NExT IAG & NRMA Superannuation Plan PAGE Annual … · 1 IAG & NRMA Superannuation Plan Annual Report 2011 A message from the Trustee Dear Member, At the IAG & NRMA Superannuation

A MESSAGE FROM THE TRUSTEE

THE PLAN AT A GLANCE

YOUR PLAN’S INVESTMENTS

INVESTMENT INFORMATION

for Accumulation and Allocated Pension

accounts


for Defined Benefit members

YOUR INVESTMENT OPTIONS IN DETAIL

MEASURING PERFORMANCE

THE PLAN’S FINANCIAL POSITION

HOW THE PLAN IS MANAGED

IF YOU LEAVE THE PLAN

SUPER NEWS

MORE INFORMATION

NExT PAGEIAG & NRMA Superannuation Plan

Annual Report for the year ended 30 June 2011

IAG & NRMA Superannuation Pty Limited (ABN 77 000 300 934) is the Trustee of the IAG & NRMA Superannuation Plan (ABN 58 244 115 920) and the issuer of this Annual Report. GPO Box 4303, Melbourne VIC 3001.

Plan Helpline: 1300 424 676 (1300 IAG NRM)

Table of contents A MESSAGE FROM THE TRUSTEE page 1

THE PLAN AT A GLANCE page 3

YOUR PLAN’S INVESTMENTS page 4 Market round up The outlook for 2011/12 The Plan’s investment strategy and objectives How the Plan’s assets are managed Use of derivatives

INVESTMENT INFORMATION FOR ACCUMULATION ACCOUNTS AND ALLOCATION PENSION ACCOUNTS page 9 Your benefit Your investment purchases units Recent investment returns

YOUR INVESTMENT OPTIONS IN DETAIL page 10 Australian Shares Shares Growth Balanced Conservative Cash

MEASURING PERFORMANCE page 17 Investment performance benchmarks

INVESTMENT INFORMATION FOR DEFINED BENEFIT MEMBERS page 17 Comparison of rates of return (net and declared) Defined Benefit members leaving – interim earning rate

THE PLAN’S FINANCIAL POSITION page 19 The Plan’s financial statements Sub-plan reporting The Plan’s financial position

HOW YOUR PLAN IS MANAGED page 21 The Trustee Changes to the Trustee over the year A chance to have your say Indemnity insurance Trust Deed and Rules Concessional tax treatment Management assistance

IF YOU LEAVE THE PLAN page 22 Receiving your benefit as a lump sum Receiving your benefit as an allocated pension Receiving your benefit as a lifetime pension Eligible Rollover Fund and unclaimed money Contribution surcharge tax Restrictions on when you can get access to your benefits

SUPER NEWS page 24 Changes already in place Announced changes

MORE INFORMATION page 26 Resolving disputes and complaints If you’d like more information Questions?

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1 IAG & NRMA Superannuation Plan Annual Report 2011

A message from the Trustee Dear Member,

At the IAG & NRMA Superannuation Plan we consistently strive to bring you excellent services and benefits. During the year, we delivered on this commitment again by offering investment choice to our Defined Benefit members. We also commenced the development of a new improved website for the Plan which was launched in August this year.

On the investment front, the market showed promising signs of recovery bolstering investor confidence. However, by mid-year the recovery had slowed, and by the year’s close, market jitters had returned, presenting a more unsettled picture.

An improved Plan website

The IAG & NRMA Superannuation Plan website offers our members access to their super information — conveniently allowing you to see your up-to-date super balance, investment returns and to perform many transactions online. We believe it’s important that you have useful tools available to help you to manage your super. The new website gives you all this and more.

There are additional calculators: use the Budget Planner to track your expenses and to identify potential savings. The Retirement Planner shows you how much you may have when you retire based on your current approach and helps you to see whether you will have enough to fund the retirement you’re dreaming of. If you’re close to retirement, the Transition to retirement calculator, helps you to understand how you can make the most of tax savings while boosting your super in the lead up to retirement. Think you’re a financial whiz? you can use the Financial wiz quiz to find out. The article library is packed with information about wealth management and creation as well as superannuation.

After using these tools and searching the site’s information, remember that if you need any advice about your super, free of charge over the phone, you can call the Plan Helpline on 1300 424 676 to speak to a financial adviser. If you have any questions about your super, the Helpline will be pleased to answer these for you.

Investment returns

Current market conditions continue to be volatile. While the 2010/11 financial year started on a strong upward trend, the market has suffered considerably from concerns about sovereign debt issues in Europe, compounded by the political issues in the US, causing significant unrest which has continued into the 2011/12 financial year.

Given the current market conditions, the Plan has posted sound positive returns for all its investment options in 2010/11, albeit slightly under returns for the previous financial year. The Shares and Australian Shares Options fell just short of double figure returns. More information about the investment environment and the Plan’s returns for the year is detailed later in this report.

Investment choice for Defined Benefit members

Up until now, Defined Benefit members have not had access to investment choice. From 1 June 2011, in response to member requests, Defined Benefit members can choose one or more of the Plan’s six investment options for their additional accumulation accounts, giving them greater control and flexibility over how their money is invested.

