Annual Report 2014/2015 - Parliament of NSW · 2016-10-17 · 30 October 2015 The Hon. Gladys Berejiklian MP Treasurer and Minister for Industrial Relations 52 Martin Place Sydney

Annual Report2014/2015

Front Cover Image© Rodney Campbell 2015

Sea Cliff Bridge

Our BusinessA message from our Chair ................................................. A3A message from our Chief Executive Officer ..................... A5Our business ..................................................................... A7Our strategy ....................................................................... A10Our performance ............................................................... A12Key administration highlights ............................................. A14Business Transformation .................................................. A16Project Eleanor ................................................................. A17Risk management at Pillar................................................. A18Our people ......................................................................... A24Organisational development .............................................. A26Health and well being ........................................................ A27Environmental sustainability .............................................. A28Pillar in the community ...................................................... A29Pillar in the superannuation industry ................................. A31

Our Corporate InformationCorporate governance ....................................................... B3The Board .......................................................................... B5Our directors ...................................................................... B5Our executive management team ..................................... B10Access to government information held by Pillar............... B13Member response.............................................................. B15Disclosure and privacy ...................................................... B16Other corporate information............................................... B17

Our Audited Financial StatementsIndependent Auditor’s Report ............................................ C3Directors’ Declaration for the Year ended 30 June 2015 ................................................. C5Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2015 .......................... C6Statement of Financial Position as at 30 June 2015 ............................................................ C7Statement of Changes in Equity for the year ended 30 June 2015 .................................................. C8Statement of Cash Flows for the year ended 30 June 2015 .................................................. C9Notes to the Financial Statements for the year ended 30 June 2015 .......................................................... C10

AppendicesAppendix 1 – Statistics about GIPA access applications ........................................................... D2Response to significant issues raised by Auditor General .................................................. D6

Appendix 2 – Exemptions from

Reporting requirements ..................................................... D6

Index of legislative compliance

Contents

30 October 2015

The Hon. Gladys Berejiklian MP Treasurer and Minister for Industrial Relations52 Martin Place Sydney NSW 2000

Dear Minister,

This is the 16th Annual Report of the Superannuation Administration Corporation, trading as Pillar Administration (Pillar). We have pleasure in submitting this Annual Report to you for presentation to Parliament.

The report has been prepared in accordance with the provisions of the Annual Reports (Statutory Bodies) Act 1984 (NSW), the Public Finance and Audit Act 1983 (NSW) and relevant Government policies.

As in previous years, Pillar’s primary business of superannuation administration was profitably conducted within a competitive environment.

The financial statements for 2014/15, which form part of the Annual Report, have been submitted to and certified by the Auditor-General of NSW.

Yours sincerely,

Cathy Aston Mr Peter Brook Chair Managing Director & Chief Executive Officer

Letter to the Minister

A1 Annual Report 2014—2015 Pillar Administration

Part AOur Business

Working today fortomorrow

This page has intentionally been left blank.

A3Pillar Administration Our business

A message from our ChairMeeting the challenges of change

Last year I wrote about the challenges of change across the Superannuation industry, change driven by fast evolving regulatory standards, change driven by fast rising customer expectations and change driven by the needs to contain operating costs. For superannuation service providers like Pillar the consequence of such strong currents of change has been the imperative to constantly develop improved services in short time frames at steadily lower costs.

We identified the introduction of a new IT platform as being a key component in being able to offer such higher quality, lower cost services and had flagged the probability of undertaking significant new IT investment in the next several years. Consequently over the past year the Board has maintained major focus on the preparatory work and implementation for such a new IT platform.

Management has held extensive discussions with our clients about their preferences for the nature of administrative services and account reporting both today and in the medium term. This client feedback was used to determine an ideal set of parameters for what we, Pillar, require a new IT platform to be able to deliver to our clients in a flexible and cost effective manner. This analysis enabled Pillar to model the costs and benefits and to formulate our Capital Management Plan. As a result of this process the Board approved the plan to invest in a new registry platform.

Installing a single new system to replace nine existing fragmented legacy systems is a challenging task. During the year Pillar invited proposals from a range of IT and systems vendors to supply a system that met those desired parameters and conducted substantial due diligence. The Board was naturally concerned that all steps must be taken to de-risk the implementation to the greatest extent. The proposal to engage a recognised expert firm, Ernst & Young in a systems integrator role together with a proven platform based on a system offered by Financial Synergy appropriately addressed many of the Board’s concerns.

Ernst & Young has worked with the Pillar management in developing a master implementation plan of the new IT platform and a new target operating model. That plan was endorsed by the Board and subsequently was submitted to Government. The new platform will be implemented progressively across the client base with our first client being transferred to the new platform by mid-2016.

Apart from commencing this major new strategic initiative, Pillar performed well in 2014/15. Some highlights of our financial results are set out below.

Financial results

Pillar responded well to this changing business climate in 2013/14 and in that year recorded a before tax profit of $2.9 million. It was no surprise to observe that the 2014/15 business climate was essentially a continuation of 2013/14, with the same challenges on management and employees to respond efficiently to the continuing changing landscape. It is encouraging to report that the focus and effort from the whole Pillar team resulted in another solid year with improvements in our financial results to the extent that in 2014/15 Pillar achieved a before tax profit of $3.5 million.

Board changes

During the year we welcomed two new directors to the Board, Peter Berckelman and Nancy Milne. Peter and Nancy bring a wealth of relevant experience; Peter in banking and finance and in particular financial risk management and Nancy as an experienced company director and financial services expert.


The year ahead

In closing, I would also like to acknowledge the hard work and dedication of all our employees over this challenging year. The future success of Pillar can only be achieved with the active engagement of our whole team and on behalf of the Board, I would like to thank them for their efforts during 2014/15 and their continued commitment in this period of industry change and transformation.

Nicholas JohnsonChairPillar Administration

Nicholas Johnson retired as Chairman on 26 June 2015. Cathy Aston was appointed to the Chair on 9 October 2015.


A message from our Chief Executive Officer

The focus on Superannuation continues to sharpen. The changes to the regulatory environment; the intense competition between superannuation funds for members; the analysis undertaken by various inquiries (including FSI); the commentary from the media and others on the performance of funds and the costs of providing services to members; the demand for new services and products; the growing awareness that we might live too long; the debate on superannuation’s purpose and how best to achieve that; the debate on sufficiency and tax concessions.

Pillar needs to be equipped to tackle these challenges and also be able to respond to client and market demands. These demands require a nuanced approach to reflect the brand and character of our clients along all dimensions of their evolving member engagement channels, their new products and new services, whilst delivering a compliant service in an ever changing, regulated environment and at more cost effective prices.

The confluence of these dimensions confirms and reinforces Pillar’s strategic direction that was set in 2013. Our decisions and approach on re-platforming and business transformation are imperative for our existing clients, our ability to attract new business and building greater scale.

Our approach has been and continues to be open and inclusive of all stakeholders. A compelling business case was developed by management and signed off by the board, with close liaison with our shareholder who provided seed funding in 2014. This business case also had the full support of our clients.

Our project is a significant change for the organisation and positions us to tackle the challenges highlighted earlier and also to grasp some emerging opportunities in the market. There is significant work being undertaken to install new software and to transfer the member data of our clients onto that new technology platform. One of the most substantial changes that is occurring is in the reshaping of our operating model. This is about the conscious redesign of our business and service delivery, the services, the products, the skills, the technology, the processes and how our people work together in that environment.

Our transformation project is progressing well. We are on schedule and on budget and we have good client engagement and overall buy in. The rigour of our software and system integration partner selection process is paying good dividends. Financial Synergy and Ernst & Young are emerging as truly strategic partners in this endeavour. We are on track to go live with our first client in April 2016 with further clients following.

2015 saw another increase in profits. Notwithstanding the significant volume of change that has been taking place, we ran a little leaner this past year. We had better recovery on projects and increased revenue due to renewed pricing arrangements. We have been able to manage and improve our ‘business as usual’ agenda and performance at the same time as our transformation project. We are well positioned to repeat our improvement in results in 2016.

Pillar’s transformation project requires a new way to think about ourselves and to portray ourselves to others. The first steps were taken in this last financial year. They were internally focussed as they should be. Redefining why we are here, setting the themes for where we want to go and articulating the way we intend to do it, our values. We also recast our imagery picking up the green and blue hues that represent our future and our home in the Illawarra. Our second stage in how we portray ourselves to others. The outward looking perspective of reshaping how others view and think of Pillar, is taking place now as we look to reacquaint the broader market with Pillar.

The market for Third Party Administration has contracted significantly over the last few years due to a number of factors. Pillar is building a product and service suite to be competitive and enhancing our client focussed ethos that makes us a desirable and valuable partner to superannuation funds. We truly understand that superannuation is about protecting and enhancing the retirement savings of Australians and this is the core of our business.


Our staff at Pillar are talented and committed. It is through their efforts that we have achieved strong operational outcomes for our clients and their members this year and also increased our financial results. Our staff continue to step up to the challenges required from regulatory change and the opportunities and consequences that arise from our business transformation program, even with the uncertainty that creates.

I expect that Pillar’s business will look entirely different when I report again next year.

Peter Brook

Managing Director & Chief Executive Officer


About Pillar

Pillar Administration

The Superannuation Administration Corporation trading as Pillar Administration (Pillar) is one of Australia’s leading superannuation administration providers, with more than $100 billion in funds under administration across 1.1 million member accounts. We are passionate about superannuation and helping to protect the retirements of millions of Australians.

We are recognised for our experience, developed over 100 years of service to our clients and community. We aim to provide flexible services that meet the particular needs of our clients, today and into the future. We specialise in administering a range of superannuation products, including complex defined benefits schemes, accumulation, pension and income streams across industry, corporate and retail funds.

Our charter

Pillar is a New South Wales statutory state owned corporation established by the Superannuation Administration Authority Corporatisation Act 1999 (NSW).

The statutory objectives under the State Owned Corporations Act 1989 (NSW) for each such corporation are:

To be a successful superannuation administration business by:

o operating as efficiently as comparable businesses; and

o maximising the net worth of the State’s investment.

To exhibit a sense of social responsibility by having regard to the interests of the community in which it operates;

Where its activities affect the environment, to conduct its operations in compliance with principles of ecologically sustainable development; and

To exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates.

The principal functions of Pillar under the Superannuation Administration Authority Corporatisation Act 1999 (NSW), are the development, promotion and conduct of its business of providing superannuation scheme administration and related services. Pillar currently provides such services to the trustees of superannuation funds.

Rebranding

The past year has been an exciting time of change at Pillar, including the launch of our new brand. Our new brand was informed by the refresh of our vision, mission and values.

The first step of our brand journey was to look at our history and who we are as an organisation. We also looked at the challenges and opportunities that we may face in our external and internal environments.

Pillar has evolved into an important player in one of the country’s fastest growing and most powerful industries. We wanted our new brand to express who we are, where we are going and to clarify our purpose and aspirations.

Our new brand was launched internally last September. Public exposure of the brand occurred in November at the Association of Superannuation Funds of Australia (ASFA) Conference in Melbourne.

The new branding saw the roll out of a new style guide, colour palette, company logo and templates. Our digital presence was also refreshed with the launch of both our new internet and intranet sites that incorporated our new branding in a professional, modern and fresh way.

Our business


Most importantly our rebrand was to be an expression of our refreshed vision, mission and values. We wanted a clear vision of who we are, and where we are going as an organisation.

A vital part of our brand journey was considering our values. We hosted a number of workshops with our employees to find out what values meant to them and how we find meaning in our work. We also explored key questions around our role and the value we add to our clients and their members.

Our four values underpin and shape everything else in our new brand. They express what we care about, what we share, and what makes us connect with one another at Pillar.

Our values are an expression of our ‘best self’ and we want to ensure that they are embedded in our day-to-day behaviour at work. This is why we have worked hard over the past year to ensure that our values are understood and demonstrated by all employees at Pillar. As part of this, we introduced a new values program called Values Improve Behavioural Excellence (VIBE). The program rewards and recognises individuals and teams at Pillar who are living out the values in their everyday work.

Our new mission statement is a constant reminder of why we are here and how we can make a difference.

“Superannuation administration matters. We safeguard the future by providing expert and reliable services today.”

Our new vision is a statement for our future aspirations. It reflects who we want to be in the future and what we want to achieve as an organisation.

“We provide peace of mind to our clients and their members.”


Our clients

At 30 June 2015, our clients were:

First State Super Trustee Corporation (the trustee of First State Superannuation Scheme) (FSS);

SAS Trustee Corporation (the trustee of the STC Pooled Fund schemes);

Commonwealth Superannuation Corporation (the trustee of PSSap);

Aon (for the Aon Master Trust and Aon ERF);

Trust Company (Superannuation) Ltd (the trustee of Virgin Super); and

The trustees of the Parliamentary Contributory Superannuation Fund (PCSF).

Our services

Administration services

The principal function of Pillar is the provision of superannuation scheme administration and related services. In essence, this includes the following services:

Collecting and processing contributions.

Keeping and maintaining member records.

Providing information and advice to fund members.

Processing claims and paying member benefits.

Contact centre and member communication services.

Preparing financial statements for the trustees of superannuation funds.

Corporate services including human resources, accounting, payroll and technical support.

Assisting clients to meet their regulatory compliance obligations.

Australian Financial Services Licence

Pillar has an Australian Financial Services Licence (AFS Licence No. 245591) and is licensed to provide financial product advice to members of the superannuation funds under its administration, and to deal in superannuation products.


Our strategy


Our strategic plan

During the 2014/15 financial year, Pillar reviewed and implanted a new organisational strategy and a revised vision and mission.

Strategic priority Outcome

Strengthen our existing services and deliver regulatory compliance

Pillar delivers cost effective, efficient and compliant services within agreed performance criteria.

Deliver new services to meet immediate and future client needs

Pillar delivers new service offerings that add value to our clients at an attractive cost to them and ourselves.

Transform our brand Pillar is sought out for service and commentary in superannuation.

Transform our workforce and culture

Pillar has an agile and motivated workforce that is customer and solution focussed, highly skilled and resilient.

Improve our profitability

Pillar earns a sufficient return to reinvest in its business and provide a return to its shareholders whilst being market competitive.

To ensure that we achieve the outcomes required to deliver on our strategy, in the coming 12 months Pillar will focus on a number of key areas. These include resources on the delivery of Project Eleanor to transform our current operating model and redesigning our organisational structure to support our future operating model. We will also be developing a pipeline of new product and service opportunities and executing a targeted approach to acquiring new business. We will also establish a targeted external communication and engagement strategy to reset the market perceptions of Pillar and further promote our brand.


Pillar’s success measures over the next three years include:

Market positioning

Pillar will be considered for all outsourcing opportunities and considered a leading provider in superannuation administration services.

Retention of existing clients

Pillar now has long-term agreements in place with all of our clients, with contracts recently being re-negotiated and agreed with STC, CSC, FTC and Aon.

Development of new products and services for existing clients

This includes the development of new services and product options, supporting our clients with their growth aspirations and helping them to remain competitive.

Seeking new business opportunities

Pillar’s business refresh means it is well positioned to pursue a range of new business opportunities.

Pillar is aiming to win two new clients or funds over the ensuing three years.

Technology platform refresh

Pillar has undertaken a project to move to a single modern registry platform. This will lower the total cost of system ownership and improve services for clients and their members.

Pillar will focus on extending client and member web and mobile accessibility and evolving customer/member demands.

Continued upward trend in profit return

Pillar is a profitable state owned corporation and has consistently generated a profit return.

Excluding technology and platform refresh costs, Pillar again expects to increase its profit in 2016. Our modelling shows increasing profits thereafter as the benefits of our refresh are realised.

