSuper offers. Just a few ofthose results are shown on this page.

How do you like us?

QSuper is one of Australia’s largestsuperannuation funds, with around

400,000 members and although I talkto a lot of members personally, it’s

obviously not possible to know whateach of our members thinks and wantsfrom their Fund. To help understandyour needs and attitudes, the QSuper

Board of Trustees conducts regularmarket research programmes.

This year you will notice a wide range ofnew initiatives and services for members,many of which have been provided inresponse to information the Boardreceived from talking to members andcarrying out market research surveys.

The Board would like to thank memberswho have participated in surveys andwould like to confirm that the privacy ofyour financial records is assured. Memberdetails are only released to firmscommissioned by the Board.

Merv Vining,QSuper Trustee

These firms are required to signagreements guaranteeing member datawill only be used for purposes authorisedby the Board. No personal financialdetails are released to these firms andresponses returned to the Board remainanonymous.

So, if you are contacted and asked toparticipate in a survey for QSuper,remember it’s a great opportunity for youto tell us what you think of us!

By Merv Vining, QSuper Trustee

Please scan in

photo “A” and

place into box

“It didn’t take long fortechnology to happen ...and your retirementwill happen too!”

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“QSuper’s investment performance is strong.”

“I wouldn’t change to another fund even

if I could.”

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“QSuper’s performance is better than other funds.”

“Low fees are one of the

best things about QSuper.”


Defined Benefit orAccumulation account.Which is best?Defined Benefit accounts provide a benefit basedon your salary, the number of years you contributeand your contribution rate. The way the benefit iscalculated is guaranteed, or defined, so that providedyou can estimate your future salary andcontribution details, you can estimate what yourvarious entitlements under the Fund will be.

An Accumulation account, however, works morelike a conventional savings account. Your benefit issimply the balance of your account, which grows

as you and your employer contributemoney. Your account earnsinterest and you are charged

fees for administration, taxand insurance premiums.

Now all employees of ‘core’Queensland Government

agencies and a number of ‘non-core’ employers, can choose either

a defined benefit or accumulationstyle account. Check your annual

benefit statement for details on youraccount.

Investment choiceIf you have a QSuper Accumulation account, youcan now choose a personalised investment strategythat you are comfortable with. QSuper offers fiveinvestment options to help you find a balancebetween the amount of investment risk you areprepared to take and the level of return you wouldlike to earn.

If you have a Defined Benefit account, your benefitsare not affected by investment returns. However,any rollovers or voluntary contributions you make(including premiums for extra insurance) aredeposited into a separate Accumulation account,where you can tailor your own investment strategy.

To find out more, contact us for an Investment choicebook, or visit our website (www.qsuper.qld.gov.au)and try the investment choice tour.

Now you have unitsIf you have an Accumulation account, your balancewill now be recorded in ‘units’. Unit prices ensurethat the earnings you receive correspond exactly tothe period for which your funds are invested.Each QSuper investment option will have a unitprice which changes in value depending on thereturns that option earns. When you invest moneyinto that option, you will buy a certain number ofunits, according to the amount you invest and theunit price that day. As the unit price changes, thevalue of the units you hold will change. As youinvest more money, the number of units youhold will increase.

Enhancing your options...This year you will notice a number of new options, products and terms as you read through Super Scoop and your annual

benefit statement. What do they mean and how will they help you to finance your future?

8

You cannow choose a

strategy you’recomfortable

with from thesefive options.

Cash

Cash Plus

Balanced with Reserves

Balanced

High Growth


A new way of calculating feesQSuper is renowned for its low fees – amongst thelowest in Australia. From 1 July 2000, the wayfees are calculated on Accumulation accounts haschanged. In the past, QSuper consisted of sevendifferent plans, with different fee structures. Thismeant different members were charged differentfees even though their money was administered inmuch the same way.

Now all of QSuper’s accumulation style accountshave been streamlined into a single arrangementand so a single style of fee will be charged. The newfee will simply be a percentage of your accountbalance (less than 0.35% each year) and will bededucted from investment returns. For the2000/01 year, the fee is expected to be around 0.3%.

It is common for other funds’ management fees tobe more than 1% higher than QSuper’s allencompassing low rate and many also have furthercharges for functions such as investmentmanagement. Even a small amount can erode yoursavings over time. Just look at the difference lowerfees can make to your retirement benefit!