To ensure this change did not expose members to volatile investment markets without their consent, the Trustee determined to apply the Cash Option as the default for those members who did not make a choice in relation to the investment of their additional accumulation accounts.

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back to Table of contents

Member representative directors’ election results

The four member representative trustee directors’ terms of office expired on 30 April 2011. An election was held to determine the member representatives for the following three year term. Jon Street was re-elected unopposed as the Patrols director. In the Staff electorate Christopher Hutchinson was re-elected and we welcome Mark Gold and Elaine Loo, who were the successful candidates in the election. Congratulations to our successful candidates. Our sincere thanks to Ceasar Galli and Nicolas Mowat for their valuable contributions during their term on the Trustee board.

IAG & NRMA Superannuation Plan — your Plan for life

More and more of our members are finding that, as an IAG & NRMA Super Plan member, you have a super plan for life. If you change your employer, you can stay with the Plan and have your new employer pay your superannuation guarantee contributions into the IAG & NRMA Plan. Download the Reserved member brochure, When you’re on a good thing, stick to it, from the website for more information or call the Helpline.

If you’re looking to retire, consider taking advantage of the Plan’s Transition to Retirement Income Stream. Or an account based pension when you do retire. There’s no need to change super funds. You can download a copy of the Retirement Income Stream PDS from the Plan website. To find out more about transitioning to retirement and for personal advice, at no cost over the phone, call the Plan Helpline.

If you have a question…

Please take the time to read this annual report. It contains information about the Plan’s investment performance for the year to 30 June 2011, the Plan’s financial situation and an overview of what’s new in super.

We know that for many people, super can seem hard to understand and making the best decisions can seem difficult. This is why you can call the Plan Helpline on 1300 424 676 (1300 IAG NRM) to have any questions answered, if you’d like advice about your super decisions and want to speak to a financial adviser. Or simply check out the Plan website.

Sincerely,

Troy Maguire Senior Manager, Superannuation IAG & NRMA Superannuation Pty Limited

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The Plan at a glance This section provides a brief summary of the operations of the Plan during the year. Further details are set out later in the report.

Plan facts and figuresPlan membership as at 30 June 2011

Accumulation 9,055

Defined Benefit 517

Lifetime Pension 177

Reserved 4,423

Allocated Pension 71

Total 14,243

Net Plan assets as at 30 June 2011 were in excess of $1,134 million.

About your Plan

In this report, a reference to:

■ ‘IAG’ means a company in the Insurance Australia Group;

■ ‘NRMA’ means the National Roads and Motorists’ Association

Limited and its related bodies corporate.

The Plan has two sub-plans:

■ The IAG sub-plan for current and former employees and officers

(and their eligible spouses) of companies in the Insurance

Australia Group, and

■ The NRMA sub-plan for current and former employees and

officers (and their eligible spouses) of the National Roads and

Motorists’ Association and its related bodies corporate.

Generally, if you joined the Plan after 1 January 1999 you belong to the

Accumulation section of the Plan. You will also be in the Accumulation

section if you chose to transfer to this section. Otherwise, you belong

to the Defined Benefits section. Some members who transferred from

the SGIC Staff Superannuation Fund, the RACV Superannuation Fund,

the CGU Superannuation Fund or the CGU-VACC Pension Fund are

also Defined Benefit members.

In this Annual Report, unless noted otherwise, references to

Accumulation members generally cover Reserved members, Retained

members, Spouse members and Allocated Pension members. Separate

investment performance information is provided for Allocated

Pension members.

Investment returnsThe following is a summary of the investment returns for the year as well as the average returns over the last five years.

Accumulation members

Investment option

Annual return* for the year ended 30 June 2011 (%)

Compound average annual rate of return over the last five years (% p.a.)

Compound average annual rate of return over the last ten years (% p.a.)

Australian Shares 9.4 1.8 n/a

Shares 9.6 1.1 4.4

Growth 8.6 1.8 4.3

Balanced 7.4 3.0 4.9

Conservative 5.8 4.2 5.4

Cash 4.3 4.7 n/a

* This return is the effective rate of net return after taxes and investment related fees and expenses.

Allocated Pension members

Investment option

Annual return* for the year ended 30 June 2011 (%)

Compound average annual rate of return* since inception (% p.a.)

Pension Growth 9.5 -1.0

Pension Balanced 8.2 -1.0

Pension Conservative 6.5 -3.7

Pension Cash 4.8 -5.1

* This return is the effective net rate of return, which is the actual rate of return after investment related fees, the investment management fee and expenses (no tax is levied). These options were introduced on 1 July 2007, so longer term performance is only available since that time.

Defined Benefit members

Annual return for the year ended 30 June 2011 (%)

Compound average annual rate of return over the last five years (% p.a.)

Credited to member accounts*

0.01 3.9

Earned on Plan assets 8.6 1.8

* This return is the effective rate of net return for compulsory account balances of Defined Benefit members. Refer page 17 for further information.

It is important to understand that while past performance is useful as a guide in reviewing the historical investment returns, it should not be relied upon as indicative of future performance and does not guarantee such performance.

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Your Plan’s investments Market round-up:

The year to 30 June 2011 delivered a positive return overall for the second year running. However, since that date investment markets have been volotile and the immediate future looks uncertain.

