Product disclosure statementThird edition, issued on 16 December 2011

CSS Commonwealth Superannuation Scheme

ReachWe understand your employment conditions and aim to deliver consistent returns and useful services, all at a competitive cost to you.

What you should know upfrontWhat is this product disclosure statement for?

This document provides important information about the features, benefits, risk and cost of investing your super in the Commonwealth Superannuation Scheme (‘CSS’ or ‘the Fund’). It will help you compare the features of the CSS with those of other funds.

Who should read this product disclosure statement?

It is advisable that all CSS members read this document.

Membership of the CSS closed to new members from 1 July 1990. However, if you are a CSS deferred benefit member and you return to eligible employment you may be able to rejoin the CSS as a contributing member, provided your new employer participates in the CSS and you meet the eligibility requirements. Once you re-enter the CSS, you are again considered to be a contributing member and your deferred membership ceases to apply. If this circumstance applies to you, you should read this document as if you were a contributing member.

Membership of the CSS is also open to former spouses of CSS members who are eligible to become CSS associate members as the result of a family law settlement which has split a member’s CSS entitlement.

The offer to which this document relates is available only to persons eligible to become a member of the CSS under the Superannuation Act 1976 who receive this document (electronically or otherwise) in Australia.

If you are not sure whether you are eligible to join the CSS, please ask your employer or call us on 1300 000 277.

Who prepared this product disclosure statement?

This document was prepared and issued on 16 December 2011 by Commonwealth Superannuation Corporation (CSC) (‘CSC’ or ‘the Trustee’ or ‘we’ or ‘us’) – ABN 48 882 817 243, AFSL 238069, RSE Licence No L0001397.

CSC is the issuer of membership interests in the CSS – ABN 19 415 776 361, RSE R1004649 and SPIN CMS0100AU.

This document contains only general information which may change

Any information in this document has been prepared without taking into account your personal objectives, financial situation or needs. Because of this, you should, before acting on any advice in this document, consider the appropriateness of the advice, having regard to your objectives, financial

situation or needs. You may wish to consult a licensed professional, such as a financial adviser or accountant, to do this.

Information in this document may change from time to time

Information that is not materially adverse may be updated and made available to you at the Our latest news area on our website www.css.gov.au

Alternatively you can call us on 1300 000 277 and ask for a paper copy to be sent to you free of charge.

Please exercise your own judgment with respect to any offer being made by a third party

Neither CSC nor the Australian Government takes any responsibility for the services or guarantees the performance of any product provided by third parties such as Members Equity Bank (‘ME’). You are under no obligation to use the services of ME and should always compare financial products to find one which best meets your personal objectives, financial situation and needs.

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CSSYour quick guide to the CSS

It’s all about you

The CSS was established to meet the superannuation needs of Australian Government employees.

Our organisation represents over 30 years experience and we are always at work for you, helping you make the most of your financial future.

The following is a summary of key considerations which lets you see, in brief, how the CSS stacks up. Further information can be found at www.css.gov.au or by calling us on 1300 000 277.

What you should consider How the CSS stacks up

1 Investment performance In the CSS, your member and productivity components are affected by investment earnings. If you leave as an age retiree, your CPI-indexed pension, the most significant part of your benefit, is not affected by investment performance because it is determined by your final salary for superannuation purposes, length of membership and age at exit. However, if you are planning to resign and preserve your benefit before age 55, your CPI-indexed pension will be affected by investment returns as it is based on your basic contributions and Fund earnings on the date it is processed.

Any super co-contributions and money you have transferred from other superannuation funds will be affected by Fund performance.

For the latest performance information visit our website www.css.gov.au. Select Investments and then Investment performance.

2 Fees, charges and commissions

As a member of the CSS you don’t pay any administration fees or member transaction costs – these costs are covered by your employer.

The Fund deducts taxes and investment management costs from investment earnings before determining Fund earning rates.

The CSS pays no commissions to financial planners.

There may be some fees for services such as reconsideration of a decision, or a family law information request, however, these are payable at the time and not deducted from your account.

3 Level of contribution by your employer

This is an amount financed by your employer and calculated when you leave. This is generally payable to you as a CPI-indexed pension.

4 Your contribution level In the CSS, you can decide how much you contribute – either 5% or more of your salary or you can choose not to contribute at all (0%). There is no upper limit on the amount of supplementary contributions (any amount over 5%) that you can pay and you can change your contribution rate at any time to suit your financial needs.

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5 Investment choice As a member of the CSS you have the option of choosing how your super is invested. We offer you two options – the Default Fund or a Cash Investment Option. See pages 24 to 26 for further information on these options.

6 Insurance As a CSS member, you receive automatic permanent invalidity or death cover at no extra cost. Your benefit will generally be based on your entitlement had you worked to maximum retirement age (generally age 65).

There are conditions that apply to the amount or type of benefit you receive.

7 Fund administration The CSS uses the administration services of ComSuper.

8 Benefit options You can take your CSS retirement benefit as a pension or a combination of pension and lump sum. There are some limited circumstances where you can take your entire benefit as a lump sum.

9 Information and general advice when you need it

We run an award-winning member education program. You have online access to benefit estimates and other information about the CSS at any time. You can also access information and assistance via email, phone, fax and letter, whichever is most convenient for you.

10 Compliance with regulatory framework

The CSS is established under the Superannuation Act 1976 and CSC is licensed under the Corporations Act 2001 and regulated by the Superannuation Industry (Supervision) Act 1993 (SIS Act).

11 Understanding your employment conditions

We work closely with employers for the benefit of members. Our organisation has been providing superannuation services and products since 1976.

12 Additional services As a CSS member, you have access to home loans provided by Members Equity Bank (ME).

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Contents

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Your quick guide to the CSS 1

How superannuation works 5

About the CSS 9How the CSS works 10

Welcome 15Welcome to the CSS 16Family law and your super 16

Contributions 19Contributing and transferring super 20

Investments 23How do investment returns affectyour benefit? 24Investment objectives and strategies 25

Death and invalidity cover 27How you are covered 28

Withdrawing your CSS super 35How can my membership end? 36

Fees, taxes and other costs 43Fees and other costs 44Tax and your super 47

Contacting us and other important information 51Your privacy 52Managing your super online 52Information, advice, complaints and contacting us 52Additional services 53

Reach

How superannuation works

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FIND OUT ABOUT:

How superannuation works

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How superannuation works

Super is a long-term way to save for your retirement. Depending on when you choose to retire, your retirement income may need to last for 20 years or more.

Super funds pool members’ contributions and invest them for the benefit of members. There are many different types of funds in Australia, with different benefits, risks and costs. Before you choose you should compare options and join a fund that will suit your individual personal objectives, financial situation and needs.

You will generally have a choice of how you want to take your benefit, either as a lump sum, a pension, or a combination of both, but there are conditions to withdrawing your super. Benefits can also be paid if you die or become totally and permanently disabled.

Although your super is invested on your behalf by your super fund, there are some decisions only you can make such as how much you need to contribute to ensure your retirement income meets your financial needs in the future.

Visit www.css.gov.au and select Member Services Online* to register your email.* You will need an Access Number to use this service. If you do not have an Access Number call us on 1300 000 277.

Who said it was hard to get information on super?

You can email any queries to members@css.gov.au

AND

subscribe to our email news service for updates on your super and to receive Annual Member Statements.

@Super made super easy with email

Experience

About the CSS

The CSS is managed by CSC. CSC represents over 30 years experience working for Australian Government employees and employers.

You can be sure that we will be doing all we can to help you make the most of your financial future through risk assessed investment, keeping you informed and helping you develop the skills needed to manage your super with confidence.

FIND OUT ABOUT:

How the CSS works and what you can expect from us

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How the CSS works

Who looks after the CSS?

The CSS was established on 1 July 1976 by the Superannuation Act 1976, exclusively for employees of the Australian Government and other participating employers. As at the end of November 2011, the CSS comprised more than $4.2 billion for over 23,000 members.

The CSS is managed by CSC. CSC is licensed under the Corporations Act 2001 and the Superannuation Industry (Supervision) Act 1993 (SIS Act).

CSC is the Trustee of four regulated superannuation schemes; the CSS, the Public Sector Superannuation Scheme (PSS), the Public Sector Superannuation accumulation plan (PSSap), the Military Superannuation and Benefits Scheme (MSBS) and five exempt public sector schemes.

CSC is responsible for all aspects of the CSS, including investment strategy, administration and member communications.

CSC is supported by an administrator, a custodian and other specialist service providers, including leading Australian and international investment managers.

What the CSS provides

The CSS is a hybrid super fund. This means that it’s a combination of two types of funds - a defined benefit fund and an accumulation fund. In a defined benefit fund, member benefits are ‘defined’ by a formula whereas in an accumulation fund, member benefits are determined by the value of contributions and investment returns. In the CSS, the defined benefit part is generally the CPI-indexed pension option which is defined by a formula based on your final super salary, your length of contributory service and your age at exit. If you defer your benefit, your pension will be defined by a formula based on your basic contributions and earnings.