Higher employer contributionsMembers who do not personally contribute moneyinto QSuper receive contributions from theiremployers that meet the minimum requirementsset by Commonwealth Government legislation forall Australian workers. From 1 July 2000, thesemembers will begin to receive more from theiremployers as this rate climbed from 7% of salary to8%.This rate will rise again to 9% from 1 July 2002.

Of course, if you contribute your own money intoQSuper, in line with the standard arrangements,you will receive even more from your employer, upto 12.75% of your salary (18% for Police Officers).

Get the most from your superTo find out more about these initiatives and QSupergenerally, you could visit the new QSuper websiteat www.qsuper.qld.gov.au . QSuper has a lot to offeryou, and if you don’t know all there is to gain fromyour Fund, you may be missing out.

So, get the most from your super! ��

your future, your choice.

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You should also note that you can make one freeswitch between investment options each year.Additional switches however, will incur a fee of $25.

0

50,000

100,000

150,000

200,000

1 2 3 4 5 6 7 8 9 10

$183,069

2.25% Fee

0.35% Fee1.5% Fee

YEARS

$165,814

$

$155,364


How is super taxed?Superannuation is taxed at threepoints:

1. when contributing;2. on investment earnings; and3. when benefits are withdrawn.

1. When you pay your own ‘after taxmoney’ into super, generally no moretax is payable on this money. However,when your employer contributes onyour behalf, tax of 15% is deductedfrom their contributions into youraccount. If you are a high incomeearner, the superannuation surchargemay also be payable – effectively a taxof up to another 15%.

2. While your money is invested insuperannuation, its earnings (interest)are taxed at a maximum rate of 15%.This is a much lower rate of tax thanyou would generally pay on any otherform of investment earnings, which areusually taxed at your marginal rate(up to 47%).

3. Once you withdraw money fromsuper, tax is payable, but again atrelatively low rates. It is possible to keepyour money in QSuper once you havefinished working for the Governmentand defer paying that tax. In fact,products like the QSuper AllocatedPension account would allow you to dothis right through your retirement.

What are salarysacrifice superannuationcontributions?Salary sacrificing involves foregoing aportion of your pre-tax income inexchange for your employer paying anequivalent amount of pre-taxsuperannuation contributions intoyour superannuation account.

If you were to receive this money aspart of your salary you would pay taxat your marginal tax rate, which couldbe as high as 47% plus the Medicarelevy. However, by receiving it as anemployer contribution into super, themoney is only taxed at 15% (or up to

The Commonwealth Government is keen to encourage you to save for yourretirement by offering low tax rates, tax deductions and tax rebates for

superannuation. However, recent changes to taxation may prompt you to ask …

“Is super still a taxeffective investment?”The answer continues to be ‘yes’! QSuper Trustee Terri Hamilton looks

at some of the areas you should consider.

Terri Hamilton joined the QSuper Board of

Trustees in June 2000. She is the Managing

Director of MAP Funds Management and a

member of the Queensland Executive of the

Association of Superannuation Funds of

Australia. Terri has two young children aged

3 and 5 and enjoys being with her family,

distance running and gardening.

Terri Hamilton,QSuper Trustee

10


30% if you are subject to thesuperannuation surcharge). Of course,paying tax at entry means you maywish to review your contributions toensure you are getting the most out ofyour super. This is particularly the caseif you have a Defined Benefit account,as more contributions may be neededto maintain your multiple growth.

You should contact your employer tofind out if it is possible for you tosalary sacrifice in this way.

What is thesuperannuationsurcharge?This is an extra tax payable by highincome earners. If your 1999/2000income, including fringe benefits andyour employer’s contributions intoQSuper, exceeded $78,208, then youwill be charged up to an extra 15% taxon your employer’s contributions.

The debt is recorded by QSuper andis generally paid when you firstwithdraw money from your account.

How does GST affectyour super?The GST (Goods and Services Tax)came into effect on 1 July 2000. It is aconsumption tax that is currently set at10% of the final price of a purchase.However, this will have very littleimpact on your super.

Most importantly, supercontributions and benefit

payments are notsubject to GST.