Stronger Super update

The implementation of the Federal Government’s Stronger Super reforms continued over the past year, introducing changes in the way we perform our day to day administrative functions. We are continuing to work closely with our clients and vendors to improve our processes in line with the Stronger Super reforms.

We have developed and installed a secure, streamlined statutory reporting system that has contributed to decreases in error rates in line with APRA reporting requirements. We have developed a formal data management framework to ensure a quality control process is in place to certify the accuracy, confidentiality and consistency of our data and to provide business logic and calculation integrity to our systems. We have implemented Data Standards Contributions resulting in a reduction in the amount of manual intervention in the employer contribution process.

The coming year will see further change being implemented and we will continue to work with and support our clients to ensure they meet their regulatory obligations.


Administration, Contact Centre, the Document Management Unit and Benefit Accounting. The work-flow management system has succeeded in enabling managers to forecast and manage resources to match work volumes and helps Pillar attain service level objectives through forecasting peaks and troughs in activity.

Pillar also continues with its focus on innovation. Pillar is an organisation which values ideas, which is why we are further developing innovation within our capability and indeed our cultural identity. In March 2015 we held our second Innovation Forum where we launched our Innovation Program. The first component of the program has been the introduction of Innovation Champions across every business unit. These Innovation Champions

Continuous improvement and innovation

Pillar is also focusing on innovation with our inaugural Innovation Forum being held in 2014. This forum was held in order to allow us to think about and develop new ideas and concepts to improve our current work practices, enhance the experience that we provide to clients and their members and develop new or improved products or services.

In order to run our operations efficiently, Pillar continues to focus on ensuring that the processes, procedures and systems we utilise to conduct our business are continually reviewed. Pillar continues to use a work-flow management system to measure business performance in all service delivery business units:

helped launch our new Idea Process, so that our employees’ ideas can be quickly and consistently assessed.

Collecting ideas from all parts of the organisation allows us to tap into good ideas, no matter where they are. Our employee’s ideas help change or create more effective processes, dynamic products and services, and adapt to and create growth for Pillar in the marketplace.

The Innovation Forum was attended by close to 100 Pillar employees from all levels of the organisation and from all divisions. Some great ideas emerged with many focused on addressing current opportunities within our business and these will be finalised and agreed as part of our business unit objectives.


Key administration highlights

Members and Employers of our clients’ funds as at 30 June 2015

Client funds under administration as at 30 June 2015

Federal Government Super Streamprogram has driven account consolidation and lost membertransfer to the ATO, accounting formost member reduction

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Members Employers

2013 2014 2015

$80

$90

$100

$110

2013 2014 2015

Billions


0

1,000,000

2,000,000

3,000,000

Writtencorrespondence

Phone calls Member mailouts

2013 2014 2015

Member correspondence of our clients’ funds as at 30 June 2015


Business Transformation

Project Eleanor

Project Eleanor was established to assist in the delivery of a number of our key strategies including:

Deliver new services to meet immediate and future client needs.

Strengthen our existing services and deliver regulatory compliance.

Improve our profitability.

Additionally at the completion of the project our client funds and their members, employers and advisers will have access to a number of improved services.

Pillar has a range of back end core administration systems that support our clients’ superannuation funds. These multiple, disparate systems create administrative and support overheads. A key element of Pillar’s IT strategy is the consolidation of these core systems (Consolidation) to provide operational efficiencies and an enhanced customer service platform.

During the 2014/15 financial year Phase 1 of the Consolidation was completed. Phase 1 involved the creation of an Enterprise Data Warehouse (EDW) to centralise all the disparate sources of data into one central repository for ease of access and reporting.

Pillar is well underway with Phase 2 of the Consolidation which involves the rationalisation of the core administration systems. The first stage was the assessment of vendor offerings via a formal evaluation and due diligence process. Pillar engaged a systems integration vendor and a software


The scope of the system will cover:

Superannuation administration functionality.

Workflow and process management.

Digital channels (e.g. web, mobile).

Reporting capabilities.

Integration to existing systems, e.g. general ledger.

Pillar’s executives have and will continue to have high involvement throughout the program, reflecting the importance of this strategic project. When implemented, Pillar

vendor to implement the new system.

The systems integration vendor provides both a risk mitigation strategy and additional capabilities relating to requirements analysis, process design, change management and data migration. These specialist areas are critical in major projects to achieve success.

It is expected that the platform build and configuration will be completed by mid 2016, with ‘go live’ for our first client. Successive and new clients will then be migration projects over the ensuing 18 months.

will be positioned for significant productivity gains and this will improve competitiveness and become a competitive advantage.

The NSW Government have provided initial funding to support Project Eleanor and the successful completion of Project Eleanor remains contingent upon this continued support.

Project Eleanor is subject to Pillar’s Risk Management Framework and all aspects go through the five steps used to manage our risk exposure.


Risk management at Pillar

Risk Management Overview

We recognise that superannuation administration carries a high level of inherent risk. Therefore, risk management is a key focus at all levels within our organisation. This includes:

Day-to-day processing of member transactions is subject to risk-based preventative and detective control mechanism and intensive surveillance.

IT system development and all significant business changes are supported structurally by a well-developed project management framework.

Regulatory risks arising from the finance and superannuation industries’ complex regulatory requirements are monitored through a comprehensive compliance program.

Risk Management Framework

Pillar’s Risk Management Framework (RMF) incorporates a collection of systems, structures, policies and processes designed to identify, assess, manage, mitigate and monitor internal and external sources of inherent risk material risks. The RMF includes the following:

A risk management strategy;

An independent and designated risk management function, with appropriate authority, expertise and reporting structure;

Risk management policies, procedures and controls to identify, assess, monitor, report on, mitigate and manage each material risk;

Clearly defined and documented roles, responsibilities and formal reporting structures for the management of material risks throughout our business operations; and

A review process to ensure the RMF remains effective.


As represented in the diagram 1 (on the previous page), Pillar’s RMF incorporates the following three lines of defence:

Defence Line Responsibility

First line of defence:

Line management/business operations

Line management is responsible for ensuring that a suitable risk and control environment is established in day-to-day operations. This includes identifying key business risks and controls at process level, which are proactively reviewed, updated and modified to capture changes in the business environment.

The first line of defence provides management assurance and informs the second line of defence by identifying, managing and reporting on the risks in their business operations.

Second line of defence:

Oversight function

There is a designated Risk function at Pillar, responsible for the oversight of business processes and risks. This includes:

Designing and reviewing risk management policies and procedures;

Reviewing the RMF;

Facilitating and challenging risk assessment processes undertaken by the first line, and providing meaningful reports on material risks to the Audit Risk Management Committee (ARMC), Executive General Managers (EGMs), clients and relevant management and staff; and

Providing risk management training and advice across the organisation. This ensures that line management are responding to new strategic priorities and risks, and monitoring mechanisms are appropriately working to enable compliance with policies and procedures.

Third line of defence:

Internal audit and other independent assurance providers

The third line of defence provides independent, objective assurance services designed to add value and improve operational controls. These assurance activities are determined by the Board through the ARMC, in consultation with the first and second lines of defence.

It is critical that the third line of defence is independent to ensure the objective and effective assessment of the organisational internal controls, risk management and governance processes. Therefore, at Pillar we provide appropriate reporting lines for respective audit and assurance providers, including a direct report to the ARMC, as required.

All functional areas and activities are covered by Pillar’s RMF including: business strategy, client and member services, finance and accounting, human resources, information security, fraud and corruption prevention, business take-on, and system migrations. Pillar’s risk profile is continually monitored and reviewed across all these functional areas.

Client Communication:

Pillar is committed to providing quality trustee engagement in relation to our risk management practices. This is achieved through ongoing communication and reporting, including:

Risk and audit reports: Quarterly reports are issued on audit and risk activities, which include an overview of all internal audit, risk, compliance and quality reviews performed during the relevant period. In addition, Pillar performs an annual audit on the description

of relevant controls over superannuation member administration services, which is completed with reference to the Guidance Statement GS007 (Audit Implication of the Use of Services Organisation for Investment Management Services ).


1. Establishing the Risk Context

2. Conducting the Risk Assessment

4. Monitoring and Review

5. Communication and Consultation

Risk Culture

3. Developing Risk Treatment Plans

Risk Management Process

Pillar’s risk management process is summarised in Diagram 2 (below) :

Client audits: The Risk team works closely with clients and their auditors to co-ordinate client-initiated audits and risk reviews. This includes internal audit, external audit, compliance, and other reviews.

Attendance at Audit and Risk Committee and/or Trustee meetings: The Risk team and relevant EGMs attend and present at client board committee meetings and/or trustee meetings, as requested.

Other ongoing communication: The Risk team, EGMs and relevant management and employees are available to address client queries (e.g. via email, phone or meetings). This may include partaking in regular audit and risk update meetings, and risk workshops, as required.

Diagram 2: Risk Management Process


The following five steps are applied to ensure that we continue to implement an effective risk management approach.

Step Description

1. Establishing the risk context The risk context is established by understanding what our organisation

does, on a holistic and elemental basis:

Internal parameters: Include our organisation’s culture, governance structure, size, diversity, business functions, contractual arrangements, capabilities, internal processes, and internal stakeholders.

External parameters: Include external factors and external stakeholders, as well as environmental conditions that would influence Pillar’s ability to achieve its objectives. These may include social, cultural, political, regulatory, economic and competitive factors.

2. Conducting a risk assessment

The Risk Assessment process involves the following steps:

Identify the risks: By noting down all possible risk events, even if there are controls in place designed to reduce these risks.

Analyse the risks: By looking at the likelihood and consequences of the risk event, before the effectiveness of internal controls has been taken into account.

Evaluate the risks: By prioritising the risks according to their combined likelihood and consequence rating.

3. Developing risk treatment plans

This involves developing and implementing action plans to eliminate risks or reduce them to an acceptable level. Overall, the aim is to identify ways to mitigate the risk by:

Reducing the likelihood of the risk occurring: By preventative maintenance, audit and compliance programs, supervision, contract conditions, policies and procedures, testing, training of employees, technical controls and quality assurance programs.

Reducing the consequences of the risk occurring: Through contingency planning, contract conditions, disaster recovery and Business Continuity Plans (BCP), off-site back-up, public relations, emergency procedures and employee training.

In some cases, the risk may be accepted, avoided, or transferred (through insurance and or fixed contracts).

4. Monitoring and reviewing the risk and control environment

Line management (i.e. risk and action owners) is required to monitor and review risks and the effectiveness of controls by:

Ensuring that controls are effective and efficient in both design and operation.

Obtain further information to improve risk assessment.

Analysing and learning lessons from risk events, including near-misses, changes, trends, successes and failures.

Detecting changes in the external and internal context, including changes to risk criteria and to the risks, which may require revision of actions plans and priorities.

Identifying emerging risks.


5. Engaging effective communication and consultation practices

Our risk management process incorporates internal audit procedures and external audit arrangements to ensure compliance with the RMF. Our communication and consultation approach includes:

• Internal Audits: Independent assurance providers (currently KPMG Australia) are engaged to provide internal audit reviews. The Internal Audit Plan is developed annually in consultation with the EGMs, key process owners/line managers and clients, as required. The Internal Audit Plan is approved by the ARMC.

• Compliance Assessment Reviews (CARs): The Risk function undertakes an annual CAR plan that incorporates a program of risk based reviews.

• External Audit: An independent assurance review on the integrity of Pillar’s financial statements is performed annually. The Annual Report is published on the Pillar website.

• Other assurance providers: Management may also engage assurance providers to assist in various advisory and audit requirements (e.g. IT Security Reviews, Risk Culture Engagements). These will be determined at the business unit level and approved by the relevant EGM.

Underpinning Pillar’s RMF and process is a risk-aware culture. All employees across Pillar, are encouraged to take a proactive role in applying effective risk management practices, in all aspects of their work.


Monitoring compliance with legislation and policies

Pillar’s compliance program is supported by a specialist Compliance business unit, which amongst other things:

Ensures that Pillar has complete and timely information to meet the requirements for all the schemes administered.

Details compliance requirements for managers and employees, where applicable.

Ensure that breaches are properly reported and addressed.

In addition, an independent internal function is dedicated to monitoring the level of compliance by conducting CARs. This function also maintains a monthly management questionnaire process that requires managers to attest to their compliance with specific requirements.

Business continuity

The risk of incidents occurring that could seriously disrupt any of Pillar’s activities is addressed by a comprehensive BCP.

Pillar’s BCP ensures that all business units have both a Business Resumption Plan and a Disaster Recovery Test Plan.Both plans document critical processes allowing for efficient recovery of Pillar processes in a disaster situation. There is regular scheduled testing of these plans. Results are then consolidated and reported to Pillar’s Executive Committee.

Data is backed-up daily to a dedicated replication system located at our offsite recovery facility.

Disaster recovery tests are scheduled bi-annually at Pillar’s dedicated disaster recovery facilities.

Quality assurance

Our quality assurance program includes:

• A comprehensive internal audit plan (with KPMG as internal auditors). The annual Internal Audit Plan is developed in consultation with the Board and our clients. Implementation of any audit recommendations is actively monitored by our Executive Committee and the ARMC.

• We are also currently implementing a data quality framework and reporting structures to ensure our compliance with APRA’s data quality guidelines.

Insurance

Pillar maintains insurance cover through a contract of coverage with NSW Treasury Managed Fund (TMF). The cover includes professional indemnity cover for all employees, property, motor vehicles, Worker’s Compensation and miscellaneous matters.


Employees

Pillar employs over 700 people, the majority of whom are located in three adjacent buildings in the Illawarra, (Coniston). Pillar is proud to be one of the region’s largest employers and actively participates in the community life of the area.

Our strategy is to strengthen our business through investment in our employees. Our aim is to achieve an engaged, diverse, and capable workforce who are actively involved in the workplace. A variety of initiatives have been implemented or continued from previous years to help us achieve this aim.

Multiculturalism

The Illawarra is recognised as a culturally diverse region, which is comprised of residents from a wide range of multicultural backgrounds. Our workforce reflects the community of the Illawarra region.

Pillar is committed to the Principles of Multiculturalism, as set out in section 3 of the Community Relations Commission and Principles of Multiculturalism Act 2000 (NSW).

Pillar has ongoing strategic initiatives in relation to these principles including:

A strong commitment by the CEO and the Executive Committee to the Principles of Multiculturalism;

Promoting an understanding of multiculturalism within Pillar;

Offering flexible working hours, subject to business needs being met;

Ensuring access to information services; and

Ensuring equality of opportunity based on merit within Pillar.

For the 2014/15 year, Pillar continued to meet its performance indicators in relation to the above-mentioned initiatives. Some of the ways in which the initiatives have been (and will continue to be) implemented are set out below.

Recruitment and selection process

Pillar has a well-structured and defined recruitment and selection process incorporating best practice methodologies and online recruitment tools. Pillar’s recruitment and selection processes strengthen our merit selection, and increase the skills of managers in making sound selection decisions.

Flexibility

Pillar offers a high degree of flexibility to our employees, many of whom, in particular parents of young or school age children, take advantage of the flexibility in working hours that we offer. Pillar has a formal Working from Home policy, which introduced an additional element of flexibility for our employees.

Diversity

Pillar strives to build a workforce that reflects the diversity of our society. A diverse workforce is one that recognises and embraces the diverse skills and perspectives that people bring to an organisation through their gender, origin, ethnicity, disability, age, and religious beliefs. By valuing different people and different approaches, we are more innovative and ultimately able to deliver better services. The merit principle is applied to all recruitment, selection, promotion, training and other employment-related opportunities. Pillar continues to encourage persons with disabilities and persons of Aboriginal and Torres Strait Islander background to apply for positions. Recently in March we celebrated Harmony Day with the aim of spreading this year’s key message: ‘Everyone Belongs’.