Global economy

The strong momentum of global production growth through the second half of 2010 and early 2011 slowed significantly in the June 2011 quarter. While the first three months of 2011 saw global growth gather momentum and remain resilient in the face of major political shocks and a series of major natural disasters, a moderation in growth was, in fact, expected by the end of the March 2011 quarter on the back of the:

■ unsustainable strength at the turn of the year

■ steady withdrawal of monetary and fiscal support across many countries

■ earlier sharp rises in energy and other commodity prices

■ disruptions to global supply chains resulting from the Japanese earthquake and tsunami.

In line with this expectation, global share markets remained positive in April but fell over the final two months of the financial year, against a backdrop of:

■ weaker US and European economic data

■ renewed concerns around the sovereign debt crisis in Europe

■ inflationary concerns and further policy tightening in China.

A rather sharp slowdown in the US has underscored the fragility of the underlying recovery, coupled with renewed decline in house prices there. The latest economic statistics suggest that the recession was deeper than previously reported and that the recovery has been shallower. Only a couple of months into the 2011/12 financial year, there are fears that a second recession may be around the corner for the US.

Despite impressive growth in Germany and other core European Union (EU) nations over the first half of the year, stresses in EU funding markets intensified as the year wore on.

The debt crisis has been building for over a year now and every apparent “resolution” has proven short-lived. Greece’s woes dominated the last quarter of the financial year under review, but as at the time of going to press Spain and Italy are struggling to refinance maturing debt.

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Investors remain sceptical about the EU’s ability and willingness to control the situation. It is clear that a lot needs to go right before there is a potential re-emergence of a more benign market environment in the second half of 2011.

The extent of the slowdown in China is somewhat less clear, but there is still no conclusive evidence that inflationary pressures are about to fall to more manageable levels. Moreover, the persistence of inflation in China and the developing world is raising fears that emerging markets are now a structural source of price pressures for developed economies. The uncertainty over the extent of the slowdown in China is acting to weaken investor confidence.

Australia

Australia’s growth, as measured by Gross Domestic Product (GDP), contracted 1.2% in the first quarter of 2011 – the deepest quarterly decline in 20 years. This deeper-than-expected contraction, compounded by the effects of the natural disaster in Japan in March, accounted for much of the sharp downward revision to the consensus projection for GDP growth in 2011 (from a forecast 2.9% in March to 2.0% in June).

Correspondingly, forecast growth for 2012 was revised up over the same period from 3.7% to 4.0%, as much of the earlier lost production is expected to eventually be clawed back. Nevertheless, a recent string of disappointing economic data (particularly outside of the resources sector) is also evident, and inflationary pressures gathered momentum in the June quarter.

The relatively lacklustre growth in domestic demand and real GDP is largely attributable to the household sector. It’s a reflection of the reluctance from households to take on new debt and consume. On the plus side, this has led to a rise in the household savings rate to the highest levels since the mid-1980s, with household disposable income growing an impressive 8.3% over the year to first quarter of 2011. Business investment growth has also continued to accelerate, largely driven by a 21.5% surge in the mining sector (ex-mining investment was up by just 2.6%).

The outlook for 2011/2012As at the time of going to press, financial markets are in turmoil. Investors are weathering the fiercest volatility since the global financial crisis. Share markets and other “growth” assets experienced substantial falls and rebounds during August and September 2011.

Two key factors have contributed to the current volatility:

1. sovereign debt issues in Europe; and

2. problems in the US, including the downgrading of their credit rating and serious doubts about their economic recovery.

The implications of the situation for returns over 2011/2012 are not yet clear, with political and fiscal uncertainty being compounded by investor nerves causing dramatic swings across markets around the world. Most superannuation investors have exposure to the share market to varying degrees and so will be affected by these market movements. The coming weeks and months may continue to be quite volatile and difficult to predict.

Look to the long term

While it’s natural to be worried about what’s happening now to your super, you also need to stay focused on your long-term goals for your super. Super is generally a long-term investment and that means your account will be affected over time by periods of market volatility.

As we saw through the last global financial crisis in 2008/09, share markets do recover. Shares have traditionally proven to be a good long-term investment and have a legitimate place in most long-term diversified superannuation investment portfolios.

To get a clearer understanding, look at your performance over a longer term period, say five or ten years. Investment markets have historically moved in cycles and while returns will vary from year to year, these cycles are generally smoothed out over the long-term.

Superannuation is also taxed at lower rates than non-super investments, so it’s important to look at the additional benefits paying less tax can bring you over the long term.

Before you make any change to your investment choice, you should speak to a licensed or appropriately qualified financial adviser. If you have concerns about your investment choice, you can speak to an adviser by calling the Plan Helpline on 1300 424 676.

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The Plan’s investment strategy and objectivesFor each investment option, the Trustee has set an investment strategy and objective. Please note that the objectives are not a forecast or guarantee of future performance.

The Trustee regularly monitors each investment option’s performance against its objective. There are different levels of investment risk associated with each of the Plan’s investment options. Please refer to the Plan PDS or the Retirement Income Streams PDS for more information. You can obtain a copy by calling the Plan Helpline on 1300 424 676 or you can download a copy from the Plan website, www.iagnrma.superfacts.com

Although the Plan offers investment choice for members, the Trustee retains overall responsibility for the investment of the assets of the various options in line with their specific investment objectives. Members can choose the investment option/s that suit their individual needs and preferences.