Where the tax does have a minorimpact, however, is the small amountof GST superannuation funds likeQSuper have to pay when they buyservices or products. Because of specialcredits, this rate of tax is not thestandard 10%, but only 2.5%.

As a result, there will only be a slightimpact on administration fees chargedby QSuper in the longer term.

Take advantage of QSuper’sinvestment choice. Gaining

even an extra 1% on yourreturn over an entire career

could increase your

retirement benefit byas much as 30%.

3

“It didn’t take long for changes in fashion to happen ...and your retirement will happen too!”

11

So, is super still agood option after thesurcharge and reducedincome tax rates?Yes, it certainly is! The superannuationsurcharge does impact on the taxeffectiveness of super for high incomeearners. And, with the introduction on1 July 2000 of the GST, personalincome rates have fallen, reducing thegap between those rates andsuperannuation tax rates.

But, superannuation still offers taxconcessions, coupled with the ability todefer or eliminate lump sum tax byrolling over your money to an incomestream in retirement.

This means super remains one of themost effective investment elements inthe portfolio of most long-terminvestors. Even though the taxadvantages may have been reduced, inmost cases, you will still pay less tax onyour super investment than on anyother form of investment.��


QuestionS

The QSuper call centre took its one millionth call during the year.Here are the answers to some of the most commonly asked questions.Remember, for more information, a fact sheet is available on each question!

Commonly asked

Question 1Can I increasemy insurance?Yes! QSuper providesinsurance as part of yoursuperannuation package,and you can increase yourdeath and disability coverat any time. This extrainsurance is bought as unitsthat cost $1 each, per week($2.75 for Police Officers).For members age 35 andunder, each unit provides$50,000 of cover, however,the value of a unit reducesas you get older. You canbuy insurance worth up toone million dollars or, ifyou are a casual employee,up to half a million dollars.

Question 3When can I accessmy money?In most cases, anycontributions you madeinto super from your ownmoney, before 1 July 1999,can be accessed when youleave employment. Yourannual benefit statementshows this amount as a cashvalue. However, since thisdate, the FederalGovernment now requiresthat the contributions bothyou and your employermake, and the interest theyearn, stay in a super funduntil you permanentlyretire after reaching yourpreservation age. This is age55 for those born before1 July 1960, and increasesto 60 for those born after1 July 1964. However, insome cases, you can accessthis money earlier, such ason severe financial hardshipor compassionate grounds,or in the event of total andpermanent disabilityor death.

Question 4Can my spousebecome a QSupermember?Yes! Opening an accountfor your spouse has manyadvantages. Besides being afacility for people who arenot currently employedto use to build up theirretirement savings, this isalso a great vehicle for self-employed spouses to usefor their personal supercontributions (and claim atax deduction on thoseamounts). If your spouse isemployed and has superelsewhere, they can alsobenefit from having aQSuper account. BesidesQSuper’s low fees andexcellent returns, yourspouse can also gain accessto QSuper’s wide range ofproducts, such as anAllocated Pension account.And, by making acontribution for yourspouse, you may be eligiblefor a tax rebate of upto $540.

Question 2Can I pay moreinto my QSuperaccount?You certainly can!Voluntary contributions area great way to boost yoursuperannuation benefit,and there is no limit to theamount you can contributeeither regularly from yourpay, or as a lump sumdeposit. Even if youalready contribute at thestandard rate of your salary(usually 5%), you can havean extra deduction fromyour pay, added to youraccount. And, withQSuper investment choice,you can have a say in howthis money is invested.

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4Question 5I’ve got superelsewhere. ShouldI transfer it?

Yes! If you have super fromprevious jobs, it makessense to transfer all of yourmoney into QSuper. Notonly will it be easier to keeptrack of your money, butyou will save by not payingfees on each separateaccount. And, with our

easy transfer facility all youneed to do is fill out a formand we arrange thetransfers for you!