Our people


We have a very culturally and linguistically diverse workforce and direct, measurable benefits arise from the substantial number of multi lingual employees who are able to assist in member services by performing interpreter functions and who also are sensitive to cultural issues of fund members from different backgrounds.

It should also be noted that no valid complaints have been made that ethnicity has been a barrier to employment and development opportunities.

Table A: Trends in the Representation of Workforce Diversity Groups*

% of total staff

Workforce diversity group Benchmark or target 2013 2014 2015

Women 50.0% 69.6% 69.0% 65.8%

Aboriginal people and Torres Strait Islanders 2.6% 0.3% 0.3% 0.3%

People whose first language spoken as a child was not English

19.0% 21.3% 21.7% 23.5%

People with a disability N/A 2.5% 2.5% 2.0%

People with a disability requiring work-related adjustment 1.5% 0.0% 0.0% 0.0%

Table B: Trends in the Distribution of Workforce Diversity Groups

Distribution Index

Workforce diversity group Benchmark or target 2013 2014 2015

Women 100 75 73 75

Aboriginal people and Torres Strait Islanders 100 N/A N/A N/A

People whose first language spoken as a child was not English 100 103 107 107

People with a disability 100 N/A N/A N/A

People with a disability requiring work-related adjustment 100 N/A N/A N/A

* Employee numbers as at 30 June.

NOTES

1. A Distribution Index of 100 indicates that the centre of the distribution of the Workforce Diversity group across salary levels is equivalent to that of other staff. Values less than 100 mean that the Workforce Diversity group tends to be more concentrated at lower salary levels than is the case for other staff. The more pronounced this tendency is, the lower the index will be. In some cases the index may be more than 100, indicating that the Workforce Diversity group is less concentrated at lower salary levels.

2. The Distribution Index is not calculated where Workforce Diversity group or non-Workforce Diversity group numbers are less than 20.

Respect for the rights of people with disabilities

Pillar is committed to treating all employees fairly and with respect. Integral to this is Pillar’s respect for the rights of people with disabilities and appreciation of their needs, particularly in accessing the services that Pillar provides and in pursuing employment and career advancement opportunities within Pillar.

We believe that any employee, or client fund members with a disability, should have the same access as other people to our services. Pillar provides flexible communication options to cater for employees and client fund members with specific needs. When providing customer service, any special needs of fund members are met on a case by case basis.


Organisational development

Industry related training

There is a passion amongst Pillar employees at all levels for training and development. Thirty employees are undertaking a Diploma in Superannuation with a further 40 employees undertaking their ASFA 146 accreditation. In addition, we have 280 employees who subscribe annually to the Super CPD membership, keeping their industry knowledge up to date with quarterly assessments.

Defined benefits project

Our customised client specific Defined Benefits programs are now in place and were built in partnership with ASFA after a year-long intense project. Employees attend a 10 day classroom program over three months, focusing on the end to end Defined Benefits processes and rules that are specific to the client they service. Graduates from the program each receive dual qualifications. A Certificate IV in Financial Services and a Certificate IV in Superannuation. We currently have three programs, each with

15 employees who have either completed a program or are in the process of completion. Our in house training team provides the training and maintains the course material content.

eLearning

Employees have a vast suite of eLearning modules to choose from. Whether they are industry and compliance related modules or off the shelf Microsoft or IT specific. We have an in house eLearning designer who customises the module content and provides additional ad hoc modules on bespoke topics such as Stronger Super and Data Contributions. Our customised eLearning offerings are truly unique to Pillar and its employees and provide a consistent, yet flexible way of learning.

Leadership training

Utilising a mix of external vendors to provide an array of leadership tools and methodologies, our management teams at all levels have attended ten days of

classroom based training. The leadership program ‘SMILE’, which stands for Supporting Managers In Leadership Excellence has been rolled out across the business as part of the leadership training framework. The benchmark level of leadership skills and capability for both newly appointed managers and more experienced managers has been lifted, with a focus on managing and leading high performance teams, self-awareness and emotional intelligence.

Business procedures

With over 3,000 business procedures, Pillar has made significant improvements to the way we manage, update and review our business and operational procedures. The introduction of a new procedure management system, internally known as ‘Compass’ has added rigour and governance to all procedures we work with on a daily basis, not to mention the additional auditing and management dashboard capability.


Workplace wellness – My Wellness program

Our people are our greatest asset and Pillar aims to lead by example by creating a workplace culture and environment that values, supports and promotes programs and policies that improve the physical and mental health, and wellbeing of our people. A healthy workplace is one where employers and employees work together to support and promote good health.

Effective workplace wellness programs have shown to have significant benefits to both employees and businesses and consistently show positive returns on investment.

Research shows there are many measurable benefits to organisations and employers in implementing workplace health programs, including increased workplace productivity, reduced absenteeism, improved employee satisfaction, improved employee engagement and reduced workers compensation costs.

Employees were offered the opportunity to undergo a free flu vaccination. We continue to see increased participation in the program which aims to reduce the incidence of unplanned leave due to illness.

In addition, Pillar offers all employees a free gym membership and comprehensive Employee Assistance Program (EAP) which is designed to improve health and general wellbeing as well as supporting a more productive workforce.

The official launch of Pillar’s ‘My Wellness Program’ was held the week commencing 25 May and included a range of events and activities including meditation, walking groups and exercise classes. A ‘My Wellness Wall’ has been created in the Coniston office which has information ranging from donating blood, details on exercises in the workplace and where to go for help with anxiety/depression. A monthly ‘My Wellness’ newsletter includes tips on exercising, eating healthily and encourages employees to adopt and maintain mental and physical wellbeing. Regular ‘My Wellness’ days will also be held during the year including walking groups, meditation sessions and health checks.

Mental Health First Aid (MHFA) is the help provided to a person who is developing a mental health problem, or who is in a mental health crisis, until appropriate professional treatment is received or the crisis resolves.

As part of Pillar’s Wellness Program 85 of our Managers attended mental Health First Aid training conducted by accredited MHFA Instructors throughout 2014/15.

Workplace health and safety

In order to identify and communicate workplace health and safety issues to management, an active Health and Safety Committee meets regularly within Pillar. We now have 12 assigned Health and Safety Representatives, representing all business areas across our Sydney and Coniston sites.

Worker’s Compensation

During the 2014/15 financial year 12 Worker’s Compensation claims were submitted to Pillar’s insurer.

Pillar was not subject to any prosecutions under the Work Health & Safety Act, 2011 (NSW) in 2014/15. Pillar was not subject to any prosecutions under the Work Health and Safety Act, 2011 (NSW) in 2014/15.

Health and wellbeing


Safety Management System

Pillar is committed to ensuring the health, safety and wellbeing of all employees, contractors and visitors through the maintenance of an effective Safety Management System (SMS).

Our SMS is regularly reviewed and updated to ensure compliance with all legislation and regulations.

Waste reduction and purchasing plan

Pillar is committed to waste reduction and recycling and aims to comply with the NSW Government’s Waste Reduction

and Purchasing Policy. Pillar prides itself on being environmentally responsible and is committed to recycling initiatives and reducing energy usage.

Practices consistent with waste reduction and sustainability are firmly established within Pillar’s processes. Pillar continues to try to reduce its use of paper products and, through e-business initiatives, the need for other organisations to use paper as well.

Key elements of Pillar’s actions in these areas are that:

Information technology and other technologies as appropriate are used to the optimum extent to reduce paper

Environmental sustainability

needs in Pillar, bearing in mind cost and quality criteria;

Office consumables with recycled content are purchased where these are readily available and meet cost and quality criteria;

Paper and cardboard waste that meets recycling criteria, and toner cartridges are placed in designated containers for recycling; and

Other suitable materials are recycled as advised.


Employees are encouraged to recycle and to reduce waste where possible and would be aware that Pillar’s actions and programs reflect corporate practices that have been in place for some time.

New employees are made aware of the practices as part of the standard induction program.

Pillar is proud to be a preferred employer in the Illawarra and actively participates in the community. Set out below are examples of how our employees contribute to our local community.

Southern Youth and Family Services Association Incorporated (SYFS)

Over the past 12 months, Pillar piloted a very successful business traineeship program providing education and employment opportunity for underprivileged youth within our area. Pillar partnered with SYFS to bring this program to life. In April 2015, this employee successfully completed her Certificate IV in Business Administration and following this success, has secured a fixed term contract working in our Data Standards Team.

Relay for Life

Once again Pillar employees and family members participated in the Illawarra’s Relay for Life over the weekend of 20-21 September 2014. Team Pillar was made up of 17 employees and family members who walked laps around Beaton Park in honour of a loved one, to show how proud they were to have survived cancer or simply because they wanted to make a difference.

Harmony Day

It should come as no surprise that we share in this cultural richness here at Pillar, with more than 19 per cent of our workforce speaking a first language other than English. In March 2015, Pillar participated in Harmony Day, which is a special celebration of Australia’s multiculturalism. Employees were invited to decorate their pods, wear something orange, the official Harmony Day colour and bring along a plate of food to share with their team members. In the spirit of Harmony Day, our CEO had the communication translated into Macedonian and Mandarin, two of the most common languages other than English spoken in Australia and by employees at Pillar.

Great Illawarra Walk

In March 2015, 18 Pillar employees and family members participated in the Great Illawarra Walk from Shellharbour Village to Stanwell Park returning on day two. This year the walk raised money for SYFS who exist to support and care for vulnerable, disadvantaged and homeless young people, aged 12-24 years or those at risk of disadvantage and homelessness. This year $111,000 was raised and the money assisted SYFS to fit-out and furnish 15 units recently completed to accommodate young people who are studying in education, attending training and commencing employment or seeking work.

Barnardo’s Gifts for Kids

Christmas is a time for giving, yet for many kids in Australia the festive season is not a time of happiness or celebration. Pillar employees have been supporting the Barnardo’s Gifts for Kids for

Pillar in the community

many years and in 2014 once again supported this program by donating presents to kids who face extreme homelessness, poverty, neglect and abuse.

The Kids’ Cancer Project

The Kids’ Cancer Project is an Australian charity focussed on finding cures for childhood cancers believing that every child with cancer should have the opportunity to grow up and live their dreams.

An employee donation box has been located in the Pillar Café and Sydney office since 2012. A member of our IT Team also competed in a ride across Italy and the Alps riding up the much feared Stelvio Pass at 2,760 metres with 50 switch backs.

Over $6,322 has been raised mainly from Pillar employees and friends.

Mission Australia Recycling Bin

Since July 2012, the Mission Australia recycling bin has been located in the Pillar car park in Coniston for employees to donate unwanted clothing. These donations have assisted underprivileged and homeless individuals and families in the Illawarra, particularly in the colder winter months.

University of Wollongong (UOW)

Pillar continues its relationship with the UOW through participation at Careers Fairs, as well as promotion and support of the University’s Graduate and Internship programs.


Employee donations

During the year, our employees donated just under $10,000 to a variety of charities through participation in various activities including raffles, barbeques and mufti days.

Some of the charities for which funds were raised during the year include:

Legacy: Providing services to Australian families suffering financially and socially after the incapacitation or death of a spouse or parent during or after their defence force service.

Epilepsy Australia’s Purple Day: Epilepsy Australia is the national coalition of Australian Epilepsy Associations raising our voices as one to advance the cause of all Australians living with Epilepsy. Purple Day is a global effort dedicated to raising awareness of epilepsy which started in 2008.

Alzheimer’s Australia Memory Walk: Alzheimer’s Australia is the leading charity for all types of Dementia in Australia, supporting people with dementia as well as their family, friends and carers through services such as early intervention programs and counselling. The Memory Walk and Jog enable Alzheimer’s Australia to continue to provide much needed support services, education and social research.

Multiple Sclerosis (MS) Australia: Multiple Sclerosis is a disease of the central nervous system, interfering with nerve impulses within the brain, spinal cord and optic nerves. MS Australia’s mission is to accelerate Australian research targeting the prevention, better treatment and a cure for MS.

Organisation Amount

Jeans for Genes $485

Steptember $722

Red Cross $620

Memory Walk $653

Loud Shirt Day $330

Cure Brain Cancer $1,000

Leukaemia Foundation $675

Great Illawarra Walk - SYFS $612

Epilepsy Australia $750

Febfast $743

Legacy $1,331

Multiple Sclerosis Australia $589

Biggest Morning Tea in support of the Cancer Council $834

Wollongong Homeless Hub $601

Total $9,945

Anzac commemorations

Pillar employees participated in a week of commemorations for the Centenary of Anzac Day. A garden was created in the walkway between two of our buildings and employees purchased poppies and placed them in the garden. We also had the reading of the Ode and a minute’s silence on every floor occupied by Pillar employees on 22 April 2015. Our intranet featured stories and photos of family members who have fought or are currently involved in the military over the past 100 years.


Corporate events and sponsorships

Pillar continues to sponsor selected events to maintain its profile in the superannuation industry.

This year, our sponsorships included:

Pillar in the superannuation industry

The Association of Superannuation Funds in Australia (ASFA) National Conference held in Melbourne in November 2014.

Conference of Major Superannuation Funds (CMSF) held on the Gold Coast in March 2015.

ASFA Superfunds Magazine ‘Out and About’ photo page.

We believe these promotional activities continue to strengthen our brand and profile within the superannuation industry.

DRAFT


Part BCorporate Information

© Rodney Campbell 2015Coalcliff Beach


B3Pillar Administration Detailed Corporate Information

Enabling legislation

The State Owned Corporations Act 1989 (NSW) (SOC Act), provides for the establishment and operation of Government enterprises as State owned corporations. It sets out the objectives of State owned corporations, the powers of Ministers and provisions for reporting.

The Superannuation Administration Authority Corporatisation Act 1999 (NSW) established the Superannuation Administration Corporation as a statutory State owned corporation. It defines the business of the Corporation and sets out special provisions for the management of the Corporation which supersede provisions in the SOC Act.

The Memorandum and Articles of Association for the Corporation with effect from 26 July 1999, the date of establishment of the Corporation, was executed by the Premier and by the Treasurer as Shareholding Ministers.

The trading name of the Superannuation Administration Corporation is Pillar Administration.

Changes in legislation relating to Pillar

There have been no changes to either the governing legislation of Pillar, the Superannuation Administration Authority Corporatisation Act 1999 (NSW) or the SOC Act since 2012/2013.

Changes in legislation related to the administration of superannuation funds are reported in the Annual Reports of Pillar’s clients.

Accountability to the NSW Government

Pillar is accountable to the NSW Government. Oversight is carried out via a Portfolio Minister (section 20I of the SOC Act) and two Voting Shareholders of Pillar (section 20H of the same Act).

As required by NSW legislation, Pillar prepares an Annual Report, Half Yearly reports, and an annual Statement of Corporate Intent, all of which are tabled in Parliament. Pillar also provides quarterly performance reports to the Portfolio Minister and the Shareholding Ministers.

Pillar’s annual financial statements are audited by the Auditor-General.

The Portfolio Minister

In terms of s. 20I of the SOC Act, the Portfolio Minister at 30 June 2015 was the Hon. Gladys Berejiklian, MP, Treasurer and Minister for Industrial Relations.

The Shareholding Ministers

In terms of s. 20H of the SOC Act, the Voting Shareholders of Pillar as at 30 June 2015 were:

The Hon. Troy Grant, MP, Deputy Premier, Minister for Justice and Police, Minister for the Arts and the Minster for Racing; and

The Hon. Gladys Berejiklian, MP, Treasurer and Minister for Industrial Relations.