The accumulation part is your contributions together with Fund earnings (known as the ‘member component’) and the productivity component (explained in Table 1 on page 11). You can generally take these components as a lump sum in combination with a CPI-indexed pension, or use them to purchase a non-indexed pension.

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Are you an employee of a Government Business Enterprise (GBE)?

For most members, the productivity component is paid by the employer into the CSS Fund and therefore becomes a benefit payable from the Fund. However, some GBEs may pay the productivity component to another super fund. In this case, the productivity benefit is paid to you by the other fund and does not form part of your CSS benefit. Information about the productivity component in this document does not apply to employees of GBEs which pay this amount into another super fund. If you are an employee of a GBE simply ask your employer to which fund the productivity component is paid. You will need to contact that fund if you require any further information about your productivity component.

What makes up a CSS retirement benefit?

A CSS retirement benefit can generally be taken as a pension or a combination of a pension and lump sum and is made up of three main components.

Table 1: Your CSS retirement benefit components

Component What is it? How is it paid?

1 Member component This is your fortnightly contributions together with Fund earnings. Your contributions consist of your basic contributions and any supplementary contributions which you may have paid.

We call this a taxed component because it is money paid from your after-tax salary directly into the CSS to be invested.

This component is generally paid as a lump sum or a non-indexed pension.

However, any supplementary contributions are paid as a lump sum if retiring on invalidity grounds or death.

2 Productivity component

This is your employer’s fortnightly contributions together with Fund earnings.

We call this a taxed component because it includes money paid from your before-tax salary directly into the CSS to be invested. Any productivity component accrued before 1 July 1990 is treated as an untaxed component.

Depending on how you exit the CSS and the benefit option you choose, this component can generally be paid as a lump sum or a non-indexed pension.

If the component is paid as a lump sum, it may need to be paid into a rollover fund.

3 Employer-financed component

This is an amount also financed by your employer and calculated only when you leave.

We call this an untaxed component because it is paid from the Consolidated Revenue Fund (CRF), not the CSS. For tax purposes it is treated as coming from an untaxed source.

This component is generally paid as a CPI-indexed pension.

However, this amount may be paid as a lump sum under the following circumstances:

> if you are involuntarily retired (retrenched); or

> you are an ex-Provident Account member and aged 60 or over when you claim your benefit; or

> where restrictions on benefits apply to your invalidity retirement.

Your CSS benefit may also include any amounts that you have transferred from other super funds and any super co-contributions. See pages 20 and 21 to see how these amounts are treated in the CSS.

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Governance and risk management

Our legislation requires us to act in good faith, with prudence and in the members’ best interests in respect of the investment and administration of the CSS.

The Auditor-General is required to audit the CSS at least once each financial year.

Our investment governance focuses on managing risk and is driven by our primary investment objective to maximise long-term real return within certain risk constraints.

Day-to-day investment decisions are made by professional investment managers within agreed investment parameters which are regularly reviewed.

If you are interested in additional information on our governance program, go to About us at www.css.gov.au

Managing risk

Super, like any investment, has risks. For example, super laws, including those relating to the CSS, may change and asset classes may perform differently from time to time. Table 2 on page 13 shows significant risks you should know about.

Ways we manage risk include:

> diversification across asset classes, individual assets, investment styles and investment managers

> continuous research and analysis

> systematic compliance and fraud control programs

> continuous monitoring of market performance, investment manager performance and relevant legislation.

We use a number of governance advisory services to help manage investment governance in Australia and our right to cast proxy votes in the Australian and international companies in which we invest.

We do not take labour standards or environmental, social or ethical considerations into account when making decisions to buy, hold or sell investments.

Our responsibility, your responsibility

The Superannuation Act 1976 and Regulations, together with this document and superannuation law, govern our relationship with you. They may change from time to time.

We are responsible for managing the Fund’s investment strategy, administration and keeping you informed about your super with the CSS. We are also responsible for responding to your enquiries, complaints and claims.

You are responsible for keeping us informed about how we can contact you and making decisions about your super, such as how much you need to contribute to ensure you have sufficient money for retirement.

Under current law, a successful claim against CSC or any of its directors, relating to the performance of their functions under the law, will not affect the balance of your CSS super account.

Do I have investment choice?

As a member of the CSS you have the option of choosing how your super is invested. We offer you two options:

> the Default Fund

> a Cash Investment Option.

For more information see Table 2 on page 13 and pages 24 to 26.

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CSSSummary of risk

This table provides a summary of risks that may affect the CSS Default Fund and Cash Investment Option.

Table 2: Significant risks that may affect the Fund

Risk Description

Inflation Inflation may exceed the return on investment.

Asset investment risk

Individual assets we buy can (and do) fall in value for many reasons, such as changes in the internal operations or management of a fund or company we invest in, or in its business environment.

Market risk Economic, technological, political or legal conditions, and even market sentiment, can (and do) change, and this can affect the value of the investments in the fund.

Interest rate risk Changes in interest rates can have a positive or negative impact directly or indirectly on investment value or returns.

Currency risk We invest in other countries and if their currencies change in value relative to the Australian dollar, the value of the investment can change.

Derivatives risk We may use derivatives to reduce risk or gain exposure to investment markets when we think it appropriate. Risks associated with these derivatives include the value of the derivative failing to move in line with the underlying asset, market or index, and counterparty risk – the risk that the other party to the derivative contract cannot meet its obligations under the contract.

Fund risk Risks particular to the fund include that it could cease operation, that fraud against CSC could occur, Trustee restructure, directors could be replaced and that our investment professionals could change.

Super laws Changes are frequently made to superannuation law and may affect your investment and your ability to access it. For example, under the existing law, your super benefit may be split by agreement or by court order with your spouse if you and your spouse permanently separate.

Changes to tax Changes can occur to taxes on investments or super generally, which may affect the value of your investment or benefit.

Liquidity risk Assets that we invest in can become difficult to trade under certain market conditions.

The CSS has a nationwide education program that will help you gain the knowledge and skills you need to manage your super confidently.

It’s FREE and convenient!We bring the information to you at your place of work through educational workshops and support sessions for your employer.

Make the most of your financial future – visit www.css.gov.au to find out how.

CSS at work for you

Welcome

If you have a CSS deferred benefit, and have returned to eligible employment, we are pleased to welcome you back to contributory membership.

There may have been some changes to the CSS since you last contributed, so it is important to read this document as if you were a new member.

If you have become an associate member of the CSS as the result of a family law split, we welcome you to the CSS. It is important to note, however, that not all of the information in this document will apply to associate members.

FIND OUT ABOUT:

Returning to the CSS

Associate membership

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Welcome to the CSS

Since 1 July 1990 new membership of the CSS has ceased.

If you are a CSS deferred benefit member and you return to eligible employment before age 65, you can return to the CSS as a contributing member, provided your new employer participates in the CSS and you meet eligibility requirements.

If you re-enter the workforce on a full-time or part-time ongoing basis with an Australian Government employer, you will again become a contributing member of the CSS. Your entitlement to a CSS deferred benefit will cease from the date of your reappointment. Please note: If you are approaching age 55 and are considering employment with the Australian Government on an on-going basis there may be an impact on your CSS deferred benefit. Please call us on 1300 000 277 to see how your benefit might be impacted.

If you re-enter the workforce on a full-time non-ongoing basis with an eligible Australian Government employer who participates in the CSS, your entitlement to a CSS deferred benefit will not cease unless you formally elect to rejoin the CSS.

If you re-enter the workforce on a casual or part-time non-ongoing basis with an eligible Australian Government employer who participates in the CSS, your entitlement to CSS deferred benefits will not cease as you are not eligible to rejoin the CSS.

Family law and your super

Following a marriage or de facto relationship breakdown, it is possible for part of your CSS benefit entitlement to be used to create a separate superannuation interest for your former spouse or partner. The Family Law Act 1975 allows superannuation to be split on relationship breakdown either by a court order or a superannuation agreement between the parties to settle their affairs.

If you joined the CSS as a result of a Family Court splitting order, you are described in this document as an ‘associate member’. There are some differences between your interest and the features of CSS that apply to other members. The key differences from a contributing member are:

> you are not able to make contributions

> your benefit is not calculated in the same way as a contributing or deferred benefit member.

Under the legislation governing the CSS, once the Trustee has received a court order or a superannuation agreement (‘splitting order’):

> Your benefit entitlement may be split and a separate interest set up in the CSS for your former spouse or partner, who becomes an associate member of the CSS

> The benefit entitlement and any interest set up for your former spouse or partner will accrue separately or, if you are already receiving a CSS pension, will be paid separately.

A benefit may be payable to your former spouse or partner immediately if you are already receiving a CSS pension. In this case, your pension will be reduced. However, if you are a spouse or partner of a former member receiving a reversionary pension, the component that relates to your eligible children will not be reduced. If a reversionary pension becomes payable directly to eligible children or partially dependant children, this reversionary pension will also not be reduced (see Withdrawing your CSS super on page 35).

An associate member is eligible to claim a benefit from the date they reach preservation age and retires or in other situations such as death or invalidity subject to certain conditions being met.