Question 6How do I get helpwhen I’m close toretirement?For many people, theirQSuper benefit will be thelargest sum of money theywill ever receive andknowing what to do is

critical. For this reason,QSuper runs pre-retirementseminars for membersapproaching retirement.Most QSuper members canclaim 2 days leave on fullpay to attend the seminarand are invited to bringalong a partner or friend atno cost to eitherparticipant. The seminarsare extremely popular andfeature eight industryprofessionals covering areasas diverse as tax, socialsecurity, financial planningand even health issues. �

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“I used to dreamof being a teacher ...eventually it happened”


Investing the money held by QSuper is arguably the most importantelement of the QSuper Board of Trustees’ activities. The Board hasestablished a specialist committee to provide advice in this area, and alsoworks closely with our investment manager, the Queensland InvestmentCorporation (QIC). Throughout the year, the Board monitors progressagainst investment objectives, maintains reserves and then sets creditingrates for the year passed. And, this year, the Board also announced measuresto let you choose an investment strategy for your own money!

1999/2000 crediting ratesThe following crediting rates, applied to accounts on a daily basis,have been declared:

Investing your moneyThe QSuper Board of Trustees is entrusted with the superannuation money of almost

400,000 members. Trustee John Thompson reports on the task of investingalmost $9 billion of your money.

Year Defined Benefit account State account Objective

CPI + 3.5%

Crediting rate

Gross Standard Voluntary Gross Resignation Preservationearning rate contributions contributions earnings

crediting rate

1999/2000 14.29% 13.35% 13.35% 14.18% 12.85% 13.25% 6.69%1998/1999 10.53% 10.35% 9.70% 10.51% 9.90% 10.30% 4.57%1997/1998 11.06% 10.85% 9.70% 11.04% 10.45% 10.85% 4.17%1996/1997 19.59% 19.45% 19.45% 19.08% 18.60% 19.00% 3.83%1995/1996 10.68% 10.50% 10.50% 11.20% 10.75% 11.15% 6.60%Compound

5 year average 13.18% 12.85% 12.48% 13.16% 12.47% 12.87% 5.16%

Year Accumulation account

Gross earning Crediting Objective:rate rate Cash + 2%

1999/2000 14.30% 12.00% 7.58%1998/1999 10.55% 9.75% 7.04%1997/1998 11.18% 10.00% 7.11%1996/1997 19.59% 17.20% 8.77%1995/1996 10.56% 10.50% 9.75%

Compound 13.18% 11.86% 8.04% 5 year average

John Thompson is the General Secretary

of the Queensland Council of Unions and

has been a QSuper Trustee since 1995.

A former plumber, he is a Board member of

the Queensland Performing Arts Trust and a

Director of WorkCover and Sunsuper. Away

from work John assists his daughter in

coaching a softball team and spends

time at the gym.

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John Thompson,QSuper Trustee


Defined Benefit State account: State account: Accumulationaccount resignation preservation account

Earning rate 14.29% 14.18% 14.18% 14.30%

Deduction for tax on 0.72% 0.72% 0.72% 1.43%investment earnings

Administration costs 0.20% 0.20% *

Transfers to/from n/a n/a n/a 0.86%reserves

Rounded crediting 13.35% 12.85% 13.25% 12.00%rate

How does your account work?

Defined Benefit and State accountsAs your final benefit is based on a multiple ofsalary, investment performance and creditingrates do not directly affect your defined benefiton retirement. If you have a State account, havemade voluntary contributions or rolled moneyinto QSuper from other funds, the crediting ratebecomes important as you will also have moneyin an Accumulation account, growing in linewith your chosen investment strategy.

Accumulation accountsYour account works just like a traditional savingsaccount, in that your contributions grow in linewith the investment performance of yourchosen strategy.

Your crediting rate is calculated in the following manner:

How is your money invested?Over the long term, the Board considers that a mix of 70% growth assets(shares and property) and 30% defensive assets (fixed interest and cash) isappropriate for the investment objectives of most QSuper members. Ofcourse from 1 July 2000, you can choose your own investment strategyfor your Accumulation account. See page 8 for more details on thefive investment options you can use to select a strategy that you’recomfortable with!

QSuper’s benchmark allocations are shown in column A of the tablebelow. QIC however, is permitted to actively manage the portfolio withinagreed limits, shown in column B, to take advantage of marketopportunities.