For defined benefit members, investment choice only applies in respect of any additional accumulation accounts in the Plan.

How the Plan’s investments are managedSpecialist investment managers appointed by the Trustee invest in securities such as Australian and overseas shares, property trusts, fixed interest securities, cash and short-term securities or any other investments in line with their appointment. This can be done directly or through pooled funds.

The Trustee, through its asset consultants, monitors the activities and performance of all the external managers.

During 2010/2011, the Trustee terminated its Australian listed property mandate with Perennial Investment Partners and established a new property investment through the GPT Wholesale Office Fund. IAG Asset Management, the trustee and manager of the IAGAM World Equity Trust, terminated the mandate with AllianceBernstein and appointed a new manager, MFS.


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How the Plan’s assets are investedThis table shows the proportion of Plan’s assets invested with each investment manager by asset class.

Proportion of total assets as at 30 June

Asset class Investment manager 30 June 2010 (%) 30 June 2011 (%)

Cash IAGAM Cash Management Trust 9.04 13.29

Sub-total 9.04 13.29

Fixed interest IAGAM Fixed Interest Trust 24.22 23.77

Sub-total 24.22 23.77

Australian shares Northward Capital (ex IAGAM Research Fund)1 12.32 11.21

BT Core Australian Equity1 10.65 9.45

Alleron1 4.39 4.13

Northcape – Small Cap1 2.77 3.16

Dimensional Australian Value Trust1 5.52 5.53

Sub-total 35.65 33.48

Overseas shares IAGAM World Equity Trust2 17.96 16.60

Generation IM Global Equity 2.53 2.31

Sub-total 20.49 18.91

Property Perennial Domestic Listed Property3 2.99 0.00

Invesco Global Property3 2.90 4.29

APPF – Retail Unlisted Property Trust 1.77 1.71

APPF – Industrial Unlisted Property Trust 0.74 1.08

GPT Wholesale Office Fund 0.00 1.58

Sub-total 8.40 8.66

Alternative investments

IAGAM Sustainable Investments Trust4 1.35 1.32

IAGAM Private Equity Trust5 0.85 0.57

Sub-total 2.20 1.89

Total 100.00 100.00

Notes:

1. Investment manager engaged by the Trustee to select and manage an investment portfolio across a range of Australian equities investments.

2. IAGAM has appointed specialist international share managers to manage the World Equity Trust’s assets. These managers are: Arrowstreet Capital, T. Rowe Price Global Equity Fund and MFS which replaced AllianceBerstein during the year.

3. Investment managers engaged by the Trustee to select and manage an investment portfolio across a range of listed property investments.

4. The IAGAM Sustainable Investments Trust is invested in the Generation Climate Solutions Fund.

5. Horsley Bridge Partners has been appointed to manage the assets of the Private Equity Trust.

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Large assets of the PlanThe IAGAM Cash Management Trust, the Dimensional Australian Value Trust, the IAGAM World Equity Trust and the IAGAM Fixed Interest Trust each held more than 5% of the Plan’s assets at 30 June 2011. While BT Investment Management and Northward Capital each manage more than 5% of the Plan’s assets, no individual underlying investment comprises more than 5% of the Plan’s total assets.

Use of derivativesDerivatives are special contracts – e.g. futures and forward exchange rate agreements – which can be used to manage the risk of changes in the future value of investments. The investment manager is permitted to use derivatives in the management of the Plan assets. These instruments are typically used for the following purposes:

■ hedging; seeking to protect against adverse changes in the market value of assets and movements in currency exchange rates

■ to obtain prices that may not be available if assets are bought directly

■ to reduce the costs of buying and selling assets directly

■ to change the term of a fixed interest security or portfolio

■ to manage cash flows efficiently

■ to manage asset weighting for the different asset classes.

Derivatives may not be used for speculative purposes.

The Plan held derivatives during the year ended 30 June 2011 in respect of its Australian shares, overseas shares and fixed interest investments. The Plan’s exposure to derivatives is limited to 20% of the market value of the assets of the Plan. Within each asset class, exposure to derivatives is limited to 20% of the market value of the asset class. The Plan also holds derivatives to hedge part of the currency exposure in relation to its investment in international shares and alternative investments. Derivatives are not used for speculative purposes.


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Recent investment returnsAccumulation accounts

The following table shows the relevant returns for each investment option for the year ended 30 June and the average returns for the past five years. The annual effective rate of net return is earnings after taxes and investment related fees and expenses.

Allocated Pension accounts

The following table shows the relevant returns for each pension investment option available to retirement income stream members for the past four years ended 30 June plus the average over the four years since the options were established. The annual effective rate of net return is earnings after investment fees, the investment management fee and expenses. No tax is levied on allocated pension accounts, however these accounts still received the benefit of franking credits attached to dividends on Australian shares.

Investment returns for an investment option may be positive or negative. The value of your investment depends on the performance of your chosen option(s).

Each option bears a different level of risk, depending on the mix of asset classes that make up the portfolio. More information about the associated risks and allocation of asset classes for each option are detailed on the following pages of this report.