The circumstances and application of superannuation splitting laws vary on a case by case basis, so please call us for more information if this occurs. For more information see Family law and splitting super: how it’s done and what happens next available on our website www.css.gov.au. You can also access further information about Family law and your super at www.css.gov.au under About the CSS.

*Associate members and members whose benefit has been subject to a family law split cannot use this service. However if you do require more information about your membership please call us on 1300 000 277.

Take control of your super with Member Services Online at www.css.gov.au

It’s simple!Simply call us on 1300 000 277 and we will provide you with an online Access Number. This will give you secure online access to your CSS account, so you can:

> use the i-Estimator to project your potential final benefit*

> view and print your Member Statement

> update your address

> choose how you want to receive news about your super

> pay surcharge and leave without pay (LWOP) contributions via BPAY.

Get online and get in control

Achieve

Contributions

FIND OUT ABOUT:

What your employer contributes

How you can build super with member contributions and transfers

What are the restrictions on contributions

How you may benefit from the super co-contribution

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Making contributions to your super is important and there are a number of ways to do this. First, your employer must make contributions to your CSS account on your behalf.

You may also make member contributions and if you are contributing to the CSS you can also transfer super with other funds to your CSS super account. It is vital that you provide us with your tax file number so that we are able to accept your contributions.

Remember, contributions are important because your retirement income may have to last 20 years or more.

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Contributing and transferring super

What your employer contributes

Your employer makes contributions to your account in two different ways:

1. A fortnightly contribution – the productivity component

2. An employer component that is calculated when you leave the CSS and claim a benefit.

Your productivity component is paid fortnightly and the amount is based on your super salary.

Your employer component is payable when you leave the CSS and claim a benefit. This amount is generally paid as a CPI-indexed pension.

Employer productivity contributions are classed as concessional contributions. A cap also applies to concessional contributions across all your super funds.

The cap on concessional contributions is:

> $25,000 per year; or

> for members aged 50 or over, a transitional limit of $50,000 per year for three years (financial year 2009/10 to 2011/12).

Contributions above this cap will be taxed at the top marginal tax rate plus the Medicare Levy and will also count towards the non-concessional contributions cap.

What you contribute

In the CSS you can choose to pay basic contributions of 5%, supplementary contributions (any amount over 5%), or make no contributions. Basic and supplementary contributions are affected by Fund earnings. Supplementary contributions can be nominated as a percentage (doesn’t have to be a whole percentage) of your super salary or as a dollar amount.

Supplementary contributions can also be a one-off contribution.

You may (except in limited cases) choose to make contributions of 0%. If you make such an election your contributory service will not be affected, however, it can affect any future lump sum benefits and/or non-indexed pensions. It can also affect indexed pensions if you intend taking your benefit as a deferred pension on retirement.

For tax purposes, your member contributions (including your basic and supplementary contributions) are classed as non-concessional contributions.

Non-concessional contributions to the CSS are not subject to tax in the Fund if these contributions, together with any other non-concessional contributions you make to any other fund, do not exceed the following amounts:

> $150,000 per year; or

> $450,000 over three years for members under 65. For example, $300,000 in year one, $100,000 in year two and $50,000 in year three.

Contributions over these amounts will be taxed at the top marginal tax rate, plus the Medicare Levy. See Fees, taxes and other costs on page 43 for more information.

You should make sure that we have your tax file number (TFN). Please take a look at your last Member Statement to see if your TFN is recorded. We need your TFN to be able to accept your member contributions. If we don’t have your TFN your productivity contributions will be taxed at the top marginal tax rate and you may pay a higher rate of tax when you withdraw your benefit.

Your super salary

Your super salary is generally your basic salary plus any recognised allowances at your last birthday. Additional payments such as overtime, accommodation or travel are not counted.

Transferring super from other funds

Contributing members may be able to transfer, or rollover, money from other super funds, into the CSS. If you do transfer money in, there are conditions such as:

> you generally cannot take this amount out of the CSS until you cease CSS membership,

> you cannot convert this amount into a CSS pension, and

> the amount which you transferred will be adjusted with Fund earning rates until the benefit is claimed.

Australian Government super co-contribution

In some cases, the government will make a contribution for people on a total income that falls between the super co-contribution income thresholds and who meet all other eligibility requirements (visit www.ato.gov.au for more information).

Member contributions deducted from your after-tax salary automatically count towards the super co-contribution.

Any super co-contribution amount received by the CSS is affected by Fund earning rates and the amount must be paid as a lump sum at retirement. It will not receive any additional employer benefit and cannot be used to purchase a pension upon retirement.

For more information about the super co-contribution, visit the ATO website www.ato.gov.au or refer to The facts about super co-contributions at www.css.gov.au or call us on 1300 000 277.

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Investments

While you’re working for others, our job is to help you build your means for retirement. We do this through prudent investment strategies and by providing information that assists you to make well-informed decisions about your super.

FIND OUT ABOUT:

How investment returns affect your benefit

Investment objectives and strategies

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How do investment returns affect your benefit?

If you are a contributing member, the member and productivity components of your benefit are affected by Fund performance. Any money you have transferred from other funds will also be affected. Positive or negative earnings will be applied to your account in line with investment performance. The rate of earnings will depend on whether you are in the Default Fund or the Cash Investment Option.

However, if you leave as an age retiree, your CPI-indexed pension, which is generally the most significant part of your benefit, is not affected by investment performance because it is determined by your final super salary, length of membership and your age at exit.

Please note: if you are considering resigning prior to your 55th birthday and deferring your benefit in the CSS, take particular note of the information provided for deferred benefit members.

If you are a deferred benefit member, the major portion of your retirement benefit from the CSS is a CPI-indexed pension. For deferred benefit members, the calculation of this pension is based on your basic contributions and Fund earnings. Positive or negative earnings will be applied to your account

in line with investment performance. The earnings will depend on whether you are in the Default Fund or the Cash Investment Option.

The remainder of your benefit (that is, the lump sum component or the amount available for conversion to non-indexed pension) may also be affected by Fund earnings. Positive or negative earnings will be applied to your account in line with investment performance. The earnings will depend on whether you are in the Default Fund or the Cash Investment Option.

If you are an associate member, the taxed components (see Table 1 on page 11) of your benefit are affected by investment performance. Positive or negative earnings will be applied to your account in line with investment performance. The earnings will depend on whether you are in the Default Fund or the Cash Investment Option.

Your untaxed component (see Table 1 on page 11) increases at the long-term Treasury bond rate between the ‘operative time’ and the date when the benefit becomes payable. The ‘operative time’ is either the date when a family law split occurred, or four business days after a superannuation agreement is served on us, the Trustee.

How the CSS performs

Investment performance information can be found on our website www.css.gov.au. Select Investments and then Investment performance.

Investment objectives and strategies

Our investment objective

Table 3 outlines the investment objectives and other features of the Default Fund and the Cash Investment Option. We may change our investment objectives from time to time or acquire investments not described in the table.

Table 3: Investment objectives and strategies

Default Fund Cash Investment Option

Investment objective This Fund’s key investment objective is to maximise long-term real returns within some risk constraints.

This Fund’s key investment objective is to preserve its capital and earn a return close to that of the UBSA Bank Bill Index.

The UBSA Bank Bill Index is a market accepted index that is commonly used to benchmark the performance of short-term cash investment portfolios. The index composition reflects a basket of 13 generic bank bills that range in maturity from 1 week to 13 weeks. Each week the shortest dated bank bill matures and is replaced by a new 13 week bank bill. In this way, the index has an average maturity of 45 days and is turned over every 90 days.

How do we invest? In developing its investment strategy to achieve this objective, CSC has adopted the following constraint to manage the level of short-term volatility of returns and maintain appropriate levels of liquidity in the Fund:

> not more than 25% of the Fund’s investments are to be invested in illiquid assets, with a minimum cash allocation of 2%.

The investment environment going forward cannot be predicted, however CSC is constantly monitoring its strategic asset allocation and the global economic environment in which your money is invested.

Currently, a significant portion of the Fund’s assets are invested in equities, with the remainder invested in bonds, property, cash and alternative investments, such as, market-neutral strategies and private equity.

The Cash Investment Option invests in:

> cash (deposits with a bank)

> Australian-dollar-denominated money market securities that are issued or guaranteed by a government, bank or corporate entity with a minimum credit rating of A1 (or its floating rate equivalent) as determined by Standard & Poor’s (or the equivalent from Moody’s or Fitch if no Standard & Poor’s rating is available); and

> interest rate futures and options traded on the Australian Securities Exchange.

Comparative risk level (also see Table 2)

Higher-investment performance is more likely to be volatile.

Lower-investment performance is likely to be less volatile.

Funds under management at 30 November 2011

$3.8 billion $403 million

* commenced December 2004

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The Cash Investment Option

The Cash Investment Option provides you with an alternative to the CSS Default Fund investment strategy. It is an opportunity to have more surety of earnings for your taxed (member and productivity) components, in exchange for the possibly higher, but more volatile, return of the Default Fund. See Table 2 on page 13 and Table 3 on page 25 for the key features and risks of the Cash Investment Option and the Default Fund.