Asset class Benchmark Portfolio Actual Actualportfolio allocation portfolio portfolioallocation range allocation allocation

A B 30/06/1999 30/06/2000

Australian shares 38% 33% - 43% 38.4% 37.9%

International shares 22% 17% - 27% 22.1% 21.9%

Property 10% 5% - 15% 11.7% 12.2%

Australian fixed interest 16% 11% - 21% 15.7% 15.7%

International fixed 8% 3% - 13% 7.6% 6.4% interest

Cash 6% 2% - 17% 4.5% 5.9%

Investment objectives1999/2000

Defined Benefit and State accounts

“To earn a long-term average investmentreturn, over rolling 5 year periods, of at

least CPI plus 3.5% per annum,after tax and fees.”*

Accumulation account

“To earn an average investment return,over rolling 5 year periods, of cash plus

2% before tax and after fees.”

*From 1 July 2000 this objective has been alteredto “CPI plus 4.5% per annum, after tax and fees”.

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0.20% + 0.40%DEATH & DISABILITY

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* Fees are deducted from member accounts on a weekly basis - members with Accumulation accounts were charged 60 centsper week for administration expenses.

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* Includes a currency effect

1995/1996 1996/1997 1997/1998 1998/1999 1999/2000 Average

Australian shares 13.8% 27.2% 1.9% 17.2% 16.6% 15.3%

International shares 9.8%* 24.4%* 37.5%* 13.1% 14.6% 19.9%

Property 10.4% 9.4% 10.5% 9.6% 10.4% 10.1%

Australian fixed interest 9.5% 16.8% 11.0% 3.7% 6.5% 9.5%

International fixed interest -7.2% 6.7%* 27.5%* 5.2% 5.2% 7.5%

Cash 7.9% 6.9% 5.2% 5.2% 5.6% 6.2%

RESERVES 30 June 30 June 30 June1998 1999 2000

(est.)

Investment reserve $53.61m $64.39m $81.8m(7.2%) (7.2%) (7.2%)

Tax reserve $19.48m $23.87m $29.3m

Other reserves* $8.98m $12.85m $18.4m

* Including the self insurance reserve and the administration reserve.

Asset sector returnsYour funds are invested acrossa range of investment types, or‘asset classes’. The table to theleft shows how individualasset classes have contributedto the overall investmentreturns for QSuper membersin recent years.

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This shows the variation between different classes in the same year, and alsoyear to year variations for each individual class, illustrating the benefits ofdiversifying investments across a range of asset classes as weaker returns canbe offset by stronger returns from other sectors during that period.

Over the longer term, assets like shares and property are expected tooutperform assets like fixed interest and cash, however, they are also morevolatile. To obtain a higher return over the long term, you must generallyaccept a greater risk of a low, or negative, return in the short term.

Reserves – how do they work?The Board maintains an investment reserve for the Accumulation account.This means that, in good years, a portion of earnings is kept in the reserve tobe distributed in later years when earnings might be low or negative. TheBoard aims for the reserve to be around 10% of all members’ accounts, butit can vary between 0% and 15%.

Other reserves are also kept, primarily in respect of taxation and death anddisability insurance liabilities. All reserves are invested in the same fashion asthe remainder of the account’s monies. �

Exempt fund statusQSuper is classed as an exempt public sector superannuation

scheme under the Commonwealth Government’s Superannuation Industry(Supervision) legislation (SIS) and is treated as a complying superannuation

fund. However, in line with an agreement between all States and theCommonwealth, QSuper complies with the principles of the

Commonwealth’s retirement incomes policy. In addition, the QueenslandGovernment and the Board of Trustees have determined that, in

all ways possible, QSuper will comply with SIS.

16


Bonds – Issued by Governments andcorporations (often banks), these are like an‘IOU’. In return for ‘lending’ their money, theinvestor receives a fixed rate of interest, as wellas their original money back at the maturity date.

Short-term money market –Also called the overnight money market, this is amarket open to large financial institutions thatwish to either lend or borrow money for shortperiods, generally between one day andone year.

Equities – Another term for shares, orstocks, which are simply a share of theownership of a company. Shares can increaseor decrease in price and often provide incomeby way of a dividend, which can be eitherfranked (tax already paid by the company) orunfranked (no tax yet paid).

what does it all mean?Investment jargon ...

ASX – The Australian Stock Exchange, whichis the actual place where shares are traded.

Sectors – Companies listed on the ASX aredivided into categories, i.e. resources andindustrials which are broken down further intoareas like mining, transport, banking, andtelcos (telecommunications).

