July 2018

Investment market update International shares fell in the March quarter but returned to positive territory in April and May. For the 11 months to 31 May 2018, international shares recorded a gain of 11.2% (MSCI World ex-Australia Accumulation Index, hedged). When factoring in the Australian dollar’s slight weakening against other currencies, the gain was 12.8%.

Share markets have been volatile and relatively weak since the start of 2018. The markets reflected the US Federal Reserve’s move to slowly increase interest rates in March and the Trump administration’s trade tariffs fuelling a potential trade war between the US and China. Negotiations between the two countries continue to cause further volatility. The Eurozone economy is showing signs of improvement, as is the Chinese economy which is reporting strong GDP growth at 6.8% year-on-year in the March 2018 quarter.

The Australian share market was affected by the US tariff proposal and the fallout from the financial services royal commission, which impacted share prices of a number of large financial institutions. For the 11 months to 31 May 2018, the Australian share market returned 9.6% (S&P/ASX 300 Accumulation Index), lagging international shares.

The Reserve Bank of Australia (RBA) Board has maintained the official cash rate at 1.5% since August 2016. No rate rises are expected until 2019, given inflation is currently under target levels. The Australian dollar continues to depreciate against the US dollar, dropping from 78.0 US cents at the end of December 2017 to 75.6 US cents at the end of May 2018. It has also been weakening against the currencies of its other major trading partners since the start of 2018.

The Trustee aims to diversify IPE Super’s investments to limit the fluctuations to members’ returns.

Returns for the 11 months to 31 May 2018 for all options are shown in the table to the right. Please remember that past performance is not necessarily a reliable indicator of future performance.

Pre-packaged investment options and asset class options*

Year to date (1 July 2017 to 31 May 2018)

Assertive Plus 10.4%

Assertive 8.4% Peer Fund comparison# 9.2%

Active Balanced (MySuper option) 7.7% Peer Fund comparison# 7.9%

Conservative 4.0% Peer Fund comparison# 4.1%

Australian Shares 10.5%

International Shares 14.2%

Diversified Fixed Interest 1.6%

Cash 1.5%

Standard Account-Based Pension investment options

Pension Aggressive 10.9%

Pension Assertive 7.3%

Pension Balanced (default) 7.3%

Pension Cautious 5.5%

Pension Conservative 3.8%

Pension Cash 1.8%

Defined Benefit section 5.9%

* Investment returns (including the returns of “transition to retirement” pensions) are net of tax, investment fees, indirect costs and an administration fee which has varied over time but is currently 0.215% per year. Investment earnings of Standard Account-Based Pensions are tax free.

# Peer fund comparisons are based on SuperRatings Pty Ltd’s Fund Crediting Rate Survey, median returns (SR50 Growth (77-90) Index, SR50 Balanced (60-76) Index and SR50 Capital Stable (20-40) Index), published on 19 June 2018, compared with IPE Super’s Assertive, Active Balanced and Conservative options respectively), www.superratings.com.au. SuperRatings statistics are not financial product advice; independent professional advice should be obtained before making any financial decisions.

Welcome to – the regular newsletter for members of the Incitec Pivot Employees Superannuation Fund (IPE Super) that keeps you up to date with what’s new in super and your Fund. For more information about any of the articles in this newsletter, please call the IPE Super Helpline on 1800 257 135. You will also find lots of information, including the latest investment performance, at www.ipesuper.com.au.

Budget updateThe 2018 Federal Budget proposed a number of rule changes to protect retirement savings, including:

Some measures to encourage consolidation of multiple accounts and to avoid erosion of retirement savings in small accounts by fees;

Steps to make insurance an opt-in arrangement for some members under 25 and low account balance members;

Actions to improve the retirement income position of retirees and pre-retirees. These include introducing a new retirement income framework, a limited exemption from the work test for people aged 65-74 with balances under $300,000 and broadening of the Pension Loans Scheme which allows you to borrow against your home to supplement the Age Pension.

To read more, see our at www.ipesuper.com.au under “Latest News”.

The information in this publication is general information only and does not take into account your particular objectives, financial circumstances or needs. It is not personal or tax advice. Any examples included are for illustration only and are not intended to be recommendations or preferred courses of action. You should consider obtaining professional advice about your personal circumstances before making any financial or investment decision based on the information contained in this publication. Please note that past investment performance is not necessarily an indication of future performance.

Issued by Towers Watson Superannuation Pty Ltd (ABN 56 098 527 256, AFSL 236049), as Trustee of the Incitec Pivot Employees Superannuation Fund (ABN 68 569 795 856). MySuper Authorisation number 68569795856660. July 2018.

How to contact usIf you’d like to find out more about any of the articles in this issue of or simply have a question about super, contact the IPE Super Helpline on 1800 257 135. We’d also love to hear your thoughts and opinions for future editions of . Contact the Policy Committee or email your thoughts to the Fund Administrator at ipesuperadmin@linksuper.com.

Fee changes from 1 October 2018IPE Super’s transaction fees are normally increased each year for indexation. The table below sets out the fees which will apply from 1 October 2018.

Fee type Fee from 1 October 2018

Administration fee (per year)

$85.00 Plus

A percentage-based fee of 0.215% p.a. ($2.15 per $1,000) of your account balance. The dollar fee is deducted from your account. The percentage-based fee is deducted from IPE Super’s investment returns before they are applied to your account.

Switching fee* $56.60 per additional switch per financial year. This fee is deducted from your account at time of switching.

Exit fee $63.80 each time you withdraw or transfer money out of IPE Super

Contribution splitting fee

$63.80 each time a splitting application is processed

Family Law information fee

$271.00 applied at each date at which information is required

Family Law establishment fee

$202.00 for establishing an entitlement to your spouse

* Excludes the first switch in any financial year.

Do you have adequate insurance cover?Although not easy to think about, illness, disability or death can happen. Make sure you have adequate insurance cover so that you and your loved ones are protected.IPE Super provides eligible members with a range of flexible insurance options to provide you with cover for death and temporary or total and permanent disablement. What’s available to you will depend on your membership category and employment status.

How do I find out how much insurance cover I already have with IPE Super? Your annual shows what cover you have at 30 June (if any). If you have recently joined IPE Super, this amount is also shown on your welcome letter. You can also check your insurance details at any time by logging into the Member Centre on the Fund’s website.

What level of insurance is right for me?This will depend on your personal financial circumstances, such as:

whether you have anyone who relies on you financially;

the size of any loans and other commitments;

any life events e.g. births, marriage, divorce, that might cause your needs to change.

Are the fees competitive?In most cases the insurance fees are likely to be lower than for personal insurance policies, since IPE Super buys its insurance at group rates and there are no sales commissions.

Want to learn more?To learn more about eligibility, the terms and conditions and how to apply for insurance, see IPE Super’s at www.ipesuper.com.au.

New video – who will receive your death benefit? When it comes to nominating who you want to receive your death benefits, you want to make it count so that your loved ones are looked after. Watch our video to learn about the types of nominations you can make and how to avoid common misunderstandings. Visit www.ipesuper.com.au and look under “Latest News”.