Restrictions on switching to the Cash Investment Option

If your taxed components total less than $1,000, you will not be able to switch to the Cash Investment Option. You can only switch your entire taxed components to the Cash Investment Option. You cannot switch part of these components. If you have multiple accounts with the CSS, you must complete a switch form for each account.

You cannot make more than two switches in a calendar year.

When to switch

Switch forms need to be received before monthly choice cut-off dates.

Choice cut-off dates are the last Friday in each month. We then process your switch so it takes effect the following Wednesday.

Your switch form can be posted or faxed to us. If you post your form it is important that you allow sufficient time for postage.

You can withdraw a switch request but you need to notify us in writing or by fax on or before the last Friday of the month in which the request will take effect.

How to switch

Simply complete a Cash Investment Option transfer (switch) form and return it to us so we receive it on or before the choice cut-off date.

To switch back into the Default Fund, you need to complete a Transfer (switch) to Default Fund form. The forms are available at www.css.gov.au.

Death and invalidity cover

FIND OUT ABOUT:

How you are covered

Benefit Classification Certificate (BCC) restrictions

Full and partial invalidity benefits

Death benefits

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As a CSS contributing member, you receive automatic death and permanent invalidity cover at no extra cost. Your benefit will generally be based on your entitlement had you worked to maximum retirement age.

CSS deferred members are also covered, however, the coverage for such members differs to the coverage for contributing members.

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How you are covered

As a CSS contributing member, you receive automatic permanent invalidity and death cover at no extra cost. Your benefit will generally* be based on your entitlement had you worked to maximum retirement age (generally 65).

This means that, depending on the circumstances, additional benefits are payable to you if your employment is terminated because you become totally and permanently disabled and benefits are payable to your eligible dependants if you die. If there are no eligible dependants when you die, then benefits are generally paid to your estate.

We do not offer income protection insurance. You may however be entitled to a partial invalidity benefit if a medical condition changes the level of your employment, such as reducing the hours you work. We do not provide you with the option to choose who can receive your benefit in the event of death. Benefits can only go to eligible dependants or your estate if there are no eligible dependants (see Table 4 on page 29).

There are conditions that apply to the amount or type of benefit you receive. For example, if you have a pre-existing medical condition your benefit may be reduced (see Are you entitled to full cover benefits? on page 30).

An invalidity pension is only payable if the Trustee decides you have a permanent medical condition that is likely to stop you from working again. Invalidity pensions are subject to ‘earnings reviews’. They can be reduced if you engage in employment while in receipt of an invalidity pension. They can also be cancelled if your circumstances change. For example if your medical condition improves sufficiently to allow you to recommence employment and you again become a contributor to the CSS.

* If you have a Benefit Classification Certificate (BCC) you may not be eligible to receive full invalidity and death benefits. In some cases the benefit is a lump sum only with no pension options (see Are you entitled to full cover benefits? on page 30).

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overTable 4: Who may be eligible to receive a CSS benefit if I die?

Category of eligible dependent Description

Eligible spouse or partner > A person, whether of the same sex or opposite sex, who had been in a marital or couple relationship with you for a continuous period of at least three years at the date of your death; or

> A person with whom you had been in a relationship for less than three continuous years at the time of your death and CSC is satisfied that the person ordinarily lived with you as husband, wife or partner on a bona fide domestic basis; or

> A person who you previously had a marital or couple relationship with, but that relationship finished before the date of your death. A spouse benefit may still be payable if your spouse remained legally married to you at the time of death and it is determined that they were wholly or substantially dependent on you.

See What does a marital or couple relationship mean? on the following page.

Eligible child Includes a child of yours (this includes adopted children, ex-nuptial children, step-children, or any other person we deem to be an eligible child) who was either living with you or was wholly or substantially dependent on you at the time of death, and is:

> aged less than 16; or

> aged between 16 and 25 provided they are in full-time study and not ordinarily employed.

Partially dependent child Includes a child of yours who is not an eligible child (including an adopted child, an ex-nuptial child or a step-child), who does not ordinarily live with you, but for whom you are required to pay (or are voluntarily paying) child support or regular maintenance, and who is:

> aged less than 16

or

> aged between 16 and 25 provided they are in full-time study and not ordinarily employed.

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What does a marital or couple relationship mean?

A marital or couple relationship is where two people of the same or opposite sex live together as husband, wife, or partner in a permanent and bona fide domestic relationship (either legally married or de facto) for a continuous period of three years or more prior to the date of death.

If the relationship has been in existence for less than three years it can still be determined that a marital or couple relationship existed by considering such matters as:

> the length of the relationship

> whether the persons were legally married

> whether the persons were in a relationship that was registered under a law of a state or territory as a prescribed kind of relationship

> financial dependence

> whether there were children of the relationship

> joint ownership of property

> any other evidence the Trustee may consider relevant.

Also, a person can still be considered to be living with another person on a permanent and bona fide domestic basis where it is determined that the person would have been living with the other person except for a temporary absence or an absence resulting from illness or infirmity.

Are you entitled to full cover benefits?

A Benefit Classification Certificate (BCC) lists any pre-existing medical condition that might affect your ability to work to retirement. If this applies to you, you would have received a BCC following your medical examination when you first joined the CSS. If you have a BCC and the medical reason for a claim for invalidity or death benefits is related to a condition on your BCC, you or your dependants may not be eligible to receive full invalidity or death benefits. In some cases the benefit is a lump sum only with no pension options.

The BCC will no longer apply if you have 20 years or more CSS contributory membership.

Revoking your BCC

If you have medical proof that you are in good health, you can ask the Trustee to consider revoking your BCC or reconsider the decision to issue the certificate. If you would like to discuss this, please call us on 1300 000 277.

Non-disclosure of a medical condition

If the Trustee believes that you didn’t properly disclose a pre-existing condition at the time of your medical examination, you or your dependants may not receive full invalidity or death benefits. The pre-existing condition will be subject to the same considerations as if it had been specified on your BCC.

How are invalidity benefits calculated?

Generally speaking, the invalidity pension is based on your prospective membership (see Are you entitled to full cover benefits?). This is the total membership you would have achieved had you continued working up until 65 years of age.

For members who joined the 1922 Pension Scheme or Provident Account before 1 July 1976, full invalidity benefits are generally payable if you have 20 years or more prospective membership. If you have less than 20 years prospective membership, your benefit decreases for each year of prospective membership less than 20 years.

For members who joined on or after 1 July 1976, full invalidity benefits are generally payable if you have 30 or more years prospective membership. If you have less than 30 years prospective membership, your benefit reduces for each year less than 30 years prospective membership.

If you have less than 15 years (but not less than eight years) contributory membership and the medical reason for your invalidity retirement is related to a condition on your BCC, you may also have the option of taking your benefit as a lump sum only. You must take your benefit as a lump sum if you have less than eight years contributory membership.

The basis for the calculation of invalidity pension benefits is as follows:

If you were a member of the 1922 Pension Scheme or Provident Account before 1 July 1976

CPI-indexed pension

If you have 20 or more years prospective membership and your invalidity retirement is not related to a condition on your BCC, your CPI-indexed pension will be at least 50% of your final annual rate of salary.

This percentage is increased if you have more than 30 years contributory membership up to a maximum of 52.5% for 40 years or more years of contributory membership.

This pension may be reduced if you have Restricted Units or Rejected Units (these are shown in your Member Statement).

Non-indexed pension

If you have 20 or more years prospective membership, your non-indexed pension will be 20% of your final salary for superannuation purposes.

Lump sum option

This option is only available to former Provident Account members. You may be able to elect to take a lump sum of three times the total of your basic contributions and Fund earnings together with a

lump sum of any supplementary contributions and Fund earnings and your productivity component (if applicable), less any surcharge debt you may have.

If you became a member on or after 1 July 1976

CPI-indexed pension

If you have at least 30 years prospective membership and your invalidity retirement is not related to a condition on your BCC, your CPI-indexed pension will be at least 50% of your final salary.

This percentage is increased if you have more than 30 years contributory membership up to a maximum of 52.5% for 40 or more years of contributory membership.

The CPI-indexed pension percentage decreases by 1% for each year less than 30 years prospective membership (down to 40% for 20 years prospective membership) and then by a further 2% for each year less than 20 years prospective membership.

Non-indexed pension

If you have 30 or more years prospective membership, your non-indexed pension will be 20% of your final salary.

The non-indexed pension percentage decreases by 0.4% for each year less than 30 years prospective membership (to 16% for 20 years prospective membership) and then a further 0.8% for each year less than 20 years prospective membership.

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If your invalidity retirement is related to a condition on your Benefit Classification Certificate (BCC)

CPI-indexed pension

If your invalidity retirement is related to a condition on your Benefit Classification Certificate (BCC), your benefits are generally based on a combination of both contributory and prospective membership.

For example, if you have less than 20 years contributory membership, but you have more than 30 years prospective membership, then your additional pension increases by 1% for years and days of actual membership (up to 20% payable in respect of 20 years actual membership).

Non-indexed pension

This pension is also based on a combination of both contributory and prospective membership.

For example, if you have less than 20 years contributory membership, your final salary is decreased by 1% for each year less than 20 years contributory membership (e.g. 19% for 19 years contributory membership).