Futures – Contracts to buy or sell shares,bonds and even actual commodities (wool,wheat, minerals) at agreed future dates andprices. Originally, futures were established tooffset the seasonality of the market for primaryproducts, where most products all becameavailable at once, but for limited periods.

Nasdaq – Originally known as the NationalAssociation of Securities Dealers AutomatedQuotation system, this has become the world’ssecond largest stock market and consistsmainly of technology stocks.

Index/Indices – Indicators of price movements ininvestment markets.

All Ords – The Standard & Poors/ASX All Ordinaries PriceIndex, which is a measure of the overall value of majorshares listed on the ASX. A new series of indices, haverecently been introduced, such as the S&P/ASX 200 whichmeasures the leading 200 companies.

The other major indices of various international stock

exchanges are:

Dow Jones - New York Stock Exchange

(NYSE or Wall Street). The world’s largest stock market.

FTSE – (pronounced “foot-see”) London

Hang Seng - Hong Kong

Nikkei – Tokyo

Dax – Frankfurt

��

Ever wondered what newsreaders are talking about during the financial update of a newsbulletin? Well the secret’s out, you don’t need an economics degree to understand them ...

just use this guide to investment jargon!

17QSuper 2000 Annual report to members


Changes to QSuper rules

New options for QSuper membersA range of new options for coreQueensland public sector employees,was phased in between 1 May and1 July 2000. Employees of some non-core agencies have also been offered anextended range of options, generallyfrom these dates. Amendments havebeen made to the QSuper rules toaccommodate the introduction of thesenew initiatives.

Rolling outMembers can now transfer or ‘roll-out’money they have previously rolled intoQSuper from other funds. Previously,these amounts could not be rolled outuntil a member had left their QSuperemployer.

Access to benefits at age 70Members with Defined Benefit andAccumulation accounts can now accesstheir superannuation entitlements atage 70, even if they haven’t leftemployment.

SurchargeAmendments to the QSuper Actwere made to ensure the cost of thesuperannuation surcharge is passed toindividual members (see page 11).

Legislation news

Family Law Amendment

(Superannuation) Bill 2000If passed, this Bill, introduced into theCommonwealth Parliament, willamend the Family Law Act 1975 toenable superannuation interests to bedivided on marriage breakdown. Theamendments will override other lawsand trust deeds that prevent thedivision of superannuation.

Parties will be able to specify howsuper will be divided on marriagebreakdown. The agreement can bemade before, during or after themarriage. The proposed changes allowa superannuation interest to be split,however, these amounts will be subjectto preservation requirements.Alternatively, a superannuation interestmay be ‘flagged’, preventing fundtrustees from making payment untilfurther notice.

Tax reformsThe QSuper Board of Trustees hasexamined the impact of 1 July 2000tax reforms (including the GST) andhas ensured QSuper is compliant withCommonwealth legislation (see page 11).

Helen Ringrose,QSuper Trustee

Helen Ringrose is Deputy Director-General of the

Department of the Premier and Cabinet. She has

previously held senior positions with the Brisbane

City Council and Victorian State Government.

Helen has been a Director of a number of Boards and

was previously a Trustee of Brisbane City Council’s

“CitySuper”. She was appointed a QSuper Trustee

in June 2000.

Superchanges

QSuper Trustee Helen Ringrose reviews changesto both Fund rules and legislation and how these

may affect members.

Corporate Law Economic Reform

Programme (CLERP) No.6The Commonwealth Governmentreleased the Financial Services ReformBill in February 2000, which impactson the licensing and disclosure offinancial products. It is likely QSuperwill be exempt from the requirements,however, will be expected to complywith the spirit of the legislation.

Choice of fund updateDebate continues on the preferredmodel for choice of fund legislation.Under the proposed legislation,employers contributing to QSuper aredeemed to comply with the choice offund requirements.

“It didn’t take long for changes inmusic to happen ... and yourretirement will happen to!”

18

PRODUCTION

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Financing your future is an easy to readquarterly newsletter designed toprovide valuable information toQSuper members on a range of issuesincluding:

� financial planning;

� investment;

� taxation;

� developments in superannuation;and

� retirement and lifestyle issues.

��

FUND ACCOUNTSThis summary of the Fund’s financial position was prepared before the audit of the

accounts, using information available at the time of publication. The auditedfinancial statements and auditor’s report will be available from

QSuper on request in November 2000.