Corporate governance

B4 Annual Report 2014—2015 Pillar Administration

Organisational chart

The Board

Board Committees

Company Secretary Board Support Shareholder Reporting

Board of Directors

Risk

Risk & Audit

Compliance Assessments

Information Technology

IT Support & Control

IT Maintenance & Improvement

IT Development

IT Operations

Enterprise Architect

Business Development & Client

Engagement

Business Development & Engagement

Technical Specialist

Marketing Specialist

Product & Innovation

Operations

Fund Operations FSS

Fund Operations Pooled Funds

Fund Operations Aon

Shared Services

Fund Operations Pssap / Virgin

Member Services

Corporate Services

Compliance

Human Resources

Organisational Development

Health & Safety

Communication & Policy

Legal & Privacy

Organisational Change

Steering Committees

Managing Director & CEO

PMO

Portfolio, FSS/STC

Portfolio, Aon/Virgin/CSC

Portfolio, Pillar/Compliance

Portfolio, Stronger Super

Practice Manager

Finance / Company Secretary

Transactional Accounting

Corporate/Project accounting

External Reporting

Company Secretarial

Fund Accounting

Commercial/Pricing

Property/Facilities

Management

Superannuation Reporting


Pillar’s Board

Under the Superannuation Administration Authority Corporatisation Act 1999 (NSW), Pillar’s Board has statutory authority to manage Pillar and is accountable to the Shareholding Ministers.

Our Directors

The Pillar Board consists of at least three, and no more than six non-executive Directors and the Chief Executive Officer. The Chair is a non-executive Director.

Clause 1(6), Schedule 3 of the Superannuation Administration Authority Corporatisation Act 2001 provides that the office of a Pillar director becomes vacant if the director becomes a member of either of the Boards of STC or FTC. On 26 June 2015, Pillar’s Chair was appointed as the Chair of STC and ceased to be Pillar’s Chair.

Until a new chair was appointed, the provisions of Clause 12 Schedule 8 of the SOC Act enable directors present at a Board meeting to elect a Director to chair the meeting. Cathy Aston has been elected as the Presiding Director at all board meetings since Nicholas Johnson ceased to be Pillar’s Chair. Subsequent to this reporting period, Cathy Aston was appointed as the Chair to Pillar's Board.

The Board meets regularly, usually monthly and monitors corporate performance and key issues through formal processes such as reports from management, questions to management from Directors at board meetings, through discussions with stakeholders and through various informal means open to the Directors.

Each of the non-executive Directors of Pillar was appointed to the Board by the Voting Shareholders pursuant to clause 15.2 of the Memorandum and Articles of Association of Pillar.

The non-executive Directors bring to the Board qualifications, skills and experience in, or relevant to, the superannuation and finance industries, private and public sector management, information technology, legal, employment and industrial relations. The current Directors of Pillar are listed (on the next page) with the date and term of appointment stated for each non-executive Director, along with an outline of each Director’s professional background.

Nicholas Johnson, M.A. (Oxon), MAICD Chair

Member of the Audit and Risk Management Committee and the Human Resources and Remuneration Committee

Nicholas has extensive experience in financial services business management, in roles both overseas and in Australia. His financial sector experience include roles as Head of Operations and of IT systems development in major investment banks. He retired from Barclays Capital in 2012 after serving as Chief Executive Officer for Australia between 1998-2009 and then as Managing Director Senior Relationship Management.

Previously he held senior positions with Commonwealth Bank, Morgan Stanley Asia, Credit Suisse First Boston and Orion Bank.

He is currently an Advisory Board Member of the North West Rail Link project (the Chatswood to Rouse Hill rapid transit rail line), Chairman of the Sydney Institute and Chairman of the National Art School.

Nicholas was appointed as Chair on 1 April 2013 and ceased to be Pillar’s Chair on 26 June 2015, when he was appointed as the Chair of STC, one of Pillar’s clients.


Peter Brook, M. Mngt (MGSM), ACA, B. Comm (Finance & Systems) (UNSW), GAICDManaging Director and Chief Executive Officer

Peter has over 27 years' experience with senior management roles across diverse and complex organisations within the financial services sector.

Peter started as a senior partner in Grant Thornton and the National Chairman of the Insolvency and Recovery practice. He later moved into senior executive roles working for MLC and Challenger (CFO of the Asset Management and Life Insurance group and an Executive Director in four ASX listed asset management funds).

Peter later moved onto Alinta Energy where he was an Executive Director and CFO. Immediately prior to Pillar, Peter was the CFO for State Super Financial Services (SSFS).

Peter was appointed as CEO on 30 May 2013, for a three year term.

Cathy Aston, B.Ec (Macquarie University), M. Comm (UNSW), TFASFA, GAICD

Member of the Audit and Risk Management Committee, and the Productivity and Information Technology Committee

Cathy is an experienced executive and non-executive director of digital and telecommunications businesses across Asia Pacific.

She has a broad commercial background with senior roles in finance, marketing, strategy and business improvement.

Previous positions include Executive Director, Digital Business at Telstra Corporation; Finance Director, Telstra International (Hong Kong); and Managing Director, Mobitel Pvt Ltd (Sri Lanka).

She is currently a director of the Financial Services Institute of Australasia (FINSIA) and the Australian Brandenburg Orchestra.

Cathy was appointed as a director on 16 June 2014 for a 3 year term and as Chair from 9 October 2015.

Patricia Azarias, B.A. (Hons) (Sydney University), M.A. (Oxon), Master of Public Affairs (Princeton University)

Chair of the Audit and Risk Management Committee and Member of the Human Resources and Remuneration Committee

Patricia is an economist. She has served as Director of the Internal Audit Division of the United Nations in New York, as Regional General Manager, Business and Private Banking, National Australia Bank, Director General, NSW Ministry of Urban Infrastructure Management, and Director of the Public Accounts Committee, NSW Parliament.

Patricia is currently a Board member of SBS Radio and Television and the South East Sydney Local Health District. She is also Chair of the Audit Committee for Sydney Harbour Foreshore Authority.

Patricia was appointed to the Board on the 1 July 2013 for a three year term.


Nigel Smyth, B.Eng (Electronic Systems) (Ulster University)

Chair of the Productivity and Information Technology Committee and Member of the Audit and Risk Management Committee

Nigel has 25 years' experience in IT and operations in the investment banking industry. Nigel retired from Macquarie Group in 2013 where he was Chief Information Officer and Head of Market Operations. He was with the Macquarie Group for 14 years and prior to that held senior IT and operational roles with Deutsche Bank, NatWest Markets and JP Morgan in London and New York.

Nigel is a Board member of the Inspire Foundation the charity behind the youth mental health website reachout.com and Chair of a yacht club.

Nigel was appointed to the Board on 1 July 2013 for a three year term.

Peter Berckelman, BEc LLB (Macquarie University)

Chair of the Human Resources and Remuneration Committee and Member of the Audit and Risk Management Committee

Peter has over 25 years' experience in banking and finance, both in Australia and overseas. He has held senior positions in Barclays Bank and UBS Australia, specialising in financial risk management.

Prior to moving into banking, Peter spent three years in a major Australian law firm.

Peter was appointed to the Board on 14 July 2014 for a three year term.

Nancy Milne, OAM, LLB (Sydney University), GAIDC

Member of the Audit and Risk Management Committee and Member of the Human Resources and Remuneration Committee

Nancy has extensive experience as a chair and non-executive director. She also has significant experience on audit and risk committees both as a member and chair. She has practised as a lawyer for over 30 years, including as a partner in three legal firms specialising in insurance, risk management and commercial dispute resolution.

Nancy was also involved in leadership roles and contributed to strategic planning in the legal sector. She has strong strategic risk management skills and a deep understanding of the financial services regulatory environment. In 2008, Nancy was awarded the Order of Australia Medal for services to the legal sector particularly as an insurance lawyer and to the community.

Nancy has had significant experience as a director of companies, both listed and unlisted and has been involved in a variety of corporate transactions. Nancy is also currently a director of Australian international Dispute Centre, ALE Property Group Limited, and Chair of the Securities Exchange Guarantee Corporation. Previous board roles include Novion Property Group, Australand, Munich Reinsurance Australasia, Crowe Horwath and Zurich Financial Services Australia.

Nancy was appointed to the Board on 15 December 2014 for a three year term.


Board changes during 2014/15

During the 2014/15 financial year the following changes were made to the Board:

Nicholas Johnson ceased as Pillar's Chair on 26 June 2015.

Peter Berckelman was appointed as a new Director of the board on 14 July 2014.

Nancy Milne was appointed as a new Director of the board on 15 December 2014.

Subsequent to this financial year:

Cathy Aston was appointed as Chair of the board on 9 October 2015.

Board Committees

During the year, the Board was assisted by the following Board Committees composed of non-executive directors. All directors who are not members of a committee have the right to attend meetings of all committees. The Managing Director and CEO is invited to all committee meetings. The Board determines the membership of the Board Committees.

The Board maintains close oversight of key business processes, and is assisted by the following three committees:

The Audit and Risk Management Committee (ARMC): During the last financial year, all of Pillar’s directors sat as members of the ARMC. The ARMC and the Superannuation Compliance Committee (SCC) were merged during the financial year. The combined ARMC and SCC focuses on the adequacy of Pillar’s RMF and the associated operating and financial controls, accounting policies and oversees the work of the contracted internal auditor firm KPMG. In addition

the committee oversees Pillar’s Compliance Program in relation to the regulatory and policy requirements for superannuation administration.

The Human Resources and Remuneration Committee (HRRC): The HRRC provides high-level oversight of human resources policies, strategies and remuneration.

Productivity and Information Technology Committee (PITC): The PITC focuses on the effective use of technology, quality, process and productivity improvements. In addition a number of working committees have been set up to oversee IT initiatives such as Project Eleanor.

If the committees are unable to meet, committee matters are submitted to the Board for consideration.

Membership of Board Committees

The Board determines the membership of the Board Committees. Individuals who are not members of the Board may be included; however, executives or executive directors of Pillar are excluded from Committee membership.

Membership is reviewed annually to consider the need for fresh perspectives while maintaining continuity and retention of knowledge and skills. Directors who are not members of a particular Board Committee are permitted to attend meetings of that Committee.

Invitees to Board Committee meetings may include:

executives of Pillar as appropriate; and

other persons providing reports or information to the Committee.

Light House Wollongong


Responsibilities and activities of Board Committees

All Board Committees consider any matters relating to their objectives and any matters referred by the Board. The Board Committees seek to ensure new Committee members are adequately inducted and that all members are informed about any changes relevant to their roles including changes in statutory requirements and accounting standards, or guidelines affecting financial reporting.

Frequency of and attendance at Board and ARMC meetings

During the year, the Board met on eleven (11) occasions and the ARMC met on eight (8) occasions. The number of meetings attended by each director is listed below.

Director

Numberof board meetings attended

Possible number of board meetings attended

Number of ARMC

meetings attended

Possible number

of ARMCmeetings attended

Nicholas Johnson Chair and Director (appointed 1 April 2013 - 26 June 2015)

10 11 7 8

Peter Brook Managing Director and CEO (appointed 13 May 2013)

9 11 8 8

Patricia Azarias(appointed 1 July 2013)

8 11 6 8

Nigel Smyth (appointed 1 July 2013)

10 11 8 8

Cathy Aston (appointed 16 June 2014)

11 11 8 8

Peter Berckelman (appointed 14 July 2014)

11 11 8 8

Nancy Milne (appointed 15 December 2014)

5 5 3 3


Managing Director and Chief Executive Officer

After consultation with the voting shareholders, the Managing Director and Chief Executive Officer (CEO) of Pillar is appointed by the non-executive Directors.

Peter Brook was appointed as Managing Director and CEO effective 30 May 2013 for a three year term.

Structure

The Pillar executive management team make up the Executive Committee (EC). The EC has an interest in all facets of Pillar, both strategically and operationally. The EC has reporting arrangements in place, ensuring it receives timely information about any matter warranting consideration or awareness.

During the year, the Executive Committee generally met at least fortnightly.

The managers who comprised the EC as at 30 June 2015 and a brief profile of each manager are set out below.

Peter BrookManaging Director & Chief Executive Officer

Peter’s profile is in ‘Our Board’.

Gerard Giesekam, B. Comm (Accounting and Finance) (UNSW), CPA/CA FinanceChief Financial Officer and Company Secretary

Gerard has over 20 years' commercial experience in the financial services industry. Gerard commenced his career with Ernst & Young and has held senior finance roles with AMP, KAZ Group, Telstra and Link Market Services. His most recent role prior to joining Pillar was as CFO of Australian Administration Services (AAS).

Gerard was acting CEO for a short period from 13 May - 9 June 2015.

Fatima Abbas, BSc/Psy (Hons), MPsy (Org), MPAExecutive General Manager – Corporate Services

Fatima has executive level experience in human resources management, corporate planning and strategy, and organisational change management. Fatima has been with Pillar since January 2012, and her previous appointment was with Fire and Rescue NSW, as the Director of Strategy and Innovation.

Our executive management team


Chris Woodward, Dip. Superannuation Mgmt (Macquarie University), Executive MBA (AGSM/UNSW)Executive General Manager – Business Development and Client Engagement

Chris has been with Pillar for over 24 years and has performed many roles within the organisation over that time. Chris’ experience is predominantly in business administration and client management. He is currently responsible for Business Development and Client Engagement within Pillar.

Primary responsibilities include client advocacy, client engagement, business development, new products and services, marketing, industry engagement, innovation and research and development.

Chris has taken on Sponsorship of Project Eleanor, Pillar's platform refresh and business transformation.

Chris RichardsExecutive General Manager – Operations

Chris has been with Pillar for over nine years and has performed many roles within the organisation over that time. Chris’ experience is predominantly in direct administration management, client relationship management and client services.

Chris has over 24 years' experience in the superannuation industry and has worked in senior leadership positions for a number of third party superannuation administrators, including Towers Perrin and Russell, as well as in-house corporate superannuation administration at BHP Billiton.

Stuart Watson, BEc (Macquarie University), Certificate IV in Compliance Management – GRC Institute (Macquarie University)Executive General Manager – Risk

Stuart has over 20 years' experience in a broad range of roles across the superannuation industry. Stuart has spent 10 years working for a number of third party superannuation administrators, including Towers Perrin, AMP and Aon Consulting in senior leadership positions in fund administration, client services and technical business functions. Before coming to Pillar, Stuart spent eight years at The Australian Prudential Regulation Authority, in a number of senior technical and management roles in their frontline supervision division.

Judy Fitzgerald, Bachelor of Applied Science (Occupational Therapy) (Sydney University), Master of Business (Employment Relations) (University of Technology, Sydney), MAICD.Executive General Manager - Project Management Office

Judy has over 25 years' experience in the financial services and superannuation sectors. She has held numerous positions at MLC, Citigroup and several roles at MetLife.

Judy is a results-oriented and driven person who works well with all levels in the organisation including presenting to the board and assisting others to achieve their highest potential through coaching and mentoring programs.

Judy has particular expertise in strategic alignment, project and change management with particular focus on customer service, business analysis, operational efficiency, business integration, risk and compliance management, leadership, and stakeholder management.

Judy commenced in her position on 1 December 2014.


Kathryn Hawkins Executive General Manager-Information Technology

Kathryn has over 10 years' experience in information technology as an executive with direct experience in Financial Services sector (banking, superannuation and insurance), manufacturing, health and community. Before joining Pillar, Kathryn was the Chief Information Officer for four years with ME Bank.

Kathryn has over 30 years of experience in various senior positions in industries including manufacturing with BHP and Mitsubishi, financial services with Bank SA, Lend Lease and Adelaide Bank.

Kathryn was also the Principal Consultant with Tower Technology.

Kathryn commenced in her position on 27 July 2015.

Numbers and remuneration of Pillars’ senior executives.