Partial invalidity pensions

A partial invalidity pension is a form of income maintenance. It is paid as a pension when your salary is reduced permanently because of a medical condition.

Circumstances where a partial invalidity pension is not payable

There are a number of circumstances in which you will not be paid a partial invalidity pension. For instance, a partial invalidity pension is generally not payable if:

> you have reached your maximum retiring age (usually 65)

> your contributory membership is less than eight years and the reduction in your salary is caused (or substantially contributed to) by a medical condition specified in a Benefit Classification Certificate (BCC) that is in force in respect of you

> it is the opinion of the Trustee that your medical condition has been caused by wilful action on your part for the purpose of obtaining an invalidity benefit

> you cease to be a member of the CSS

> you are entitled to compensation under a Commonwealth or State or Territory law providing for worker’s compensation.

Calculation of the benefit

A partial invalidity pension is paid in addition to your new salary, and is worked out using a formula which takes into account:

> the amount you would have received if you were entitled to a full invalidity pension

> your salary before and after you became entitled to a partial invalidity pension

> an annual rate of salary determined by the Trustee, in its discretion, if your new annual rate of salary is less than one half of your previous annual rate of salary.

Cancellation of partial invalidity pensions

Your partial invalidity pension is cancelled when:

> you cease to be an eligible employee; or

> the rate of your salary (not including the partial invalidity pension) becomes equal to or greater than the current equivalent of the salary you previously received (that is, your salary before your invalidity retirement or your reduction in salary on medical grounds as the case may be).

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If you die while a contributing member

If you die before your maximum retiring age while you are a contributing member, the pension which may be payable to your eligible spouse, partner or children will be a percentage of the invalidity pension that would have been payable had you retired on invalidity grounds (see How are invalidity benefits calculated? on page 30). The various percentages are shown in Table 7 on page 40.

The potential invalidity pension would take into account any reduction in benefits that may apply because of the application of a Benefit Classification Certificate (see Are you entitled to full cover benefits? on page 30).

Your eligible spouse or partner may choose from benefit choices similar to those that would have been available to you on invalidity retirement.

If you die on or after your maximum retiring age while you are a contributing member, the pension which may be payable to your eligible spouse or partner will be based on the age retirement pension that would have been payable to you had you been eligible for an age retirement benefit immediately following your death (see Table 5 on page 36 for more detail).

If you die while a deferred benefit member

If you die before your maximum retiring age while you are a deferred benefit member, the pension payable to your eligible spouse or partner will be a percentage of the invalidity pension that would have been payable had you retired on invalidity grounds.

The potential invalidity pension would take into account any reduction in benefits that may apply because of the application of a Benefit Classification Certificate (see Are you entitled to full cover benefits? on page 30).

Your spouse or partner may choose from benefit choices similar to those that would have been available to you on invalidity retirement.

If you die on or after your maximum retiring age while you are a deferred benefit member, the pension which may be payable to your eligible spouse or partner will be based on the deferred age retirement pension that would have been payable to you had you been eligible for an age retirement benefit immediately following your death (see Table 5 on page 36 for more detail).

If you die as a contributing or deferred benefit member and have no dependants

This lump sum includes your member and productivity components, amounts to meet Superannuation Guarantee requirements and any amounts you have transferred from other super funds and any super co-contributions.

If you die while receiving a pension

If you die while receiving a CSS pension, your eligible dependants are entitled to receive a pension that is a percentage of the pension being paid to you at the time of your death. The percentage payable will depend on whether you choose the higher dependant pension option at the time of your retirement. The various pension percentages are shown in Table 7 on page 40.

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Acquire

Withdrawing your CSS super

Your super is intended for your retirement and is therefore a long-term savings vehicle.

Under law, super is generally payable when you reach your preservation age and retire from the workforce, or if you become totally and permanently disabled, or die.

FIND OUT ABOUT:

When you can withdraw your benefits

Restrictions on withdrawing your benefit

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How can my membership end?

> Retiring after reaching the minimum retirement age (generally 55)

> Involuntary retirement (retrenchment)

> Resignation or dismissal

> Permanent invalidity

> Death

> Joining another employer-sponsored super scheme or changing your employment arrangements so that you no longer qualify to contribute to the CSS.

Table 5: What are my options?

Exit type Benefits available

Age retirement

1. Take a CPI-indexed pension and a lump sum of your member and any productivity components. If you are under age 60 and are not permanently leaving the workforce, your productivity component and any member component that exceeds your SIS Upper Limit must be paid into a rollover institution.

2. Take a CPI-indexed pension and non-indexed pension purchased with your member and productivity components. Alternatively, use your member component only to purchase an additional non-indexed pension and receive any productivity component as a lump sum. If you are under age 60, and not permanently leaving the workforce, your productivity component must be paid into a rollover institution.

3. Take your total benefit as a lump sum if you are an ex-Provident Account member and retire at age 60 or more.

4. Postpone payment of all or some of your CSS benefit if you are still working but are under age 65.

Involuntary retirement (retrenchment)

1. Preserve your total benefit in the CSS (if you do this you become a deferred benefit member). If you have elected to preserve your benefit and you recommence public employment for which your employer contributes to an eligible superannuation scheme, you may also be able to transfer your preserved benefit to that scheme. Eligible superannuation schemes can be found at www.css.gov.au

2. Take a CPI-indexed pension and a lump sum of your member and productivity component. If you are under your preservation age, or under age 60 and not permanently retiring from the workforce, your productivity component and any member component that exceeds your SIS Upper Limit must be paid into a rollover institution.

3. Take a CPI-indexed pension and non-indexed pension purchased with your member and productivity component. Alternatively, use your member component only to purchase an additional non-indexed pension and receive any productivity component as a lump sum. If you are under age 55, you cannot convert your productivity component to additional non-indexed pension; the productivity component must be taken as a lump sum. In addition, if you are under your preservation age, or under age 60 and not permanently retiring from the workforce, any productivity component to which you are entitled as a lump sum must be paid into a rollover institution.

4. A lump sum. If you are under age 55, the employer component of the lump sum plus your productivity component and any member component that exceeds your SIS Upper Limit must be paid into a rollover institution. If you are over age 55 but have not reached your preservation age or you are under age 60 and not permanently retiring from the workforce, your productivity component and any part of the total lump sum that exceeds your SIS Upper Limit must be paid into a rollover institution.

5. Postpone all or some of your CSS benefit if you are still working and have reached your minimum retirement age, but are under age 65.

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Exit type Benefits available

Resignation or dismissal

1. Withdraw your member component and rollover your productivity component (if any) and amounts required to meet Superannuation Guarantee requirements to a rollover fund. If you take this option, you forego most of your employer-financed component (the major component of your benefit).

2. Preserve all your benefits in the CSS until you reach minimum retirement age (generally 55). This will become a deferred benefit which you can later take as a pension (part of which is CPI-indexed) or a combination of a CPI-indexed pension and a lump sum.

For members who are planning on resigning and claiming their deferred benefit immediately, you must resign at least two days before your minimum retirement age to be eligible for the preservation option.

If you have elected to preserve your benefit and you recommence public employment for which your employer contributes to an eligible superannuation scheme, you may be able to transfer your benefit to that scheme. Eligible superannuation schemes can be found at www.css.gov.au.

Ceasing CSS contributory membership without ceasing your employment e.g. changing your employment arrangements so that you no longer qualify to contribute to the CSS

1. If you are under your minimum retirement age (generally age 55) you may preserve your benefit. If you do this you become a deferred benefit member and you can claim your deferred benefit when you reach your preservation age, even if you are still employed by the same employer.

If you continue in public employment, have elected to preserve your benefit and your employer contributes to an eligible superannuation scheme, you may also be able to transfer your benefit to that scheme. Eligible superannuation schemes can be found at www.css.gov.au

2. If you are over your minimum retiring age at the time you cease your CSS membership (provided you have also reached your preservation age) you may be entitled to claim a CSS retirement benefit.

Any lump sum benefit payable must be rolled over.

Permanent invalidity

1. Take a CPI-indexed pension and a lump sum of your member and productivity components.

2. Take a CPI-indexed pension, a non-indexed pension purchased with your basic contributions and Fund earnings and a lump sum of your productivity component and any supplementary contributions plus Fund earnings.

See Death and invalidity cover on pages 27 to 33 for more information.

Death

If you die while a contributing or a deferred benefit member

If you die before your maximum retiring age, your eligible spouse or partner will generally receive 67%* of the potential invalidity pension that would have been payable to you if you had been entitled to it immediately following your death, plus a lump sum of any productivity contributions and supplementary contributions that you have made. Alternatively, your eligible spouse or partner may be able to elect to take a pension and lump sum combination, based on the invalidity benefit options that would have been available to you immediately following your death.

If you die on or after your maximum retiring age, your eligible spouse or partner may be entitled to 67%* of the potential age retirement pension payable to you if you had been entitled to it immediately following your death. Your eligible spouse or partner may also be entitled to an additional pension based on your member component or to commute that additional pension into a lump sum benefit.