Investment information for Accumulation accounts and Allocated Pension accountsYour benefitFor Accumulation members, your super benefit is your member account balance. For Allocated Pension members, it is your pension account balance. Your account is invested (after allowing for tax and expenses) according to your choice of investment option(s). So the amount you ultimately receive is directly linked to the investment performance of your selected option or mix of options.

For Defined Benefit members, your additional accumulation accounts are invested according to your choice of investment option(s).

Your investment purchases unitsYour account balance is applied to buy what are known as ‘units’ in your chosen investment option(s). The number of units bought depends on the unit price at the relevant time. For example, if your account balance is $1,000 and the unit price of your selected investment option is $1.00 at that time, then 1,000 units would be bought on your behalf.

Unit prices are generally calculated daily and will go up and down as investment markets shift, affecting the value of your units and consequently the value of your investment. The unit price for each option also takes into account investment fees and investment expenses (an investment management related fee applies in the pension investment options and earnings in the pension investment options are not taxed). The value of your account balance at any time is simply the number of units you have multiplied by their unit price at that time.

Net returns on your chosen investment options (which may be positive or negative) will be reflected via changes in unit prices. If the net returns for the option are positive, the unit price will increase. If the net investment returns are negative (a loss), the unit price will decrease. The effective rate of net returns for a given period can therefore be determined by the proportionate increase (if a positive return) or decrease (if a negative return) in the unit prices from the start to the end of the period. Daily unit prices are posted on the Plan’s website.

Investment option Effective rate of net earnings (%)

Compound average rate of net return over the past five years (% p.a.)

Year ended 30 June

2007 2008 2009 2010 2011

Australian Shares

24.2 -10.1 -18.7 10.2 9.4 1.8

Shares 18.7 -13.5 -15.7 11.2 9.6 1.1

Growth 13.8 -11.3 -10.3 11.1 8.6 1.8

Balanced 11.7 -6.3 -5.2 8.9 7.4 3.0

Conservative 7.6 -1.5 1.5 7.6 5.8 4.2

Cash 5.4 6.0 4.5 3.5 4.3 4.7

Investment option Effective rate of net earnings (%)

Compound average rate of net return over the past four years (% p.a.)

Year ended 30 June

2008 2009 2010 2011

Pension Growth

-12.1 -11.3 12.4 9.5 -1.0

Pension Balanced

-7.1 -6.0 10.2 8.2 1.0

Pension Conservative

-1.4 1.5 8.5 6.5 3.7

Pension Cash 6.7 5.1 3.8 4.8 5.1

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Your investment options in detailInformation in this section applies to Accumulation accounts and Allocated Pension accounts*

Each of the Plan’s options has a specific investment objective and strategy set by the Trustee. The objectives are not a forecast or guarantee of future performance. Each option has a different risk profile and the Trustee’s aim is to achieve the best possible returns relative to the level of risk associated with investing in that option.

The investment returns for any option fluctuate depending on the volatility of investment markets and the performance of the underlying asset classes. The performance of each asset type is measured against a benchmark set by the Trustee which reviews this performance regularly.

The target asset allocation for each option is the proportion of that option that would ideally be invested in each asset class if the Trustee had no particular view that one asset class was likely to outperform any other asset class. However, within the ranges specified in this Annual Report, the Trustee may decide to invest more than the target allocation in an asset class it expects to outperform and less in one it expects to underperform.

The aim is to maintain the asset allocations for each investment option within the target ranges stated in this Annual Report. Nevertheless, from time to time, market movements and/or cash flows into or out of an option may cause the actual allocation temporarily to fall outside the target ranges. This will normally be addressed at the next available rebalancing opportunity.

When considering the following information, please note that past performance for each investment option should not be relied upon as indicative of future performance and does not guarantee such performance.

* Allocated Pension members can select from the Pension Growth, Pension Balanced, Pension Conservative and Pension Cash Options.


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Option 1 – Australian Shares

Strategy

Aims to invest 100% of assets in Australian shares.

Investment objective

This option aims to achieve a rate of return (net of investment fees and expenses but before tax) that outperforms the S&P/ASX 200 Accumulation Index over rolling three year periods.

Level of risk - high

Likelihood of a loss in any one year period is approximately two in seven.

Because shares are market driven investments which respond quickly to changes in market conditions, shares are highly volatile and investors can expect performance to show periods of significantly high growth, as well as periods of poor or even negative returns. Over a longer period of time, shares generally can be expected to produce higher returns than any other asset class.

The performance of the Australian Shares Option is measured against a benchmark portfolio, which consists of the target asset allocation as shown below.

Target asset allocation

Benchmark % Range %

Australian shares* 100 90–100

Cash* 0 0–10

Where the assets were invested as at 30 June 2011:

Australian shares 95.4%

Cash 4.6%


Overseas shares 49.3%

Cash 1.8%



Property 11.0%

Alternatives 2.7%

Fixed interest 26.4%

Cash 6.2%

Australian Shares 23.7%

Overseas Shares 14.7%

Property 7.5%

Alternatives 1.2%

Fixed Interest 34.4%

Cash 18.5%



Property 4.8%


Cash 33.5%

Cash 100%

As at 30 June 2011, the Australian Shares Option had investment assets of $34.1M.