Band and salary range2014

Average RemunerationMale Female Total

Band 4$422,501 - $488,100

1 0 1 $426,063

Band 3$299,751 - $422,500

0 0 0 $0

Band 2$238,301 - $299,750

2 0 2 $260,550

Band 1$167,100 - $238,300

3 2 5 $203,405

Total 6 2 8

The table below shows remuneration levels and numbers of senior executive staff by salary band and gender.

Band and salary range2015

Average RemunerationMale Female Total

Band 4$430,451 – $497,300

0 0 0 0

Band 3$305,401 – $430,450

1 0 1 $426,063

Band 2$242,801 – $305,400

1 0 1 $253,406

Band 1$170,250 – $242,800

4 2 6 $219,459

Total 6 2 8

3.99% of Pillar Administration’s employee related expenditure in 2014/15 was related to senior executives.


Access to government information held by Pillar

Pillar is an agency covered by the GIPA Act. Under the GIPA Act (Government Information (Public Access) Act 2009 (NSW), an agency must release “government information” unless there is an overriding public interest against disclosure. Government information is considered to be anything contained in a record held by a government agency, or held on behalf of an agency by a government contractor or by the State Records Authority.

Pillar holds information that is classed as “government information” about:

itself as a corporation - such as information relating to its business operations, financial situation and dealings, staff and structure and property and equipment.

the superannuation funds and schemes that it administers on behalf of the trustees of those funds – such as employer and employee membership details; including detailed information about the members of each of the superannuation funds, such as their name, date of birth, employer, address, tax file number, contributions and entitlements.

Open access information about Pillar

The GIPA Act obliges an agency to proactively release “open access information” (as defined in the GIPA Act). Pillar’s “open access information” can be obtained by any member of the public by downloading it from our website www.pillar.com.au (under “Access to Information”).

Alternatively, access can be requested by:

Phoning the Pillar Information Officer on 1800 779 068; or

Writing to:

Information Access Co-ordinatorPillar AdministrationPO Box 1229Wollongong NSW 2500.

Access to other information about Pillar, may require that a formal application be made under the GIPA Act. Typically, such information may be of the type that is costly to make available or where the decision about access may have to be formally made because of the nature of the information sought. Formal applications should be made on the applicable form available in the section “Access to Information” on Pillar’s website. An application fee of $30 must be paid and a processing fee of $30 an hour may be applicable. Discounts of the processing fees are available for pensioners, full-time students and for those in financial hardship.

Open access information about Pillar, which is not publicly available

Under section 14 of the GIPA Act there is a public interest consideration against disclosure of information if disclosure of the information could reasonably be expected to have one or more of the following effects:

Undermine competitive neutrality in connection with any functions of an agency in respect of which it competes with any person or otherwise place an agency at a competitive advantage or disadvantage in any market.

Reveal commercial-in-confidence provisions of a government contract.

Diminish the competitive commercial value of any information to any person.

Prejudice any person's legitimate business, commercial, professional or financial interests.

Pillar operates in a highly competitive commercial environment and the disclosure of commercially sensitive information about Pillar could adversely affect its commercial interests. Pillar is committed to being as transparent as possible and discloses a significant amount of information about itself in its annual reports, on its website and in other documents that are tabled in Parliament.

However, there is some open access information about Pillar the disclosure of which it considers could reasonably adversely affect Pillar’s commercial interests, such as some internal policy documents and details about Pillar’s commercial contracts. Pillar has weighed up the public interest considerations for and against disclosure of the relevant open access information and on balance, believes that the public interest considerations against disclosure outlined in clause 4 of section 14 of the GIPA Act outweigh the public interest considerations for disclosure of the relevant information. Therefore, there are some documents about Pillar that are open access information but in relation to which Pillar believes that there is an overriding public interest against disclosure.

Review of the information made publicly available by Pillar

In June 2015, Pillar reviewed the type of information that it makes publicly available. The review took into account the information that Pillar already has made available on its website and the open access information, including various corporate policy documents and reports that are tabled in Parliament, which are publicly available and accessible via Pillar’s website. The conclusion of the review was that Pillar believes that it has made publicly available all of the government information that


should, in the public interest, be publicly available and that can be made publicly available without posing unreasonable costs on Pillar or adversely affecting its commercial interests. We believe that there is considerably more publicly available information about Pillar, than is the case for our competitors.

Member access to their superannuation file

Any member of a NSW public sector superannuation scheme can apply for access to part or all of the information held in the superannuation file that Pillar maintains in relation to their scheme membership. Pillar requires that the application be formally made under the GIPA Act (on the applicable form available in the section “Access to Information”) on Pillar’s website or by contacting Pillar. An application fee of $30 must be paid and processing fees of $30 an hour may apply (although the first 20 hours of processing is free of charge). Reductions of the processing fees are available for pensioners, full-time students and for those in financial hardship.

Agency Information Guide

Pillar's Agency Information Guide is available under section “Access to Information” on Pillar’s website. The Agency Information Guide was reviewed and updated in June 2015.

Applications for access to information

During the 2014/15 year there were:

277 formal applications for information (under the GIPA Act) received by Pillar, (including withdrawn applications, but excluding invalid applications).

277 applications processed.

26 applications outstanding as of 1 July 2014 and there are 26 still in progress as of 30 June 2015.

25 applications refused, in whole or in part, because the application was for information for which there is a conclusive presumption of overriding public against disclosure (categories referred to in Schedule 1 of the GIPA Act). Of those applications, all 25 were only refused in part.

Please refer to Appendix 1 for statistical information about applications for access under the GIPA Act.


Complaints made about Pillar

During the year, there were no complaints made to Pillar which were not related to the superannuation funds and schemes we administer.

Pillar reports details of complaints received, in relation to the funds we administer. Reports are provided directly to the fund.

Complaints made by fund members

By arrangement with its public sector trustee clients STC and the Trustees of PCSF, Pillar’s Annual Report includes statistics on complaints it received relating to the NSW public sector superannuation schemes. A breakdown by category is listed below.

The number of complaints received

Member response

from STC scheme members decreased from 106 in 2013/14 to 59 in 2014/15. There were no complaints for PCSF in either year.

At 30 June 2015, there were 113,741 STC scheme members (including pensioners). There were 315 PCSF members and pensioners.

For reporting purposes, the definition of a complaint is “a written or oral expression of dissatisfaction which requires a response”.

All complaints are analysed to determine if there is a systemic cause and if that is the case, corrective and preventive action is implemented. Employees and managers are encouraged to recognise and highlight complaints that show the need for changes to scheme literature, standard letters, systems, procedures and practices.

Disputes and appeals

The dispute and appeal processes for the public sector schemes, which are formally exempt from compliance with the provisions of the Superannuation Industry (Supervision) Act 1993 (Cth) are administered by the Trustees of the public sector schemes and are covered in their Annual Reports.

If dissatisfied with the decision by the STC following the dispute process, an appeal may be lodged with the Industrial Court of NSW.

Complaint category Complaints for STC Complaints for PCSF

Application of policy 13 0

Administrative issues 46 0

Investment 0 0

Insurance 0 0

Incorrect data from external provider 0 0

Total 59 0


Public interest disclosures (PID)

Section 31 of the Public Interest Disclosures Act 1994 (NSW), provides that each public authority, including Pillar as a State owned corporation, must prepare an annual report on the authority’s obligations under the Act for submission to the Minister responsible for the authority, with a copy to the Ombudsman.

The report can be included in the Annual Report for the authority. The information to be reported is set out in the Public Interest Disclosures Regulation 2011 (NSW).

Disclosure and privacy

The information for the 2014/15 year is as follows: Pillar has a Public Interest Disclosures Policy. The Policy demonstrates Pillar’s commitment to supporting and protecting employees who report wrongdoing, including wrongdoing by Pillar management or employees.

The Public Interest Disclosures Policy was reviewed and updated in January 2015 and re-launched to Pillar employees, with employees being reminded about the existence of the Policy and the protections under the Public Interest Disclosures Act 1994 (NSW) for a person making a public interest disclosure. Senior managers are tasked with the

responsibility of ensuring that their employees are aware of Pillar’s policies, including the Public Interest Disclosures Policy. All policies are easily accessible to employees on the Pillar intranet.

Periodic reminders about the Public Interest Disclosures Policy are emailed to all Pillar employees. Furthermore, Pillar’s Code of Conduct contains specific reference to the Public Interest Disclosures Policy.

Public interest disclosures (PIDs) in 2014/15 Made by public

officials performing their day to

day functions

Under a statutory or other legal obligation

All other PIDs

Number of public officials who made PIDs to Pillar in 2014/15

0 0 0

Number of PIDs received in total in 2014/15 0 1 0

Of the PIDs received, the number were primarily about:

Corrupt conduct 0 0 0

Maladministration 0 1 0

Serious and substantial waste 0 0 0

Government information contravention 0 0 0

Local government pecuniary interest contravention 0 0 0

Number of PIDs finalised in 2014/15 0 1 0


Privacy policy

Pillar’s Privacy Policy sets out its commitment to best practice privacy standards and its objective of compliance with the requirements of the Privacy Act 1988 (Cth) and the Australian Privacy Principles contained therein. The Privacy Policy and Pillar’s procedures in relation to privacy were updated to ensure compliance from March 2014 with the amendments to the Privacy Act 1988 (Cth) that took effect at that time.

Pillar is contractually obligated to comply with the Privacy Management Plan of STC. This Privacy Management Plan sets out the requirements of the Privacy and Personal Information Protection Act 1998 (NSW), that Pillar, as the administrator of the schemes, is indirectly obligated to comply with, although as a State owned corporation Pillar is exempt from the NSW privacy legislation.

Other corporate information

Grants to non-government organisations

There were no grants made to non government organisations by Pillar in 2014/15.

Overseas visits

There were no overseas trips by representatives of Pillar in 2014/15.

Expenditure on consultants during 2014/15 financial year

Pillar incurred expenditure of $ 14,367,620 during the 2014/15 financial year for the following types of services:

IT consulting services;

consulting services;

professional services;

market intelligence services;

strategic planning and advisory services;

test managers;

taxation consulting services;

business analysts.

Details of the production of this annual report

The estimated external costs of this Annual Report are to be no greater than $952 with 30 copies of the report being printed.

This report will be available on the internet in PDF format, soon after it is submitted to the NSW Parliament in late November 2015. The report will be available on the Pillar website at www.pillar.com.au. The report is available in hard copy.

Exemptions from reporting requirements

As a NSW State owned corporation, Pillar competes for superannuation administration business with private sector organisations, and has been determined by NSW Treasury to be an “in competition” entity for annual reporting purposes for 2013/14 and future financial years. Accordingly, Treasury has granted to Pillar various “in competition” annual reporting exemptions, pursuant to section 7(2) of the Annual Reports (Statutory Bodies) Act 1984 (NSW,) and clause 19 of the Annual Reports (Statutory Bodies) Regulation 2010 (NSW).

Please refer to Appendix 2 of this Report for details of the exemptions and any relevant conditions.There were no grants made to non government organisations by Pillar in 2014/15.

Please refer to Appendix 2 of this Report for details of the exemptions and any relevant conditions.


Part CAudited Financial Statements


C3Pillar Administration Audited Financial Statements

C4 Annual Report 2014—2015 Pillar Administration


Superannuation Administration Corporation (trading as Pillar Administration)

Directors’ Declarationfor the year ended 30 June 2015

Pursuant to Section 41C of the Public Finance and Audit Act, 1983, in the opinion of the Directors of Superannuation Administration Corporation (trading as Pillar Administration):

(a) the financial statements:

(i) exhibit a true and fair view of Superannuation Administration Corporation’s financial position, financial performance and cash flows for the year ended 30 June 2015; and

(ii) comply with applicable Australian Accounting Standards (which include Australian Accounting Interpretations), the requirements of the Public Finance and Audit Act 1983 and the Public Finance and Audit Regulation 2015.

(b) there are reasonable grounds to believe that the Corporation will be able to pay its debts as and when they fall due.

(c) we are not aware of any circumstances at the date of this declaration that would render any particulars included in the financial statements to be misleading or inaccurate.

Signed in accordance with a resolution of the Board of Directors

Cathy Aston Peter Brook Director Managing Director & CEOSuperannuation Administration Superannuation Administration Corporation Corporation

Date: 18 September 2015



Statement of Profit or Loss and Other Comprehensive Income

for the year ended 30 June 2015

NOTE2015$’000

2014$’000

Continuing Operations

Revenue

Operating activities 2(a) 108,423 94,105

Other income 2(a) 295 140

Expenses

Employee related expenses 2(b) (65,919) (62,901)

Depreciation and amortisation expense 2(b) (1,970) (1,587)

Occupancy expenses (3,470) (3,619)

Information technology expenses (9,329) (6,848)

Member communications expenses (3,039) (3,314)

Contractors’ expenses (16,019) (5,978)

Consultancy expenses (1,203) (943)

Travel expenses (390) (459)

Other expenses 2(b) (3,894) (5,651)

Profit before income tax 3,485 2,945

Income tax benefit/(expense) 3(a) 916 (236)

Profit for the year from continuing operations attributable to shareholders of the corporation

4,401 2,709

Other comprehensive income for the year net of tax Items that may be reclassified subsequently to profit or loss

Revaluation increment on property, plant and equipment net of tax

- 840

Total other comprehensive income for the year 4,401 840

Total comprehensive income for the year 4,401 3,549

The accompanying notes form an integral part of this Statement of Profit or Loss and Other Comprehensive Income.



Statement of Financial Positionas at 30 June 2015

NOTE2015$’000

2014$’000

ASSETS

Current Assets

Cash and cash equivalents 16(a) 17,159 10,735

Trade and other receivables 4 12,359 10,831

Other current assets 5 3,798 3,201

Total Current Assets 33,316 24,767

Non-Current Assets

Property, plant and equipment 6 14,382 13,615

Intangibles 7 695 703

Deferred tax assets 3(c) 6,152 4,480

Total Non-Current Assets 21,229 18,798

Total Assets 54,545 43,565

LIABILITIES

Current Liabilities

Trade and other payables 8 11,532 6,426

Provisions 9 12,174 10,857

Total Current Liabilities 23,706 17,283

Non-Current Liabilities

Deferred tax liabilities 3(d) 781 1,464

Provisions 9 3,071 2,232

Total Non-Current Liabilities 3,852 3,696

Total Liabilities 27,558 20,979

Net Assets 26,987 22,586

Equity

Contributed equity 10 6,000 6,000

Reserves 10 3,643 3,643

Retained earnings 10 17,344 12,943

Total Equity 26,987 22,586

The accompanying notes form an integral part of this Statement of Financial Position.



Statement of Changes in Equityfor the year ended 30 June 2015

NOTE

Contributedequity

$’000

Asset revaluation

reserve$’000

Retained earnings**

$’000

Total equity$’000

Balance at 1 July 2014 10 6,000 3,643 12,943 22,586

Profit for the year - - 4,401 4,401

Other comprehensive income, net of tax

- - - -

Total comprehensive income for the year

- - 4,401 4,401

Transactions with owners in their capacity as owners:

*Dividend to equity holders - - - -

Balance at 30 June 2015 6,000 3,643 17,344 26,987

NOTE

Contributedequity

$’000

Asset revaluation

reserve$’000

Retained **earnings

$’000

Total equity$’000

Balance at 1 July 2013 10 6,000 2,803 11,619 20,422

Profit for the year - - 2,709 2,709

Other comprehensive income, net of tax

- 840 - 840

Total comprehensive income for the year

- 840 2,709 3,549

Transactions with owners in their capacity as owners:

*Dividend to equity holders - - (1,385) (1,385)

Balance as at 30 June 2014 6,000 3,643 12,943 22,586

*Note: Dividend to equity holders - NSW Treasury has exempted Pillar from dividend obligations from the 2015 financial year, for 4 years (2014: 70% of the forecast net profit from ordinary activities after income tax). Dividend per share was NIL for 2015 (2014:$692,500 per share).** Note: The Operational risk reserve of $4 million, reported separately in previous years, has now been reclassified as part of retained earnings to conform with the current year’s presentation.