If you die and leave no dependants, a lump sum of your member contributions, amounts required to meet Superannuation Guarantee requirements and your productivity component (if any) is paid to your estate.

If you die while a pensioner

Your eligible spouse or partner would generally be entitled to 67%* of the pension that you were receiving at the time of death. When you claim your pension on retirement, you can elect to receive a lower pension at that time in return for your spouse or partner to receive a higher pension at the time of your death. See Higher dependant pension option on page 40 for more information.

If you die while an associate benefit member

A lump sum is paid to your estate.

If you die while receiving a CSS associate pension

There is no residual benefit for beneficiaries. The benefit ends at that time.

* This percentage is increased for any eligible children

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How is the CPI-indexed pension calculated?

At age retirement

The CPI-indexed pension is financed by your employer. It is calculated using a percentage of your final super salary based on your length of contributory membership (in years and days), your age at retirement and whether you joined the CSS before or after 1 July 1976.

Our CPI-indexed pensions are based on a maximum of 52.5% of final super salary on retirement at age 65 with 40 or more years contributory membership.

The percentages used to calculate benefits in the CSS can be found in the CSS Benefit Tables booklet at www.css.gov.au.

Following deferment

If you preserve (defer) your total benefit, your member component and any productivity component will remain in the CSS until you claim your benefit (conditions apply) or reach age 65, whichever is the earlier. Your deferred benefit will move in line with the earning rate of the Fund until your benefit is claimed.

Your future CPI-indexed pension will be based on 2.5 times the total of your basic contributions and Fund earnings to the time the benefit is paid. (This calculation is a little different for those who pay a transfer value into the scheme).

This amount is converted to a CPI-indexed pension by using a factor based on your age when you claim the benefit.

How is your lump sum calculated?

Your lump sum is your member and productivity components. You can take this amount as a lump sum or a non-indexed pension.

How is the non-indexed pension calculated?

At age retirement

Non-indexed pensions are called non-indexed because they do not grow with the Consumer Price Index (CPI). A non-indexed pension is worked out by multiplying the total of your member and productivity components (or just your member component if you wish), by a percentage factor which varies according to your age at retirement.

Non-indexed pensions are limited to 20% of your final super salary if you retire at age 60 or more. If you retire under age 60, that percentage is reduced. For example, if you retire at age 55, the percentage is 18.5%. These limitations do not apply if you preserve your benefit.

Any amount of your member and productivity components that cannot be converted to a non-indexed pension will be refunded as a lump sum.

The percentages used to calculate benefits in the CSS can be found in the CSS Benefit Tables booklet at www.css.gov.au.

Following deferment

The non-indexed pension available following preservation is calculated by using the same percentage factor as used for your CPI-indexed pension and applied to your member and productivity components.

How can I withdraw my super on retirement?

The Superannuation Industry (Supervision) Act 1993 and Regulations prevents us cashing your benefit (as a lump sum, as a pension or a combination) unless you have satisfied a ‘condition of release’. For example, you will satisfy a condition of release for taking all of your lump sum as cash in hand when you retire from the workforce after reaching your ‘preservation age’. There are no fees for withdrawing benefits from the CSS.

Transfers from other super funds

You can only withdraw amounts you have transferred into the CSS from other super funds when you cease eligible employment.

If the amount transferred into the CSS is being taken as a lump sum, all or part of that amount may need to be rolled over depending on your age and whether you are retiring from the workforce.

Earning rate

When withdrawing from the CSS, the earning rate applied is the rate at the time your transaction is processed. This may not be your date of claim.

Early release on severe financial hardship or other specified compassionate grounds

Eligible employees, deferred benefit members and certain other members may be able to obtain early access to part of their benefits on financial hardship or specified compassionate grounds.

Financial hardship

There are two ways to qualify for a release on the grounds of severe financial hardship:

1. If we are satisfied that:

> you have received Commonwealth income support payments for a continuous period of 26 weeks (we will need written evidence of this from the relevant Commonwealth Government agency); and

> you were receiving these payments on the date of that written evidence; and

> you are not able to meet reasonable and immediate family living expenses.

2. If you have reached your preservation age (see Table 6) plus 39 weeks, and we are satisfied that:

> you have received Commonwealth income support payments for a cumulative period of 39 weeks after reaching your preservation age (we will need written evidence of this from the relevant Commonwealth Government agency); and

> you were not employed (on a full-time or part-time basis) on the date of your application.

If your benefits are from Centrelink, you will need to provide us with your Centrelink Customer Reference Number which we will use to confirm your eligibility. If your benefits are from the Department of Veterans’ Affairs, you will need to provide a letter from the Department confirming your payments.

We can only make one payment on these grounds in any 12 month period, which generally cannot be less than $1,000, and which cannot exceed $10,000.

Specified compassionate grounds

If you do not qualify for early access to your superannuation benefits on severe financial hardship grounds, you may consider asking the Department of Human Services (DHS) to approve the release of benefits on specified grounds. Some examples of the types of expenses you may be able to claim include:

> medical expenses

> renovations to your home necessitated by severe disability

> mortgage payments – to prevent loss of your home.

All enquiries regarding applications for early release on these grounds should be directed to DHS on 1300 131 060. An application form is also available from their website at www.humanservices.gov.au.

Are there any restrictions I need to know about?

Preservation age

The law places restrictions on when you can access your superannuation benefit. One of these restrictions is called your ‘preservation age’ and is in addition to the other restriction on withdrawing your benefit, the SIS Upper Limit. You generally cannot access your entire benefit until you reach your preservation age (see Table 6 below) and have retired from the workforce.

Table 6: Your preservation age

Date of birth Preservation age

Before 1 July 1960 55

1 July 1960 – 30 June 1961 56

1 July 1961 – 30 June 1962 57

1 July 1962 – 30 June 1963 58

1 July 1963 – 30 June 1964 59

After 30 June 1964 60

SIS Upper Limit

Your SIS Upper Limit is that portion of any CSS lump sum benefit which is not subject to any cashing restrictions. If you become entitled to a CSS lump sum benefit, then the portion of the benefit up to this amount can be taken as cash; it does not have to be rolled over. Your SIS Upper Limit is shown on your Annual Member Statement.

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Any difference between your CSS lump sum entitlement and your SIS Upper Limit must be rolled over. These cashing restrictions do not apply if you are retiring on invalidity grounds.

How long do I have to make an election to claim my benefit?

Elections for age, invalidity, involuntary retirement and resignation benefit options must normally be notified to us no sooner than three months before, but no later than three months after leaving employment (see When can I lodge the forms? on this page). If you do not notify us within this time, we may pay your benefit to an Eligible Rollover Fund (see the last section on this page for more detail).

If you want to preserve your benefit in the CSS, your election must be made no sooner than 30 days before, but no later than 21 days after leaving employment.

Higher dependant pension option

If you retire on age or involuntary retirement grounds, or claim your deferred benefit on age grounds, you can elect to receive a lower pension at that time in return for your spouse and/or children receiving a higher pension following your death.

You can elect to reduce your pension to 93% of the normal pension rate and, in return, your eligible spouse and/or children will receive a higher pension following your death (see Table 7 to the right). This option is not available if you retire on

invalidity grounds or if you die while you are still a contributing or deferred benefit member, or you are an associate member.

Table 7: Dependant pension rates

Standard rate Higher rate*

Spouse or partner with/without children

Eligible spouse or partner only

67% 85%

Eligible spouse or partner and one eligible child

78% 97%

Eligible spouse or partner and two eligible children

89% 108%

Eligible spouse or partner and three or more eligible children

100% 108%

No spouse

One eligible child only 45% 51%

Two eligible children 80% 92%

Three eligible children 90% 108%

Four or more eligible children 100% 108%

* Applies to the reduced pension rate

When can I lodge the forms?

We cannot process the payment of your benefit until after your date of exit. However, you can submit your application form before your date of exit to allow enough time to make sure that all the necessary documents and information have been provided well ahead of your retirement.

You should give your completed forms to your personnel section so that they can complete the

departmental report and checklist. Your personnel section will then forward the completed paperwork to us for processing.

If you are claiming a deferred benefit, your benefit application form must be signed, dated and sent to us prior to your nominated claim date, that is, it is not possible to back date the date from which a deferred benefit is to be claimed.

How long does it take to get your benefit?

For standard benefit claims, it will take approximately 10 working days from the date we receive your benefit application form or the date you finish working (whichever is later). If it will take longer (e.g. your form is not completed correctly), we will advise you.

Can the CSS rollover your benefit without your permission?

Generally, if your super becomes payable as a lump sum we need to receive your instructions within three months from when you cease to be a member on how you would like your benefit paid. Otherwise it may be paid into an Eligible Rollover Fund (ERF). The ERF selected by the Trustee is: AUSfund–Australia’s Unclaimed Super Fund–PO Box 2468, Kent Town, SA 5071 or phone 1300 361 798. Once the benefit is transferred, you may lose your benefit options in the CSS, and you must claim your benefit from the ERF.

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rWhat happens when you become a CSS pensioner?

Whether you take a CSS pension because you retired, or became permanently disabled or receive a reversionary pension from a CSS member who has died, we will pay your pension every two weeks. This is paid directly into your Australian bank account. We cannot pay into a bank account unless it features your name.