Recent investment returns

The annual effective rate of net return (i.e. actual investment returns less tax and expenses) for the year ended 30 June for the past five years was:

Year ending 30 June Rate of return (% p.a.)

2007 24.2

2008 -10.1

2009 -18.7

2010 10.2

2011 9.4

Five year compound average net rate of return

1.8

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Option 2 - Shares

Strategy

Aims to invest approximately half the assets in Australian shares and half in overseas shares. By sharing the asset allocation, this portfolio is not completely exposed to either Australian or overseas market forces, giving the advantage of some diversification.


This option aims to achieve a rate of return (net of investment fees and investment expenses and applicable tax) of at least 5.5% p.a. above inflation (as measured by the Consumer Price Index) over rolling ten year periods.

Level of risk - high

Likelihood of a loss in any one year period is approximately one in four.

Because shares are market driven investments which respond quickly to changes in market conditions, shares are highly volatile and investors can expect performance to show periods of significantly high growth, as well as periods of poor or even negative returns. Over a longer period of time, shares generally can be expected to produce higher returns than any other asset class. Exposure to overseas shares means that there is also a currency risk although the Trustee has chosen to hedge part of this currency risk.

The performance of the Shares Option is measured against a benchmark portfolio, which consists of the target asset allocation as shown below.

The Trustee may vary the actual asset allocation at any time either up or down within the below ranges.


Benchmark % Range %

Australian shares* 50 45–65

Overseas shares* 50 30–55

Cash* 0 0–10

* Historically the benchmark allocation was 65% Australian shares and 35% overseas shares.



Cash 4.6%



Cash 1.8%



Property 11.0%

Alternatives 2.7%


Cash 6.2%



Property 7.5%

Alternatives 1.2%


Cash 18.5%



Property 4.8%


Cash 33.5%

Cash 100%

As at 30 June 2011, the Shares Option had investment assets of $77.5M.


The annual effective rate of net return (i.e. investment returns less tax and investment fees and expenses) for the year ended 30 June for the last five years were:

Year ending 30 June Rate of return (% p.a.)

2007 18.7

2008 -13.5

2009 -15.7

2010 11.2

2011 9.6


1.1

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Option 3 - Growth and Pension Growth

Strategy

Aims to invest the majority (70%), in growth assets such as Australian and overseas shares and property trusts, and the remaining (30%) in less volatile assets such as fixed interest and cash.


These options aim to achieve a rate of return (net of investment fees and investment expenses and applicable tax) of at least 4.5% p.a. above inflation (as measured by the Consumer Price Index) over rolling seven year periods.

Whilst both the Accumulation Growth and Pension Growth Options are invested in the same pool of assets, returns will differ between them because different investment fees apply and earnings in the Pension Growth Option are not taxed.

Level of risk – medium to high

Likelihood of a loss in any one year period is approximately one in five.

While a large portion of the assets is invested in the more volatile share markets, this is partially offset by the stability of the fixed interest and cash components of the portfolio. For this reason, some fluctuation from year to year can be expected, however this fluctuation is not expected to be as great as for the Australian Shares Option and the Shares Option.

The performance of the Growth Option and Pension Growth Option are measured against a benchmark portfolio, which consists of the target asset allocation shown below.



Benchmark % Range %

Australian shares 30 25–45

Overseas shares 20 15–35

Property 10 0–20

Alternatives 10 0–15

Fixed interest 25 10–40

Cash 5 0–20


As at 30 June 2011, these options had investment assets of, in total, $803.1M. This includes the assets in respect of Defined Benefit members as explained on page 17.


The return for the Growth Option is net of tax and investment fees and expenses. The return for the Pension Growth Option is net of investment fees, the investment management fee and expenses (no tax is levied).

Year ending 30 June

Rate of return (% p.a.)

Growth Option

Pension Growth Option

2007 13.8 N/A

2008 -11.3 -12.1

2009 -10.3 -11.3

2010 11.1 12.4

2011 8.6 9.5

Four year compound average net rate of return

-1.0 -1.0


1.8 N/A


Cash 4.6%



Cash 1.8%



Property 11.0%

Alternatives 2.7%


Cash 6.2%



Property 7.5%

Alternatives 1.2%


Cash 18.5%



Property 4.8%


Cash 33.5%

Cash 100%

For Accumulation members, the Growth Option is also the default option. This means that this option will apply to your superannuation investment if you do not choose an investment option. The Trustee has chosen the Growth Option as the default option because the Trustee views superannuation as a long-term investment. However, it’s important that you individually assess your own situation and retirement planning strategy (for example, if you are near to retirement age), as the default option may not be appropriate for you. You are encouraged to make your own choice between the available options and to seek professional advice.

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Option 4 – Balanced and Pension Balanced

Strategy

Aims to have 50% of the portfolio in growth assets, which will participate in the higher returns expected from shares, but will be cushioned from the associated high volatility by an equal allocation (50%) to defensive assets.


These options aim to achieve a rate of return (net of investment fees and investment expenses and applicable tax) of a least 3.5% p.a. above inflation (as measured by the Consumer Price Index) over rolling five year periods.