The accompanying notes form an integral part of this Statement of Changes in Equity.



Statement of Cash Flowsfor the year ended 30 June 2015

NOTE2015$’000

2014$’000

Cash Flows From Operating Activities:

Receipts from customers (inclusive of GST) 113,313 103,234

Payments to suppliers and employees (inclusive of GST) (109,849) (96,349)

Interest received 301 129

Government grant received 7,000 -

Net cash flows from operating activities 16(c) 10,765 7,014

Cash Flows From Investing Activities:

Payments for property, plant and equipment (2,676) (1,294)

Payments for intangible assets (280) (541)

Net cash flows used in investing activities (2,956) (1,835)

Cash Flows From Financing Activities:

Dividends paid (1,385) (1,096)

Net cash flows used in financing activities (1,385) (1,096)

Net increase in cash and cash equivalents 6,424 4,083

Cash and cash equivalents at the beginning of the financial year

10,735 6,652

Cash and cash equivalents at the end of the financial year

16(a) 17,159 10,735

The accompanying notes form an integral part of this Statement of Cash Flows.



Notes to the Financial Statementsfor the year ended 30 June 2015

Corporate Information

Superannuation Administration Corporation (the Corporation), trading as Pillar Administration is a Statutory State Owned Corporation established on 26 July 1999 under the Superannuation Administration Authority Corporatisation Act, 1999 (“the Act”). It is domiciled in NSW Australia and its registered office address is at Level 16, 1 Margaret Street, Sydney, NSW 2000.

The Corporation provides superannuation scheme administration services and related services in both the public and private sectors. The Corporation operates under the commercial disciplines of the NSW Government’s Commercial Policy Framework and accordingly the Board of Directors has determined the Corporation as a for-profit entity for the purpose of the preparation of the financial statements.

These financial statements for the financial year ended 30 June 2015 have been authorised for issue in accordance with a resolution of the Board of Directors on 18 September 2015.

1. Significant Accounting Policies

(a) Basis of Preparation

The financial statements are general purpose financial statements, which have been prepared in accordance with applicable Australian Accounting Standards (which include Australian Accounting Interpretations), the requirements of the Public Finance and Audit Act 1983 and the Public Finance and Audit Regulation 2015.

The financial statements have also been prepared on an historical cost basis using the accrual method of accounting and do not reflect current values of assets except where noted.

The accounting policies adopted in preparing the financial statements have been consistently applied from year to year unless otherwise stated.

All amounts are expressed in Australian Dollars which is the corporation’s functional and presentation currency.

(b) Statement of Compliance

The financial statements and notes comply with Australian Accounting Standards, which include Australian Accounting Interpretations.

Use of judgements and estimates

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events management believe to be reasonable under the circumstances. The resulting accounting judgements and estimates will not always equal the related actual results.

Provision for impairment of receivables

The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the ageing of receivables, historic collection rates and specific knowledge of individual debtors financial position (refer to note 4).

Income tax

Significant judgement is required in determining the provision for income tax. The corporation recognises liabilities for anticipated tax based on the corporation’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determinations are made.




1. Significant Accounting Policies (continued)

Other provisions

As discussed in note 1(g), long service leave benefits are measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. The values of the short and long term employee incentive schemes are dependent on the individual staff and the organisation as a whole achieving specific performance conditions. Refer to note 9 for further details.

Estimation of useful lives of assets

The corporation determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

(c) Income Tax

The Corporation is subject to notional taxation in accordance with the State Owned Corporations Act 1989. An “equivalent” or “notional income tax” is payable to the NSW Consolidated Fund through the Office of State Revenue. Taxation liability is assessed according to the National Tax Equivalent Regime (NTER) of the NSW Treasury (and any transitional provisions which apply). The NTER adopts as far as practicable the Commonwealth Income Tax Assessment Acts 1936 and 1997 (as amended) as the basis for determining taxation liability and tax-effect accounting. The liability method of tax-effect accounting is adopted.

The charge for current income tax expenses is based on the profit / (loss) for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date.

Deferred tax is accounted for using the balance sheet liability method in respect to temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability settled. Deferred tax is recognised as an expense or income in the Statement of Profit or Loss and Other Comprehensive Income.

Deferred tax assets are recognised to the extent that it is probable that sufficient future taxable amounts will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the corporation will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

The Corporation is entitled to claim a non-refundable tax credit in relation to R&D costs incurred each year. The Corporation recognises the non-refundable credit against income tax expenses and provision for income tax liabilities as permitted by AASB 112 Income Taxes. The credit is recognised in the year in which the Income Tax Return is submitted to and approved by the ATO.





(d) Property, Plant and Equipment

Acquisitions and Capitalisation

All items of computers and other plant and equipment acquired are recorded at the cost of acquisition. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to the acquisition. Acquisitions that do not meet the following asset recognition criteria are expensed.

An asset will be recognised in the Statement of Financial Position when and only when:

• it is probable that the future economic benefits embodied in the asset will eventuate; and

• the asset possesses a cost or other value that can be measured reliably.

The materiality test also applies to the asset recognition criteria. The threshold value for physical assets follows the NSW Treasury Guidelines for Capitalisation of Expenditure in the NSW Public Sector. In general, a physical asset costing less than $5,000 is not capitalised unless it is part of a group of assets which exceed $5,000 in total. The threshold value is determined and reviewed by the Audit & Risk Management Committee of the Board.

Expenditure incurred to restore or maintain the future economic benefits that were expected from the original standard of performance of an asset are not capitalised.

Property

The Corporation’s policy is to have an independent valuation of the land and building every three years, with annual appraisals being made by the directors. The land and buildings are shown at fair value based on the appraisal of an independent registered valuer, Opteon, dated 31 March 2015.

Fair value of property is determined based on the best available market evidence, including current market selling prices for the same or similar assets. Where there is no available market evidence, the asset’s fair value is measured at its market buying price, the best indicator of which is depreciated replacement cost.

When revaluing property, any balances of accumulated depreciation at the revaluation date in respect of those assets are credited to the asset accounts to which they relate. The net asset accounts are then increased or decreased by the revaluation increments or decrements.

Revaluation increments are credited directly to revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement in respect of that class of asset previously recognised as an expense profit or loss, the increment is recognised immediately as revenue.

Revaluation decrements are recognised immediately as expenses in profit or loss, except that, to the extent that a credit balance exists in the revaluation reserve in respect of the same class of assets, they are debited directly to the revaluation reserve.

Plant and equipment

Plant and equipment are measured on the fair value basis, less depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flow or future economic benefits which will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to present values in determining recoverable amounts.

Disposals

The profit or loss on disposal of assets is calculated as the difference between the carrying amount of the asset at the time of disposal and the proceeds on disposal and is recorded in the Statement of Profit or Loss and Other Comprehensive Income in the year of disposal.





(d) Property, Plant and Equipment (continued)

Depreciation

Items of property, plant and equipment are depreciated on a straight-line basis over their estimated economic useful lives, making allowances where appropriate for residual values. The estimates of economic useful lives are reviewed annually, taking into account commercial and technical obsolescence. The expected economic useful life of computers is 4 years.

Other plant and equipment is depreciated over their estimated useful lives using the straight-line method, making allowances where appropriate for residual values. The expected economic useful life of other plant and equipment ranges from 3 to 10 years.

The depreciable amount of the building, excluding freehold land, is depreciated on a straight line basis over the estimated economic useful life to the economic entity commencing from the time the asset is held ready for use. The expected useful life of the building is 40 years and the asset is depreciated at a rate of 2.5%.

(e) Financial Assets and Financial Liabilities

For the purpose of these financial statements, a financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments give rise to positions that are financial assets or liabilities. These include both primary instruments (such as receivables, payables and equity securities) and derivative instruments (such as financial options, foreign exchange transactions, forward rate agreements and interest rate and currency swaps).

All classes of instruments are initially recorded at cost and are subsequently carried at fair value at reporting date. Financial instruments are subsequently measured at amortised cost using the effective interest rate method. Any impairment loss occurring on financial instruments is treated as an expense in the period in which it occurs.

(f) Intangible Assets

Acquisitions and Capitalisation

All items acquired are recorded at the cost of acquisition. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to the acquisition. Acquisitions that do not meet the following asset recognition criteria will be expensed.

An asset will be recognised in the Statement of Financial Position when and only when:

• it is probable that the future economic benefits embodied in the asset will eventuate; and

• the asset possesses a cost or fair value that can be measured reliably.

The materiality test also applies to the asset recognition criteria. In general the recognition threshold for software, considered to be an integral part of computer hardware, is $100,000. The threshold value is determined and reviewed by the Audit & Risk Management Committee of the Board.

Expenditure incurred to restore or maintain the future economic benefits that were expected from the original standard of performance of an asset will not be capitalised.

New Business Take-on Costs

Where the costs of taking on a new client are included in the overall pricing terms, they are capitalised and amortised over the life of the initial contract term. The asset is measured as the reasonable costs that are directly related to and specifically incurred in the process of setting up the new business. Overhead costs and other administration costs are not capitalised. The Corporation adopts the cost method, such that the take-on asset is carried at cost less a charge for amortisation, adopting the initial term of the contract as the useful life of the asset, subject to accumulated impairment losses.





(f) Intangible Assets (continued)

The Corporation undertakes regular and at least annual impairment reviews, such that the asset is never greater than the net present value (NPV) of the future cash flows relating to the new business over the initial term of the contract. The NPV is calculated as the total revenues (revenues associated with both take-on costs plus ongoing administration costs) less the total costs (take-on costs plus ongoing administration costs). Where an impairment loss has been charged in a prior year(s) and circumstances have changed, the asset is adjusted to reflect the revised economic conditions in the business (due to either reduced costs or increased revenues), such that the NPV of future cash now indicates that the impairment charge should be reduced or reversed.

Software

Software is measured at cost, less amortisation and impairment losses.

Carrying Amounts

The carrying amount of intangibles is reviewed annually by directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flow or future economic benefits which will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to present values in determining recoverable amounts.

Disposals

The profit or loss on disposal of assets is calculated as the difference between the net book value of the asset at the time of disposal and the proceeds on disposal and is recorded in the Statement of Profit or Loss and Other Comprehensive Income in the period of disposal.

Amortisation

Items of software are amortised on a straight-line basis over their estimated economic useful lives. The estimates of economic useful lives are reviewed annually, taking into account commercial and technical obsolescence. The expected economic useful life of software ranges from 2 to 4 years.

(g) Employee Benefits

Annual Leave

Liabilities for wages and salaries, including non-monetary benefits expected to be settled wholly within 12 months after the end of the reporting period are recognised in other liabilities in respect of employees’ services rendered up to the end of the reporting period and are measured at amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable.

Long Service Leave

Liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the end of the reporting period. They are recognised as part of the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees to the end of the reporting period using the projected unit credit method. Consideration is given to expected future salaries and wages levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds, with terms to maturity and currency that match, as closely as possible, the expected future cash outflows, in accordance with NSW Treasury policy.





(g) Employee Benefits (continued)

Regardless of when settlement is expected to occur, liabilities for long service leave and annual leave are presented as current liabilities in the Statement of Financial Position if the entity does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period.

Superannuation

Contributions are made by the Corporation entity to an employee superannuation fund and are charged as expenses when incurred. The Corporation transferred all its staff superannuation entitlements in the defined benefit plans to NSW Treasury in 2005. The unfunded superannuation liability of the Corporation is now assumed by the Crown Entity.

Long Term Incentive Plan

The long term incentive scheme was closed 23 May 2014.

Short-term Obligations

Liabilities for wages and salaries, including annual leave and long service leave expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

The liabilities for annual leave and long service leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables.

Other Long-term Employee Benefit Obligations

The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on government bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows.

The obligations are presented as current liabilities in the Statement of Financial Position if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur.

(h) Rounding

All values reported in the financial statements have been rounded to the nearest thousand dollars.

(i) Financial Liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

(j) Cash and Cash Equivalents

For the purpose of the Statement of Cash Flows, cash includes cash on hand and deposits held at call with banks.





(k) Revenue Recognition

Revenue is recognised when it is probable that the economic benefit will flow to the Corporation, and revenue can be reliably measured.

Administration fees and other revenue are recognised as revenues when services have been provided and it is probable that economic benefits will transfer to the Corporation.

Project revenue is recognised when services have been provided, measured on the percentage completed and on an accrual basis.

Interest is recognised on an accrual basis.

All revenue is stated net of the amount of applicable goods and services tax (GST).

(l) Government Grant

The Corporation received a $7m Government grant in July 2014 to fund a project to move to a single standardised registry platform. This funding is initially recognised as deferred revenue, and revenue is recognised as services are performed or conditions fulfilled.

In the absence of external funding, it was unclear how the remainder of the project will be funded to completion. There is significant uncertainty whether the project will run to completion to provide economic benefits to the Corporation. The $7m Government grant has been fully recognised to offset the project expenses during the financial year ended 30 June 2015.

(m) Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Corporation prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid in line with agreed terms. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised at their fair value.

(n) Trade and Other Receivables

Trade receivables and other receivables are recorded at amounts due, less any impairment. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Corporation will not be able to collect all amounts due according to the original terms of the receivables.

The amount of the impairment loss is recognised in the Statement of Profit or Loss and Other Comprehensive Income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expense in the Statement of Profit or Loss and Other Comprehensive Income.





(o) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of associated goods and services tax (GST), except:

(i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an item or as part of an item of expense; or

(ii) for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of the receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows with the amount of associated goods and services tax.

(p) Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Corporation as lessee are classified as operating leases. Payments made under operating leases (net of any incentive received from the lessor) are charged to profit or loss on a straight-line basis over the period of lease. The Corporation does not have any finance leases.

(q) Lease Incentives

Lease incentives for leased property are accounted for as a liability and are amortised on a straight line basis over the lease term in accordance with AASB Interpretation 115 Operating Leases – Incentives.

(r) Tenancy Make Good Provision

Tenancy make good expenses are recognised as a liability. The amount is reviewed each year. The full make good amount has been provided for in relation to the properties cost per square metre and discounted each year in accordance with the 10 year bond rate.

(s) Impairment of Assets

Assets are reviewed for impairment at each reporting date and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and the value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely dependent on the cash flows from other assets of the groups of assets (cash generating units). Non financial assets that suffered impairment are reviewed for possible reversal of previous impairment losses at each reporting date.

(t) New Accounting Standards Adopted

The Corporation has adopted all new standards on issue effective for the financial year. There was no material impact as a result of adoption of these standards.





(u) New Accounting Standards Issued but not yet Effective

The AASB has issued new and amended accounting standards and interpretations that have mandatory application dates for future reporting periods. We have reviewed all of the new accounting standards, and the following are those that are expected to affect the corporation:

AASB 9 Financial Instruments

The revised AASB 9 incorporates the IASB’s completed work on Phase 1 of its project to replace IAS 39 Financial Instruments: Recognition and Measurement (AASB 139 Financial Instruments: Recognition and Measurement) on the classification and measurement of financial assets and financial liabilities. In addition, the IASB completed its project on derecognition of financial instruments.

The Standard includes requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments. AASB 9 (issued in 2009) only included requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB’s project to replace IAS 39 (AASB 139).

AASB 15 Revenue from Contracts with Customers

This standard is applicable to annual reporting periods beginning on or after 1 January 2017. The standard provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity’s statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity’s performance and the customer’s payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgments made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The Corporation will adopt this standard from 1 July 2017 but the impact of its adoption is yet to be assessed by the consolidated entity.