Twice a year, in January and July, your pension will be adjusted in line with the Consumer Price Index (CPI). This is usually an increase but even in the event of a negative CPI your pension will not be decreased. We advise you of these adjustments in writing at the time.

At the end of the financial year you will receive a payment summary which you can lodge with your income tax return.

You should also read Tax and your super on page 47 and Withdrawing your CSS super on page 35.

What happens if I die while receiving a pension?

Generally, your eligible spouse or partner would be entitled to 67% of the pension that you were receiving at the time. This pension is increased for any eligible children. The pension is payable for your spouse or partner’s lifetime. The pension payable in respect of eligible children (see Table 7 on page 40) is payable while they remain eligible.

Relationship separation

Following a marriage or de facto relationship breakdown, it is possible for part, or even all, of your CSS benefit entitlement to be used to create a separate superannuation interest for your former spouse or partner.

The Family Law Act 1975 allows superannuation to be split on marriage or de facto relationship breakdown either by a court order or a superannuation agreement between the parties. These laws apply to people who have been married and have divorced, or who are still married but are separated or who were in a de facto relationship that has ended, and who make arrangements after 28 December 2002 to settle their affairs by a court order or a superannuation agreement.

Under the legislation governing the CSS, once a valid court order or superannuation agreement (‘splitting order’) has been received by the Trustee:

> your benefit entitlement may be split and a separate interest set up in the CSS for your former spouse or partner, who becomes an associate member of the CSS

> your benefit entitlement and any interest set up for your spouse or partner or former spouse or partner will accrue separately, or, if you are already receiving a CSS pension, will be paid separately

> if you are a contributing member, your interest will continue to be a defined benefit, but your benefit will be adjusted at the time the benefit becomes payable

> a benefit may be payable to your former spouse or partner immediately if you are already receiving a CSS pension. In this case, your pension will be reduced but not the component of it that relates to eligible children or partially dependent children. Further, any pension subsequently payable to eligible children (where there is no eligible spouse or partner) will not be reduced.

Circumstances and the application of superannuation splitting laws vary on a case by case basis, so please call us for more information if this occurs. You can also access further information about Family law and splitting super at www.css.gov.au under About us.

Benefit options for an associate member

If, at the time the splitting order takes effect, your spouse or partner or former spouse or partner was receiving a CSS pension, you will generally receive a pension calculated by reference to the ‘separation amount’.

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In all other cases, you are entitled to an associate deferred benefit. You may be able to withdraw your associate deferred benefit either as a lump sum or as a pension in the following circumstances:

> if you become totally and permanently incapacitated due to invalidity or terminal illness

> on a date chosen by you after your reach age 55 and before you reach age 65, provided that you intend to retire permanently from the workforce and that the withdrawal is permitted under the SIS Act

> once you reach age 65 (at this age, there are no further conditions on you receiving the associate deferred benefit).

If you are leaving Australia permanently, you may be able to withdraw your associate deferred benefit as a lump sum, provided the withdrawal is permitted under the SIS Act.

If you are suffering severe financial hardship or there are compassionate grounds that justify you accessing your associate deferred benefit before age 55, the Trustee, or the Department of Human Services (DHS) may, in very limited circumstances, allow you to withdraw some of your associate deferred benefit.

Once you reach age 55 you are also able to rollover your associate deferred benefit into another super fund or Retirement Savings Account. You cannot, however, rollover your associate deferred benefit out of the CSS until you reach age 55 and the benefit becomes payable.

Calculating an associate deferred pension

The associate deferred pension is generally calculated by dividing the associate deferred benefit by a pension factor based on the associate member’s gender and age.

What happens if you defer some or all of your super with the CSS

If you choose to defer your benefit, your member and productivity components remain in the CSS until you claim your benefit.

While deferred, your member and productivity components will continue to be invested in your chosen investment option and be adjusted with Fund earning rates, which may be positive or negative. Fund earning rates are published at www.css.gov.au.

It is also important to note that Fund earning rates will have a greater impact on your benefit.

Fees, taxes and other costs

As a CSS member you don’t pay any administration and transaction costs or fees. We deduct investment management costs from your investment option before determining Fund earning rates.

Tax on super can be very complex and subject to change from time to time. For these reasons, we strongly recommend you seek advice on how your CSS super is taxed from a licensed professional, such as a financial adviser or an accountant.

FIND OUT ABOUT:

Fees and other costs

Tax and your super

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Fees and other costs

DID YOU KNOW?

Small differences in investment performance and fees and costs can have a substantial impact on your long term investment returns.

For example, total annual fees and costs of 2% of your fund balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $100,000 to $80,000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. You may be able to negotiate to pay lower contribution fees and management costs where applicable*. Ask the Fund or your financial adviser.

TO FIND OUT MORE

If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website (www.moneysmart.gov.au) has a superannuation fee calculator to help you check out different fee options.

* We are required by law to provide you with the above information. The information provided can help you compare different super funds and their products to the CSS. No fees and expenses are deducted directly or indirectly from a CSS contributing member’s account, nor do the Fund’s fees, expenses and costs affect a CSS contributing member’s benefit during the period of contributory membership.

CSS fees and costs

This document shows fees and other costs that you may be charged. These fees and costs may be deducted from the returns on your investment or from the fund assets as a whole. Information on taxation is set out on pages 47 to 49.

You should read all the information about fees and costs because it is important to understand their impact on your investment in the CSS. As a member of the CSS you don’t pay any administration fees or member transaction costs - these costs are covered by your employer (or your former employer if you are a preserved benefit member). We deduct investment management costs from investment earnings before determining the Fund earning rate. Table 8 on the next page outlines all significant costs you are expected to pay.

The CSS pays no commissions to financial planners. Neither CSC nor the Australian Government takes any responsibility for the services, or guarantees the performance of any product provided by third parties.

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Fees

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Type of fee or cost Amount How and when paid?

Fees when your money moves in or out of the Fund

Establishment fee: The fee to open your account in the CSS. Nil

Contribution fee: This is the fee for the initial and every subsequent contribution you make to the CSS (or that may be made on your behalf, e.g. by an employer).

Nil

Withdrawal fee: This is the fee charged for each withdrawal you make from the CSS (including any instalment payments and your final payment).

Nil

Termination fee: The fee to close your account with the CSS. Nil

Management costs

Administration costs: These are the fees and costs for operating the CSS. They include administration and other fees charged by CSC, distribution costs and other expenses incurred in operating the Fund.

Nil

Investment costs: These are the fees and costs for investing your superannuation. They include fees paid to investment managers, custodian costs, investment consulting costs, internal investment costs and other expenses incurred in investing the assets. The amounts shown are estimated costs for the 2010/2011 financial year.

Default Fund 0.88%* p.a. of the average net assets of the Default Fund.

Cash Investment Option 0.13% p.a. of the average net assets of the Cash Investment Option.

These are the amounts we deduct from the investment earnings of the CSS Fund before determining the Default Fund or Cash Investment Option earnings rates.

Additional service fees**

Switching fee: This is the fee charged when you switch between investment options offered by the CSS. Nil

* This amount includes performance based fees (PBFs) of 0.16%. These fee rates are based on actual costs incurred and future costs may differ from these shown. See Performance based fees in the Additional explanation of fees and costs on the next page for more information.

**Please see Additional explanation of fees and costs on the next page for additional service fees such as reconsideration fees.

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Additional explanation of fees and costs

We may need to change these fees from time to time. We will advise you of any fee change that we believe will materially affect you.

Reconsideration of a decision

We charge a fee of $150 (including GST) when you request CSC to reconsider a decision that it has made (there is no fee payable when you request reconsideration of a decision made by a delegate). This amount must be paid when you lodge your application for reconsideration. The fee will be refunded if your request is not accepted for reconsideration and also in the event you are successful in your reconsideration.

Performance based fees

We pay performance based fees (PBFs) to some of the Fund’s investment managers. If the performance of an investment manager exceeds certain benchmarks, they will become entitled to a PBF and this will increase management costs. Accordingly, PBFs arise when higher returns are achieved by the investment manager and will limit the extent to which the performance of an investment option is boosted. No PBFs are paid in relation to the Cash Investment Option.

The extent of any PBF cannot be determined in advance. Actual PBFs will depend upon the level of performance achieved by investment managers that charge PBFs and the weighting of those managers in the Default Fund.

PBFs impact the Fund, and the value of your benefit, in the same way as the Fund’s other investment management costs. As a result, PBFs affect the components of your benefit that are affected by investment performance.

Table 9: Example of annual fees and costs for a balanced investment option

This table gives an example of how the fees and costs in the Default Fund for this product can affect your super investment over a one year period. You should use this table to compare this product with other super products you may be considering.

Example - Default Fund (a balanced investment option)

Balance of $50,000 with total contributions of $5,000 during the year

Contribution Fees Nil For every $5,000 you put in, you will be charged $0.

PLUS Management Costs 0.88% And, for every $50,000 you have in the Fund you will be charged $440 each year.

EQUALS Cost of the Fund If you put in $5,000 during a year and your balance was $50,000, then for that year you will be charged fees of: $440*.What it costs you will depend on the investment option you choose.