Whilst both the Balanced Option and the Pension Balanced Option are invested in the same pool of assets, returns will differ between them because different investment fees apply and earnings in the Pension Balanced Option are not taxed.

Level of risk – medium

Likelihood of a loss in any one year period is approximately one in six.

With greater levels of diversification and reduced risk, these options are not expected to experience as high a level of year-on-year volatility in investment returns as the Australian Shares Option, Shares Option or Growth Option.

The performance of the Balanced Option and Pension Balanced Option are measured against a benchmark portfolio, which consists of the target asset allocation as shown below.



Benchmark % Range %

Australian Shares 22.5 15–35

Overseas Shares 15 5–25

Property 7.5 0–10

Alternatives 5 0–10

Fixed Interest 35 25–55

Cash 15 0–30



Cash 4.6%



Cash 1.8%



Property 11.0%

Alternatives 2.7%


Cash 6.2%



Property 7.5%

Alternatives 1.2%


Cash 18.5%



Property 4.8%


Cash 33.5%

Cash 100%

As at 30 June 2011, these options had investment assets of, in total, $89.3M.


The return for the Balanced Option is net of tax and investment fees and expenses. The return for the Pension Balanced Option is net of investment fees, the investment management fee and expenses (no tax is levied).

Year ending 30 June


Balanced Option

Pension Balanced Option

2007 11.7 N/A

2008 -6.3 -7.1

2009 -5.2 -6.0

2010 8.9 10.2

2011 7.4 8.2


1.0 1.0


3.0 N/A

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Option 5 – Conservative and Pension Conservative

Strategy

Invests mainly in fixed interest and cash, which are stable investments producing a more predictable return than the Australian Shares, Shares, Growth and Balanced Options in the longer term. The growth component of this portfolio is achieved by a relatively small investment in shares and property.


These options aim to achieve a rate of return (net of investment fees and investment expenses and applicable tax) of at least 2.5% p.a. above inflation (as measured by the Consumer Price Index) over rolling three year periods.

Whilst both the Conservative Option and the Pension Conservative Option are invested in the same pool of assets, returns will differ between them because different investment fees apply and earnings in the Pension Conservative Option are not taxed.

Level of risk – medium to low

Likelihood of a loss in any one year period is approximately one in twelve.

Investment returns are expected to remain more stable in the short-term than the returns of the all the other options except the Cash Option.

The performance of the Conservative Option and Pension Conservative Option are measured against a benchmark portfolio, which consists of the target asset allocation as shown below.



Benchmark % Range %

Australian shares 10 0–20

Overseas shares 10 0–20

Property 5 0–10

Fixed Interest 45 20–70

Cash 30 5–55


As at 30 June 2011, these options had investment assets of, in total, $53.7M.


The return for the Conservative Option is net of tax and investment fees and expenses. The return for the Pension Conservative Option is net of investment fees, the investment management fee and expenses (no tax is levied).

Year ending 30 June


Conservative Option

Pension Conservative

Option

2007 7.6 N/A

2008 -1.5 -1.4

2009 1.5 1.5

2010 7.6 8.5

2011 5.8 6.5


3.3 3.7


4.2 N/A


Cash 4.6%



Cash 1.8%



Property 11.0%

Alternatives 2.7%


Cash 6.2%



Property 7.5%

Alternatives 1.2%


Cash 18.5%



Property 4.8%


Cash 33.5%

Cash 100%

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Option 6 – Cash and Pension CashStrategy

Invests solely in cash, which includes deposits in banks, bills of exchange, promissory notes and other short term securities. Cash is the most stable investment with virtually no risk of negative returns over the short term. However, the long term performance of cash is historically lower compared with the other investment options available under the Plan, particularly during periods of high inflation.


These options aim to provide capital stability and capital preservation by matching the cash benchmark as measured by the UBS Bank Bill Index.

Whilst both the Cash Option and the Pension Cash Options are invested in the same pool of assets, returns will differ between them because different investment fees apply and earnings in the Pension Cash Option are not taxed.

Level of risk – low

Likelihood of a loss in any one year period is close to nil.

Investment returns are expected to remain more stable than the other options over both the short and long term. As this option is invested only in cash, its performance will be measured by the UBS Bank Bill Index, which is the index for cash.


Benchmark % Range %

Cash 100 100


As at 30 June 2011, these options had investment assets of, in total, $72.4.M.


The return for the Cash Option is net of tax and investment fees and expenses. The return for the Pension Cash Option is net of investment fees, the investment management fee and expenses (no tax is levied).

Year ending 30 June


Cash Option

Pension Cash Option

2007 5.4 N/A

2008 6.0 6.7

2009 4.5 5.1

2010 3.5 3.8

2011 4.3 4.8


4.6 5.1


4.7 N/A


Cash 4.6%



Cash 1.8%



Property 11.0%

Alternatives 2.7%


Cash 6.2%



Property 7.5%

Alternatives 1.2%


Cash 18.5%



Property 4.8%


Cash 33.5%

Cash 100%

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Measuring performance The investments are reviewed to monitor how they are performing against investment objectives. The following are the benchmarks used by the Trustee to measure the performance of each asset class.