Management have reviewed these standards and no material impact is expected on the financial statements. The changes are expected to be relating to disclosures in the financial statements.

(v) Dividends

NSW Treasury has exempted Pillar from dividend obligations from the 2015 financial year, for 4 years (2014: 70% of the forecast net profit from ordinary activities after income tax).





(w) Share Capital

Superannuation Administration Corporation was incorporated under the Superannuation Administration Authority Corporatisation Act 1999 (NSW) with issued capital of two fully paid $3,000,000 ordinary shares.

Current Shareholders are the Hon. Troy Grant, MP, Deputy Premier,minsiter for Justice and Police, Minister for the Arts and Minister for Racing, and the Hon. Gladys Berejiklian, MP, Treasurer and Minister for Industral Relations, MP, as appointed by the State Owned Corporations Act 1989 (NSW) on behalf of the NSW Government. The holder of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Corporation. The $6,000,000 share capital is included as issued capital per the Statement of Financial Position.

(X) Comparative Information

Where relevant, comparative amounts are restated to conform to the current reporting period’s presentation. This could arise as a result of the requirements of new or revised Australian Accounting Standards and Australian Interpretations, a voluntary change in accounting policy or a reclassification of items presented.




2. Profit for the Year 2015$’000

2014$’000

(a) Revenue

Operating ActivitiesAdministration fees 76,986 75,135Project revenue 21,872 15,822Government grant income 7,000 -Other operating revenue 2,565 3,148Total Operating Activities 108,423 94,105

Other IncomeInterest revenue - other corporations 295 140

295 140

Total Revenues 108,718 94,245

(b) ExpensesEmployee Related ExpensesSalaries and wages 54,381 51,172Redundancies 425 1,303Provision for employee benefits 5,481 5,607Superannuation contributions 5,632 4,819Total Employee Benefit Expenses 65,919 62,901

Depreciation and Amortisation ExpenseIntangibles 288 304Computer equipment 988 849Other property, plant and equipment 694 434

Total Depreciation and Amortisation 1,970 1,587

Other Expenses Communications 1,142 1,103Postage 840 1,071Insurance 466 458Printing 280 218Stationery 108 98Operating lease – minimum lease payments 332 325Loss on disposal of fixed assets 222 197Audit fee 75 73Doubtful debts (137) 1,428Sundry administration expenses 566 680Total Other Expenses 3,894 5,651

Auditors RemunerationRemuneration of the auditor of the corporation for:Audit and review of financial report 75 73Total Auditors Remuneration 75 73




2. Profit for the Year (continued)NOTE

2015$’000

2014$’000

(c) Project expenses partly funded by Government Grant 1(l)

Following costs have been included in the Expenses

Employee related expenses 619 -Information technology expenses 2,396 -Contractors’ expenses 6,376 -Other expenses 16 -Total Project Expenses 9,407 -

3. Income Tax 2015$’000

2014$’000

(a) Income tax expense:

Current tax expense

Current income tax charge 3,386 2,134

Adjustments in respect of current income tax of previous year 14 (9)

R&D claim (1,961) (629)

Total current tax expense 1,439 1,496

Deferred tax expense

Decrease / (increase) in deferred tax assets (1,672) (1,223)

(Decrease) / increase in deferred tax liabilities (683) (37)

Total deferred tax expense (2,355) (1,260)

Total Income Tax (Benefit) / Expense (916) 236

(b) Numerical reconciliation of income tax expense to prima facie tax payable

Profit from operations before income tax expense 3,485 2,945

Tax at Australian tax rate of 30% (2014 – 30%) 1,046 884

Tax effect of amounts which are not deductible (taxable) in calculating taxable income:

R&D claim (1,961) (629)

(Over)/Under provision of income tax in previous year - (19)

Total Income Tax (Benefit) / Expense (916) 236




(c) Deferred Tax Assets1 July 2014$’000

Charged to income$’000

30 June 2015$’000

The balance comprises temporary differences attributable to:

Employee benefits 3,111 312 3,423

Accrued expenses 310 396 706

Other provisions 1,059 964 2,023

Total Deferred Tax Assets 4,480 1,672 6,152

(d) Deferred Tax Liabilities

The balance comprises temporary differences attributable to:

Amounts recognised direct to Statement of Profit or Loss and Other Comprehensive Income:

Fixed assets (102) (681) (783)

Accrued interest income 6 (2) 4

Amounts recognised directly in equity:

Revaluation of property 1,560 - 1,560

Total Deferred Tax Liability 1,464 (683) 781

4. Trade and Other Receivables NOTE2015$’000

2014$’000

Current

Trade receivables 13,355 12,058

Less: Provision for impairment of receivables (1,069) (1,458)

12,286 10,600

Other receivables 73 231

12,359 10,831

Movements in the provision for impairment of receivables

Opening balance at 1 July 2014 (1,458) (230)

Additional provisions recognised (468) (1,228)

Amount reversed 857 -

Receivables written off during the year as uncollectable - -

Closing balance (1,069) (1,458)


5. Other Assets NOTE2015$’000

2014$’000

Current

Prepayments 2,752 2,190

Deposit 1,046 1,011

3,798 3,201

6. Property, Plant And Equipment Land and Buildings:

At 1 July

Gross carrying amount 1(d) 10,530 9,468

Less accumulated depreciation (38) (24)

Net carrying amount 10,492 9,444

At 30 June

Gross carrying amount 1(d) 10,530 10,530

Less accumulated depreciation (216) (38)


If freehold land and buildings were stated at historical cost basis, the amounts would be as follows:

At cost 5,091 5,091

Accumulated depreciation (542) (495)

4,549 4,596

Computer Equipment:

At 1 July

Gross carrying amount 6,426 5,178

Less accumulated depreciation (4,225) (3,379)


At 30 June







6. Property, Plant And Equipment (continued) 2015$’000

2014$’000

Plant and Equipment:

At 1 July



Net carrying amount 922 1,359

At 30 June



Net carrying amount 1,838 922

Total computers and other plant and equipment 4,068 3,123

Total Property, Plant and Equipment 14,382 13,615

Movements in Carrying Amounts

Land and Buildings: 10,492 9,444

Revaluation increment - 1,200

Depreciation expense (178) (152)

Carrying amount at the end of the year 10,314 10,492

Computer Equipment:

Opening balance 2,201 1,799

Additions 1,023 1,255

Reclassification (5) (1)

Disposals - (3)


Carrying amount at the end of the year 2,230 2,201

Other Plant and Equipment:

Opening balance 922 1,359

Additions 1,653 39

Disposals (222) (194)


Carrying amount at the end of the year 1,838 922

Valuation of Land and Buildings

The land and buildings building are shown at fair value based on the appraisal of an independent registered valuer, Opteon, dated 31 March 2015.




7. Intangible Assets 2015$’000

2014$’000

Software:

At 1 July



Net carrying amount 703 673

At 30 June



Net carrying amount 695 703

Movements in Carrying Amounts

Balance at beginning of the year 703 673

Additions 280 541

Disposal - (207)

Amortisation expense (288) (304)

Carrying amount at the end of the year 695 703

8. Trade and other PayablesCurrent unsecured liabilities

Trade payables 5,631 4,050

Deferred Revenue 4,112 1,619

GST payable 1,789 757

11,532 6,426

9. ProvisionsCurrent

Annual Leave

Provision at beginning of the year 3,605 3,533

Additional provisions raised during the year 4,462 4,111

Amounts used (4,015) (4,039)

Carrying amount at reporting date 4,052 3,605




9. Provisions (continued) NOTE2015$’000

2014$’000

Long Service Leave


Additional provisions raised during the year 1,374 1,574

Amounts used (532) (610)


Employee Incentive Scheme Provision 19

Provision at beginning of the year 700 408

Additional provisions raised during the year 800 292

Amounts used (238) --

Amounts reversed (462) --

Carrying amount at reporting date 800 700

Declared dividend


Additional provisions raised during the year - 1,385

Amounts used (1,385) (1,096)

Carrying amount at reporting date - 1,385

Tax Provision

Tax Provision at beginning of the year 833 -

Additional provisions raised during the year 1,440 833

Tax paid - -

Carrying amount at reporting date 2,273 833

Provision for Tenancy Make-Good

Tenancy make-good costs at beginning of the year 357 96

Amount transferred from/(to) non current provision during the year - 69

Amounts used (357) -

Additional provision raised during the year - 192

Carrying amount at reporting date - 357

Lease Incentives

Unamortised incentives at beginning of the year - 32

Amount transferred from non current provision during the year - -

Additional provision raised during the year 230 (32)

Carrying amount at reporting date 230 -

Total Current Provisions 12,174 10,857




9. Provisions (continued) NOTE2015$’000

2014$’000

Non-CurrentEmployee Incentive Scheme Provision

Provision at beginning of year - 82

Unused amounts reversed - (82)

Carrying amount at reporting date - -

Long Service Leave

Provision at beginning of year 2,087 2,133

Unused amounts reversed (348) (46)


Lease Incentives

Unamortised Incentives at beginning of year - -

Additional provisions raised during the year 720 -

Carrying amount at reporting date 720 -

Provision for Tenancy Make-Good

Tenancy make-good costs at beginning of year 145 214

Additional provisions recognised during the year 467 -

Amount transferred (to)/from current provision during the year - (69)

Carrying amount at reporting date 612 145

Total Non–Current Provisions 3,071 2,232

Total provisions 15,245 13,089

Total employee benefit provision 11,410 10,369

Total employee numbers 728 670

Employee entitlements for annual and long service leave include short-term benefits (expected to be settled no later than 12 months after 30 June 2015) and long-term benefits (expected to be settled after more than 12 months) as follows.

Short-term

Annual leave 3,241 2,884

Long service leave 913 808

Employee incentive scheme 19 800 700

4,954 4,392

Long-term

Annual leave 810 721

Long service leave 5,646 5,256

Employee incentive scheme 19 - -

6,456 5,977






10. Equity

The State Owned Corporations Act 1989 requires the Corporation to have two voting shareholders; the Treasurer and another Minister.

Shares in the Corporation as at 30 June 2015 were held by the Hon Troy Grant, MP, Deputy Premier, Minister for Justice and Police, Minister for the Arts and Minister for Racing, and the Hon Gladys Berejiklian, MP, Treasurer and Minister for Industrial Relations. The total contributed equity at balance date was 2 shares with a value of $3,000,000 each.

NOTE2015$’000

2014$’000

Contributed Equity

Balance at beginning of the reporting period 6,000 6,000

Add/less movement - -

Carrying amount at the end of the reporting period 6,000 6,000

Reserves

Asset revaluation reserve


Revaluation increment/(decrement) 1(d) - 840


Total reserves at the end of the reporting period 3,643 3,643

Retained Earnings


Current year profit 4,401 2,709

Dividend declared - (1,385)


Note: The Operational risk reserve of $4 million, reported separately in previous years, has now been reclassified as part of retained earnings to conform with the current year’s presentation.

11. Capital and Lease Commitments 2015$’000

2014$’000

Operating Lease CommitmentsCommitments in relation to operating leases contracted for at the reporting date but not provided for in the financial statements (including GST):

Payable - minimum lease payments

- not later than one year 2,033 1,705

- greater than one year and less than five years 3,214 4,648

- greater than five years - 98

5,247 6,451




Included in the lease commitments are non-cancellable leases with terms between one and a half years and five years. These leases also provide the Corporation with an option to renew for up to four years. Rent is payable monthly in advance.

Capital CommitmentsThe Corporation has no capital commitments at the reporting date (2014: $0).

12. Related Parties

(a) Directors and Key Management Personnel

The names of the Board Members of the Corporation in office during the year ended 30 June 2014 and up to the date of signing these financial statements are as follows:

Directors:

Mr N. Johnson (up to 26 June 2015)

Ms P. Azarias

Mr N. Smyth

Ms C. Aston

Mr P. Berckelman (appointed 14 July 2014)

Ms N. Milne (appointed 15 December 2014)

Mr P. Brook (Managing Director & CEO)

In addition to the Directors and CEO disclosed above, the names of the Key Management Personnel of the Corporation in office during the year ended 30 June 2015 and up to the date of signing these financial statements are as follows:

Mr G. Giesekam Executive General Manager Finance and Company Secretary

Ms F. Abbas Executive General Manager Corporate Services

Mr C. Woodward Executive General Manager Business Development & Client Engagement

Mr C. Richards Executive General Manager Operations

Ms J. Fitzgerald Executive General Manager Project Management Office (appointed 1 December 2014)

Ms L. Griffiths Executive General Manager Project Management Office (appointed 18 September 2013 and up to 4 July 2014)

Ms K. Hawkins Executive General Manager IT (appointed 27 July 2015)

Mr M. Malss Executive General Manager IT (appointed 10 November 2014 and up to 24 July 2015)

Mr J. Vohradsky Executive General Manager IT (up to 9 July 2014)

Mr S. Watson Executive General Manager Risk

(b) Compensation of Directors and Key Management Personnel2015$’000

2014$’000

Short term benefits – (salaries, directors fees, bonuses) 2,117 2,102

Post employment benefits - superannuation 171 165

Termination benefits 102 198

2,390 2,465

The Managing Director is a Board Member and does not receive a separate fee for serving as a Director.




13. Economic Dependency

The majority of the Corporation’s business revenue 57% (66% 2014) comes from two clients.

14. Financial Instruments Risk Management

Capital Risk Management

The Corporation manages its capital to ensure it will be able to continue as a going concern while maximising the return to shareholders through optimal use of the capital. The Corporation did not have any debt for the years ended 30 June 2015 and 30 June 2014. The Corporation is required under its Australian Financial Services Licence to maintain a minimum cash level of $100,000. At no time during the current financial year was this amount breached. Daily monitoring is carried out to ensure appropriate levels are maintained.

Credit Risk (Counterparty Risk)

Credit (or Counterparty) risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation and cause the Corporation to incur a financial loss.

The Board approved Treasury Management Policy prescribes surplus cash to be invested with major Australian banks, who currently hold a AA credit rating. The other material financial asset is receivables from superannuation fund trustee clients. There is no material risk that the receivables may be impaired as the trustees are either licensed by the Australian Prudential Regulation Authority (APRA) or appointed by the NSW Government.

Liquidity Risk

Liquidity risk refers to the situation where the Corporation may not be able to meet its financial obligations when they fall due. The Corporation has steady cash inflow from contracted services with trustees and manages its liquidity by annual budgeting and rolling 3 months cash flow forecast. In accordance with Board policy the Corporation invests its surplus cash in bank deposits to ensure adequate liquidity.

The following tables summarise the past due but not impaired profile of the Corporation’s accounts receivable. Accounts receivable excludes statutory receivables and prepayments

Year ended 30 June 2015 Less than 3 months

($000)

3 monthsto 1 year

($000)1-5 years

($000) Total

($000)

Contractual

Cash Flow ($000)

Accounts receivable 3,884 272 - 4,156 4,156

3,884 272 - 4,156 4,156

Year ended 30 June 2014Less than 3

months($000)

3 monthsto 1 year

($000)1-5 years

($000) Total($000)

Contractual Cash Flow

($000)

Accounts receivable 3,760 42 - 3,802 3,802

3,760 42 - 3,802 3,802




14. Financial Instruments Risk Management (continued)

The following tables summarise the maturity profile of the Corporation’s financial liabilities. The carrying amount equals the cash outflows. Accounts payable excludes statutory payables and unearned revenue.


months($000)

3 monthsto 1 year

($000)1-5 years

($000) Total($000)


($000)

Accounts payable 5,631 - - 5,631 5,631

5,631 - - 5,631 5,631


months($000)

3 monthsto 1 year

($000)1-5 years

($000) Total($000)


($000)

Accounts payable 4,050 - - 4,050 4,050

4,050 - - 4,050 4,050

Interest Rate Risk

The Corporation has call deposits with banks which are influenced by the official cash rate as declared by the Reserve Bank of Australia. A movement in interest rates of 1.5% on the closing balance for the entire year would impact the profit / (loss) before tax by $193,457 (2014: $176,184).