* Please note that this is a notional amount only and does not reflect the actual effect of management costs on your benefit. This is because your benefit is, in part, a defined benefit and is not wholly impacted by Fund earnings. The Fund’s management costs only affect the components of your benefit that are affected by investment performance.

Note that we are required by law to include the above example.

Additional fees may apply: reconsideration fee - $150.

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Tax on super benefits is complex and subject to change from time-to-time. For these reasons, we strongly recommend that you seek independent financial and tax advice on your benefit in the CSS.

Tax is paid on employer contributions, Fund earnings and some benefits.

Tax on contributions

Member contributions paid to the CSS are paid from your after-tax income and not subject to further tax. These contributions are known as ‘non concessional contributions’ for tax purposes.

Your employer productivity contributions are taxed at 15% - this tax is deducted from the contributions when we receive them from your employer. These contributions are known as ‘concessional contributions’ for tax purposes. If we do not have your tax file number your employer productivity contributions will be taxed at the top marginal tax rate at the end of the financial year. Additionally, you may pay a higher rate of tax when you withdraw your benefit.

Tax on Fund earnings

Fund earnings are taxed at a rate of up to 15%.

Tax on benefits

The tax on your benefit will depend on whether the benefit is sourced from contributions paid into the CSS and earnings on those contributions (taxed source) or from other sources (untaxed source). Your CSS benefit includes two components – a tax free component and a taxable component. The taxable component is itself divided into two further components – a taxed element and an untaxed element as follows:

> Tax-free component – Your benefit may include a tax-free component. This component consists of your member contributions from your after tax salary, any super co-contributions and any tax free components included in any transfers from other super funds. It may also include a pre 1 July 1983 component if your eligible service started before 1 July 1983.

> Taxable component (taxed element) – Your benefit may include a taxable component – taxed element. This component consists of your post-June 1990 productivity, Fund earnings on your member contributions, Fund earnings on any super co-contributions and any transfers from other super funds.

> Taxable component (untaxed element) – Your benefit may include a taxable component – untaxed element. This component consists of your employer component and any pre-July 1990 productivity contributions and Fund earnings.

See Table 1 on page 11 for more details about each of the types of contributions.

The tax treatment of each component is set out in Table 10 on the next page.

Pension benefits

CSS pensions are subject to normal PAYG tax deductions although you may be eligible to receive tax concessions (see Table 11 on the next page).

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Table 10: Tax treatment of lump sums

Percentage of tax payable on a taxed source

Percentage of tax payable on an untaxed source

Tax-free component

Taxable component

Tax-free component

Taxable component

Under preservation age 0% 21.5% 0%

31.5%

Top marginal tax rate for amounts above $1.205 million#

Preservation age to age 59

Up to $165,000* 0% 0% 0% 16.5%

Above $165,000* 0% 16.5% 0%

31.5%

Top marginal tax rate for amounts above $1.205 million#

60 and over 0% 0%

16.5%

Top marginal tax rate for amounts above $1.205 million#

Please note: The Medicare levy is applied where tax is deducted. * The $165,000 threshold applies to the 2011/12 financial year and is indexed annually. It is calculated across your entire taxable benefit. This threshold is referred to as the low rate cap amount. # The threshold applies to the 2011/12 financial year and is indexed annually. This threshold is referred to as the untaxed plan cap amount.

Table 11: Tax treatment on pensions

Percentage of tax payable on a taxed source

Percentage of tax payable on an untaxed source

Tax-free component

Taxable component Taxable component

Under preservation age 0% Your marginal tax rate Your marginal tax rate

Preservation age to age 59 0%Your marginal tax rate less a 15% tax offset

Your marginal tax rate

60 and over 0%Your marginal tax rate less a 10% tax offset

Please note: The Medicare levy is applied where tax is deducted.

The super contributions surcharge threshold

Your benefit may also be subject to contributions surcharge tax if your adjusted taxable income in the financial years 1996/97 to 2004/05 exceeded the surcharge threshold in any of those years.

Taxes on death benefits

If you die while you are a member of CSS, a death benefit may be payable to one or more of your eligible dependants. Your eligible dependants are your spouse or partner and your children under the age of 16 (or 25 if they are studying full-time) and are dependent on you. If you do not leave any eligible dependants, your death benefit will be paid to your legal personal representative to be distributed in accordance with your will or, if none, the laws of intestacy. A death benefit may be paid as a lump sum or as a pension.

The tax treatment of a death benefit paid to an eligible dependant is summarised in Table 12 on the next page.

For more information on tax see the Tax and your CSS benefit fact sheet available on our website www.css.gov.au.

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Benefit Age of deceased Age of beneficiary Percentage of tax payable on a taxed source

Percentage of tax payable on a untaxed source

Tax free Taxable

Lump Sum Any age Any age 0% 0% 0%

Pension Below 60 Below 60 0% Marginal tax rate less a 15% tax offset

Marginal tax rate

Below 60 60 and over 0% 0% Marginal tax rate less a 10% offset

60 and over Any age 0% 0% Marginal tax rate less a 10% offset

Please note: The Medicare levy is also applied where tax is deducted.

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Contacting us and other important information

Getting your hands on the information you need is vital to making decisions relating to your super.

There are a number of ways you can find what you are looking for. Our website provides you with information about your super scheme, including fact sheets, quarterly newsletters, information about how your fund is performing and much more.

This section will also outline how we protect your personal information, as well as our contact phone numbers, website addresses and details about making complaints and the additional services we offer.

FIND OUT ABOUT:

How to get information and contact us

How we protect your personal information

Additional information

More about specific terms in our glossary

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Your privacy

We are committed to protecting your privacy. We collect personal information from you only for the purposes of establishing and administering your super and insurance, to send you information about new products or services (provided by us or others) and to invite you to participate in member research.

Your personal information will be disclosed to our administrator, ComSuper (for the purposes of establishing, administering and releasing your super), and in some circumstances if it is required by law. Otherwise, your details are not disclosed to any other party without your consent.

A full copy of our privacy policy is available at www.css.gov.au or call us on 1300 000 277.

Managing your super online

Contact us to request an Access Number. This will give you secure online access to your CSS super account, so you can:

> use the i-Estimator to project your potential final benefit

> view and print your Member Statement

> update your address

> choose how you want to receive news about your super

> pay surcharge and leave without pay (LWOP) contributions via BPAY.

Our website is also a great first-stop for information and services, such as:

> news and quarterly newsletters

> forms and publications

> glossary of terms used in this document and the super industry generally

> sending us an enquiry via email.

Fast facts when you need them

If you need additional information on any aspect of the CSS you will find a range of useful fact sheets on our website.

Visit www.css.gov.au or call us on 1300 000 277.

Information, advice, complaints and contacting us

To help you stay informed about your super, every year we will send you:

> an Annual Statement detailing your benefit, including contributions paid to your account and your opening and closing balances

> a general update on the CSS including information about any major developments

> if you are a CSS pensioner, twice a year we will send you information about CPI adjustments and once a year we will send you a payment summary for tax purposes.

Whenever you want:

> You can access general information and services at www.css.gov.au.

Your employer is required to provide you with details of the contributions they have made at least once each quarter. They will usually do so on your pay advice.

If a significant event occurs, and we believe it will materially and adversely affect you, we are required by law to advise you.

Information in this document may change from time to time and information that is not materially adverse may be updated and made available to you in the Our latest news area of our website. Alternatively, you can call us on 1300 000 277 and ask for a paper copy to be sent to you free of charge.

You can also subscribe to our email service for important updates.

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We are licensed to provide general advice about the CSS and super through our authorised representatives. We cannot provide you with advice based on your individual objectives, financial situation and needs.

Your employer is not licensed and must not give advice or make any recommendations regarding the CSS or other super funds.

If you want to contact us

For information about your super

www.css.gov.au

members@css.gov.au

1300 000 277

02 6272 9613

PO Box 22, BELCONNEN ACT 2616

For information about CSC investments and governance

www.csc.gov.au

secretary@csc.gov.au

02 6263 6999

02 6263 6900

GPO Box 1907, CANBERRA ACT 2601

If you have a complaint

Please call us on 1300 000 277. If you are not satisfied with the response, ask to speak to a supervisor. If you still feel the issue has not been explained or resolved to your satisfaction, ask to be transferred to the Complaints Officer:

complaints@css.gov.au

02 6272 9081

02 6272 9809

The CSS Complaints Officer, PO Box 22, BELCONNEN ACT 2616

If you are still not satisfied

If you are dissatisfied with our response or we cannot resolve your situation within 90 days, contact the Superannuation Complaints Tribunal (SCT), an independent arbitrator set up by the Australian Government to resolve members’ complaints.

info@sct.gov.au

1300 884 114

03 8635 5588

www.sct.gov.au

Superannuation Complaints Tribunal, Locked Bag 3060 MELBOURNE VIC 3001

Additional services

As a CSS member, you can access home loan services through Members Equity Bank.

For more information visit www.css.gov.au.

www.css.gov.auEmail members@css.gov.au

Phone 1300 000 277