FINANCIAL HIGHLIGHTS

AND SUMMARY

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TRUSTEESMeeting Attendances

Financing your future aims to give youa range of up to date information tohelp you finance your future withconfidence.

If you would like a free subscription toFinancing your future, simply completethe coupon and either mail or fax it tothe address or number indicated.Or if you prefer, you canemail your details [email protected]

MEMBER REPRESENTATIVES:(Nominated by combined public sector unions committee)

Merv Vining 13Australian Workers’ UnionBill Ludwig (Deputy)

Steve Ryan 13Queensland Teachers’ UnionJeff Backen (Deputy)

Merv Bainbridge (Deputy) 13representing Gary WilkinsonQueensland Police Union of Employees

Karen Peut 13Queensland Public Sector UnionAlex Scott (Deputy)

John Thompson 12Queensland Council of UnionsGrace Grace (Deputy)

EMPLOYER REPRESENTATIVES:(Nominated by the Queensland Government)

Glenn Poole (Deputy) 13representing Gerard BradleyUnder Treasurer and Chairman of the Board

Bob Scheuber 11Queensland RailMichael Goode (Deputy)

Mary Montgomery 12Queensland Health

Merv Lawrence # 12Office of the Public Service CommissionerJohn Walsh (Deputy)

Christine Maher # 12Corrs Chambers Westgarth LawyersRosemary Vilgan (Deputy)

Terri Hamilton* 1Medical & Associate Professions Funds ManagementRosemary Vilgan (Deputy)

Helen Ringrose* 1Department of the Premier and CabinetCathi Taylor (Deputy)

# Served until 31 May 2000.

*Appointed 1 June 2000.

Inflows

$3,059,935,000

Outflows

$789,351,000QSuper members’ funds as at 1 July 1999

$6,681,186,000

Investment income $ 1,064,890,000

Employer contributions $ 1,213,301,000

Employer share $ 263,674,000of benefits paid

Member contributions $ 384,301,000

Transfers in $ 131,825,000

Other income $ 1,944,000

Benefits paid $ 686,731,000

Administration expenses $ 18,631,000

Income tax expense $ 82,095,000

Other expenses $ 1,894,000

TOTAL ASSETS $9,036,209,000Investments $9,021,876,000Other assets $14,333,000

QSuper members’ funds

as at 30 June 2000

$8,951,770,000(Net assets available to pay benefits

at 30 June 2000.)

TOTAL LIABILITIES $84,439,000Provision for fund tax $41,240,000Provision for deferredincome tax $43,115,000Other liabilities $84,000

19


Reach QSuper all day and nightFact sheetsfrom Super Scoop

Throughout Super Scoop, we haveused the icon above to show there is afact sheet available. You can get it bycalling QSuper, using option 1 andquoting the document number(s) you want.

MENU (LIST OF ALL DOCUMENTS) 999

Comparison of Defined Benefit andAccumulation accounts 407

Investment choice book 907

Unit prices 302

Tax explanation 401

Salary sacrificing 008

Superannuation surcharge 404

Extra insurance cover 509

Voluntary contributions 103

Voluntary contributions for members withpreserved accounts 102

Early access to eligible benefits 417

Spouse accounts 408

Rolling over other super to QSuper 604

Retirement preparation seminars 813

Balanced with Reserves investment option 426

4Talk to an Information Officer

Monday to Thursday8.30 a.m. to 5.00 p.m.

Friday9.00 a.m. to 5.00 p.m.

QSUPER WEBSITEVisit the new QSuper website at

www.qsuper.qld.gov.au

Jam-packed with heaps of information, factsheets and books to download PLUS

a great new benefit calculator!

www.qsuper.qld.gov.au

[email protected] Box 200BRISBANE Q 4001

(07) 3237 11181300 360 750for the cost of a local call

David Longland Building81 George StreetBRISBANE Q 4000

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Phone 1300 360 750

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3Listen to the latest

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During Septemberand October, QSuper willhave Information Officers

available to help youfrom 8.00 a.m.to 8.00 p.m.

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Documents

QSuper 2000 Annual report to members · pension anyway? As at 1 July 2000 the weekly age pension is $196.25 for a single person and $162.85 each for a couple. The figure is set at