Other Market Risks

The Corporation does not have material exposure to foreign currency or other price risks.

15. Fair Value Measurement

All assets and liabilities for which fair value is measured or disclosed are categorised according to the fair value hierarchy as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly;

Level 3 - Inputs for the assets or liability that are not based on observable market data (unobservable inputs).

Recognised fair value measurements

The following table sets out the group’s assets and liabilities that are measured and recognised at fair value in the financial statements.

30 June 2015Note

Level 1 ($000)

Level 2 ($000)

Level 3 ($000)

Total ($000)

Recurring fair value measurements

Non-financial assets

Land and Buildings 6 - - 10,314 10,314

Total non-financial assets - - 10,314 10,314




15. Fair Value Measurement (continued)

30 June 2014Level 1 ($000)

Level 2 ($000)

Level 3 ($000)

Total ($000)

Recurring fair value measurements

Non-financial assets

Land and Buildings - - 10,492 10,492

Total non-financial assets - - 10,492 10,492

The level 3 assets and liabilities unobservable inputs and sensitivity are as follows:

Land and buildings Rental yield 9% to 10.5% (10.22%)1.00% change would increase/decrease fair value by $108,000

Discount rate 6%0.6% change would increase/decrease fair value by $38,000

Valuation techniques used to determine fair values

The Corporation engages external, independent and qualified valuers to determine the fair value of the corporation’s land and buildings every three years. In periods when an external valuation is not conducted, the Directors perform Level 3 valuations for land and buildings which are also approved by the Audit & Risk Management Committee.

16. Cash Flow Information

2015$’000

2014$’000

(a) Reconciliation of Cash

Cash at bank and on hand 17,159 10,735

Call deposits with banks earn at current bank deposit rates. The effective interest rate earned for the year was 2.29% (2014: 2.17%).

(b) Financing Facilities

The Corporation has a credit facility of $5 million available. As at 30 June 2015, this facility had not been utilised (2014: nil).




16. Cash Flow Information (continued)

(c) Reconciliation of profit after income tax to net cash flows from operating activities

2015$’000

2014$’000

Profit after income tax expense for the year 4,401 2,709

Non - cash flow adjustments:

Depreciation expense 1,682 1,283

Amortisation expense 288 304

Loss on disposal of plant and equipment 222 197

6,593 4,493

Changes in Assets and Liabilities:

(Increase)/decrease in assets:

Receivables (964) (982)

Other assets (593) (1,700)

Deferred tax assets (1,673) (1,223)

Increase/(decrease) in liabilities:

Trade creditors 1,408 1,090

Deferred revenue 2,493 980

GST payable 1,032 (358)

Provision for employee benefits 1,041 1,200

Provision for lease Incentives 950 (33)

Provision for tenancy make good 110 193

Provision for claims 468 371

Provision for doubtful debts (857) 1,165

Provision for income tax 1,440 1,496

Deferred tax liabilities (683) 322

4,172 2,521

Net cash flows from operating activities 10,765 7,014




17. Subsequent Events

The directors are not aware of any of the following events that have occurred prior to the signing of the financial report:

(a) events providing additional evidence of conditions that existed at the reporting date, or events that reveal for the first time conditions that existed at the reporting date, or

(b) other events occurring after the reporting date that are to be disclosed in compliance with Australian Accounting Standard AASB 110 Events After the Reporting Period.

18. Contingent Assets And Liabilities

At reporting date and up to the signing of these financial statements there are no known contingent assets or contingent liabilities (2014: $0).

19. Employee Incentive Schemes

During the previous financial year the Board approved both a short term incentive scheme to retain selected key management and align them with the strategic goals of the business. The scheme is dependent upon individual staff and the organisation as a whole achieving specific performance conditions.

Short Term Incentive Scheme

The short term incentive scheme is directly related to individuals who have achieved a specific minimum outcome in their individual scorecard results. The pool of funds is dependent on the annual profit of the corporation. An amount of $800,000 has been set aside as at the reporting date (2014: $700,000).

— End of Financial Statements —

Part DAppendix


Pillar Administration Appendix

Appendix 1 –Statistics about GIPA access applications 1 July 2014 to 30 June 2015

Table A: Number of applications by type of applicant and outcome*

Access granted in

full

Accessgranted in

part

Accessrefused in

full

Informationnot held

Informationalready

available

Refuse todeal with

application

Refuse to confirm/

deny whether

informationis held

Applicationwithdrawn

Media 0 0 0 0 0 0 0 0

Members of Parliament

0 0 0 0 0 0 0 0

Private sector business

0 0 0 0 0 0 0 0

Not for profit organisations or community groups

0 0 0 0 0 0 0 0

Members of the public (application by legal representative)

102 80 0 0 0 0 0 2

Members of the public (others)

57 35 0 1 0 0 0 0

* More than one decision can be made in respect of a particular access application. If so, a recording must be made in relation to each such decision. This also applies to Table B

Table B: Number of applications by type of application and outcome

Access granted in full

Accessgranted in

part

Accessrefused in

full

Informationnot held

Informationalready

available

Refuse todeal with

application

Refuse to confirm/

deny whether

informationis held

Applicationwithdrawn

Personal information applications*

159 115 0 1 0 0 0 2

Access applications (other than personal information applications)

0 0 0 0 0 0 0 0

Access applications that are partly personal information and partly other

0 0 0 0 0 0 0 0

* A personal information application is an access application for personal information (as defined in clause 4 of Schedule 4 to the Act) about the applicant (the applicant being an individual).

Appendix 1

D2

Annual Report 2014—2015 Pillar Administration

Table C: Invalid applications

Reason for invalidity Number of Applications

Application does not comply with formal requirements (section 41 of the Act) 14

Application is for excluded information of the agency (section 43 of the Act) 0

Application contravenes restraint order (section 110 of the Act) 0

Total number of invalid applications received 14

Invalid applications that subsequently became valid applications 6

Table D: Conclusive presumption of overriding public interest against disclosure matters listed in Schedule 1 to the Act

Number of times consideration used *

Overriding secrecy laws 0

Cabinet information 0

Executive Council information 0

Contempt 0

Legal professional privilege 25

Excluded information 0

Documents affecting law enforcement and public safety 0

Transport safety 0

Adoption 0

Care and protection of children 0

Ministerial code of conduct 0

Aboriginal and environmental heritage 0

* More than one public interest consideration may apply in relation to a particular access application and, if so, each such consideration is to be recorded (but only once per application). This also applies in relation to Table E.

Table E: Other public interest considerations against disclosure: matters listed in table to section 14 of Act

Number of occasions when application

not successful (3)

Responsible and effective government 0

Law enforcement and security 0

Individual rights, judicial process and natural justice 101

Business interests of agencies and other persons 0

Environment, culture, economy and general matters 0

Secrecy provisions 0

Exempt documents under interstate Freedom of Information legislation 0

Table F: Timeliness

Number of Applications

Decided within the statutory timeframe (20 days plus any extensions) 262

Decided after 35 days (by agreement with applicant) 1

Not decided within time (deemed refusal) 14

Total 277

D3


Table G: Number of applications reviewed under Part 5 of the Act (by type of review and outcome)

Decision

variedDecision upheld

Total

Internal review 0 2 2

Review by Information Commissioner* 0 1 1

Internal review following recommendations under section 93 of Act 0 0 0

Review by ADT 1 0 1

Total 1 3 4

* The Information Commissioner does not have the authority to vary decisions, but can make recommendations to the original decision-maker. The data in this case indicates that a recommendation to vary or uphold the original decision has been made by the Information Commissioner.

Table H: Applications for review under Part 5 of the Act (by type of applicant)

Number of Applications for review

Applications by access applicants 4

Application by persons to whom information the subject of access application relates (see section 54 of the Act)

0

Response to a Significant Issues raised by the Auditor- General in the Statutory Audit Report for year ended 30 June 2015

The Corporation’s Project Eleanor (budget $44.1 million) includes building an Enterprise Data Warehouse (completed in December 2014) and upgrading and transitioning all back office systems to a fit for purpose platform (expected completion November 2017). As a result of the uncertainty around external funding at this time, the Corporation has decided not to capitalise the costs pertaining to Project Eleanor. The Auditor General reviewed management’s assessment and resultant accounting treatment and concurred with this accounting treatment.

The governance structure established by the Corporation for the delivery of efficient and effective management of the project includes:

an Independent Steering Committee reporting to the Board;

Periodic monitoring and reporting of the governance and control framework by Internal Audit to the Audit and Risk Management Committee;

Engagement of an external expert as a project consultant;

Recruitment of experienced and qualified personnel in key project management roles; and

The Finance team reporting costs-to-date against budget and milestone achievements.

The Auditor General recommended Pillar continue to maintain its established governance framework for Project Eleanor and closely monitor its progress to completion.

D4

Annual Report 2014—2015 Pillar Administration

Pillar, as a State owned corporation that competes for superannuation administration business with private sector organisations, has been determined by NSW Treasury to be an “in competition” entity for annual reporting purposes from the 2011/12 financial year onwards. Accordingly, Treasury has granted to Pillar various “in competition” annual reporting exemptions, pursuant to section 7(2) of the Annual Reports (Statutory Bodies) Act 1984 (NSW) and clause 19 of the Annual Reports (Statutory Bodies) Regulation 2010 (NSW).

Details of the exemptions are set out below.

Note: In the following:

ARSBA means Annual Reports (Statutory Bodies) Act 1984 (NSW).

ARSBR means Annual Reports (Statutory Bodies) Regulation 2010 (NSW).

Requirement that Pillar is exempted from Comment/Condition applicable to exemption

Budgets

• detailed budget for the year reported on (s. 7(1)(a)(iii) ARSBA)

• outline budget for next year (s. 7(1)(a)(iii) ARSBA);

• particulars of material adjustments to detailed budget for the year reported on (cl. 7 ARSBR).

Report of Operations

Summary Review of Operations (Schedule 1 ARSBR):

• narrative summary of significant operations;

• selected financial and other quantitative information associated with the administration of program or operations.

Management and Activities (Schedule 1 ARSBR):

• nature and range of activities;

• measure and indicators of performance;

• internal and external performance reviews;

• benefits from management and strategy reviews;

• management improvement plans and achievements;

• major problems and issues;

• major works in progress, cost to date, estimated dates of completion and cost overruns;

• reasons for significant delays etc to major works or programs.

Exemption is subject to a condition. The condition is that comments and information relating to the “summary review of operations” are to be disclosed in a summarised form.Pillar has provided information in Part A about our operations.

Exemption is subject to a condition. The condition is that comments and information relating to “management and activities” are to be disclosed in a summarised form.Pillar has provided information in Part A about our management and activities.

Research and Development (Schedule 1 ARSBR):

• completed research including resources allocated;

• continuing research and development activities, including resources allocated,

unless that information could adversely affect operations.

Human Resources (Schedule 1 ARSBR):

• number of employees by category and comparison to prior three years;

• exceptional movements in employee wages, salaries or allowances;

• personnel policies and practices

• industrial relations policies and practices.

Appendix 2 - Exemptions from reporting requirements

D5


Requirement that Pillar is exempted from Comment/Condition applicable to exemption

Consultants (Schedule 1 ARSBR):

• for each engagement costing greater than $50,000:o name of consultant;o title of project;o actual cost;

• for each engagement costing less than $50,000:o total number of engagements;o total cost;

• if applicable, a statement that no consultants were engaged.

Exemption is subject to a condition. The condition is that the total amount spent on consultants is to be disclosed along with a summary of the main purposes of the engagements.

Pillar has provided this information about in Part B.

Land Disposal (Schedule 1 ARSBR):

• list of properties disposed of during the year other than by public auction or tender that had a value of more than $5 million, including the name of person acquiring the property and the proceeds from the disposal of the property;

• details of family and business connections between the purchaser and the person responsible for approving the disposal;

• statement giving reasons for the disposal;

• purpose/s for which proceeds were used;

• statement indicating that access to the documents relating to the disposal can be obtained under the GIPA Act.

Consumer Response (Schedule 1 ARSBR):

• extent and main features of complaints;

• services improved/changes in responses to complaints/suggestions.

Exemption is subject to a condition. The condition is that comments and information relating to “consumer response” are to be disclosed in a summarised form.

There were no complaints made to Pillar during 2012/13 that were not related to the superannuation funds and schemes that Pillar provides administration services for.

Pillar reports details of the complaints received in relation to each fund or scheme that it administers to the trustee of the applicable fund or scheme. We provide information in Part B about the complaints made in relation to the public sector superannuation schemes that Pillar administers.

Payment of Accounts (Schedule 1 ARSBR):

• performance in paying accounts, including action to improve payment performance.

Statutory State owned corporations are not subject to the payment of accounts provisions in cl. 13 of the Public Finance and Audit Regulation 2010.

Time for Payment of Accounts (Schedule 1 ARSBR):

• reasons for late payments;

• interest paid due to late payments.

Statutory State owned corporations are not subject to the payment of accounts provisions in cl. 13 of the Public Finance and Audit Regulation 2010.

Report on Risk Management and Insurance Activities (Schedule 1 ARSBR)

Exemption is subject to a condition. The condition is that comments and information are to be disclosed in a summarised form.

Pillar provides information about its risk management and insurance activities in Part A. Pillar, as a statutory State owned corporation, is also exempt from the requirement in Internal Audit and Risk Management Policy for the NSW Public Sector (TPP 09-05), to annually report compliance with the core requirements of the policy. It should be noted that Pillar does actually comply with the requirements of the policy.

Disclosure of Controlled Entities (Schedule 1 ARSBR):

• details of names, objectives, operations and activities of controlled entities and measures of performance.

Exemption is subject to a condition. The condition is that the names of the controlled entities are to be disclosed along with a summarised disclosure of the controlled entities’ objectives, operations and activities and measures of performance.

Pillar does not control any entities.

Investment Performance (cl. 12 ARSBR)

Liability Management Performance (cl. 13 ARSBR)

D6

Access B11

Changes to legislation B3

Chair’s message A3

Charter A7

Chief Executive Officer’s message A5

Committees B8

Complaints B15

Consultants B17

Disability Action Plan A25

Disclosure D6

Discussion of activities and performance A7 – A10

Directors B5 – B7

Directors’ Declaration C5

Diversity A24

Employees’ leave entitlements Part C

Executive numbers B12

Executive structure B10 – B11

Executive remuneration B12

Executive performance B10 – B11

Financial Statements (and Notes) Part C

Governance B3 – B12

Government Information (GIPA) B13 – B14

Government Information (GIPA) Statistics Appendix 1

Grants to Non-Government Organisations B17

Independent Audit Report C3 – C4

Insurance A23

Letter of submission A1

Management B10 – B12

Multicultural Polices and Services Program A24

Objectives A7, A9

Organisation chart B4

Overseas visits B17

Oversight B3 – B9

Privacy Policy B16

Public Interest Disclosures B16

Report production details B17

Risk management A18 – A23

Waste Reduction & Purchasing Plan A28

Workplace health and safety A27

Index of legislative compliance

Superannuation Administration Corporation trading as Pillar Administration

ABN 80 976 223 967

AFS Licence number 245591

Address Level 16, 1 Margaret Street Sydney NSW 2000

Postal Address GPO Box 3887 Sydney NSW 2001

Telephone 02 9238 5555

Fax 02 9238 5272

Website www.pillar.com.au