Asset type Performance benchmark

Australian shares Composite Index*

Overseas shares MSCI World (ex Aust) Accumulation Index (50% hedged)

Property Composite Index**

Alternatives UBS Bank Bill Index

Fixed interest UBS Composite Bond Index (All Maturities)

Cash UBS Bank Bill Index

* Partially measured against the S&P/ASX 200 Accumulation Index, partially against the S&P/ASX 300 Accumulation Index and partially against the S&P/ASX Small Ordinaries Accumulation Index.

**Partially measured against the FTSE EPRA/NAREIT Global REIT Index and partially against the Mercer Unlisted Property Index.

Investment information for Defined Benefit membersInformation in this section applies to Defined Benefit membersAs Defined Benefit members, some of your benefits may be based on your salary and period of service, and some on your account balances in the Plan. The compulsory account balances of Defined Benefit members are credited with a declared earning rate.

The Trustee has chosen to invest the assets supporting the entitlements of Defined Benefit members in the Growth Option – refer page 13. The Trustee has generally determined the declared earning rate by averaging actual returns over three years. However, given recent investment returns, the Trustee has elected to place a floor under the earning rate of 0.01% per annum. As a result, the declared earning rate of 0.01% for the year to 30 June 2011 was lower than the rate that would have reflected the performance of the Growth option over the last three years, as the Trustee recoups the cost of applying the floor during previous years.

This approach is known as “smoothing” and results in less fluctuation in the rate of interest being applied to members’ accounts than would apply if the actual earnings were applied each year. However, over longer periods the difference in overall result is substantially reduced.

From 1 June 2011, any additional voluntary account balances are now invested in the Cash Option or such other option as chosen by the member. Prior to this date the smoothed rate applied.

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Comparison of annual effective rates of net return and declared rates 1990 – 2011The Plan’s annual effective rate of net investment returns (i.e. actual investment returns less tax and expenses) and declared earning rates since 1991 for account balances of Defined Benefit members are as follows:

Year ended 30 June Effective rate of return (% p.a.) Declared earning rate (% p.a.)

1990 11.30 18.10

1991 17.30 12.50

1992 21.40 7.50

1993 18.80 11.30

1994 10.80 13.50

1995 -0.50 15.60

1996 10.20 10.20

1997 21.90 8.30

1998 11.70 7.00

1999 13.70 9.20

2000 15.00 15.00

2001 6.00 11.50

2002 -5.10 5.30

2003 -0.40 0.20

2004 13.60 2.70

2005 12.40 8.50

2006 15.60 13.90

2007 13.80 14.00

2008 -11.30 6.00

2009 -10.30 0.01

2010 11.10 0.01

2011 8.60 0.01

Five year compound average rate of return (% p.a.)

1.78 3.86

Ten year compound average rate of return (% p.a.)

4.30 4.93

Twenty year compound average rate of return (% p.a.)

8.42 7.86

Twenty-two year compound average rate of return (% p.a.)

8.94 8.52

Note: past performance is not an indicator of future performance

Defined Benefit members leaving during the yearFor Defined Benefit members leaving the Plan during the year, before a final earning rate is available, benefits are calculated using an interim rate. The Trustee sets interim rates each quarter.

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The Plan’s financial details The Plan’s financial statementsA summary of the Plan’s audited accounts for the 2010 and 2011 years is shown below. Copies of the audited accounts and the auditor’s report are available by contacting the Plan Helpline on 1300 424 676 – see page 27 for contact details.

Accounts as at 30 JuneStatement of change in net assets

2010 ($,000) 2011 ($,000)

NET ASSETS AT START OF YEAR 914,668 1,029,058

Plus

Contributions 100,368 98,468

Transfers from other funds 14,848 19,016

Insurance proceeds and rebates 3,536 2,863

Investment income 29,876 51,780

Realised investment gains (losses) 54,457 26,937

Unrealised investment gains (losses) 17,665 16,397

Total revenue 220,750 215,461

Less

Benefits paid 79,760 84,875

Administration expenses 4,219 3,986

Insurance premiums 2,110 1,642

Contribution surcharge tax 140 6

Income tax expense 20,131 19,629

Total expenses 106,360 110,138

NET ASSETS AT END OF YEAR 1,029,058 1,134,381

Statement of net assets

2010 ($,000) 2011 ($,000)

ASSETS

Investments 1,017,648 1,118,517

Investment income receivable 3,924 12,018

Other receivables 477 591

Deferred tax asset 12,156 8,876

Total assets 1,034,205 1,140,002

Less

LIABILITIES

Benefits payable 929 594

Provisions for income tax 2,502 4,081

Derivatives contracts 1,040 —

Other (including share creditors) 676 946

Total liabilities 5,147 5,621

NET ASSETS AT END OF YEAR 1,029,058 1,134,381

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2011 Sub-plan reportingIn accordance with the Plan’s Trust Deed, from 1 December 2003, the Plan has been administered as two sub-plans, the IAG sub-plan and the NRMA sub-plan. The following secondary sub-plan report has been prepared for the financial year to 30 June 2011.

Statement of change in net assets

IAG sub-plan ($,000) NRMA sub-plan ($,000)

NET ASSETS AT START OF YEAR 897,465 131,593

Plus

Transfers between sub-plans 1,079 (1,079)

Contributions 86,418 12,050

Transfers from other funds 16,914 2,102

Investment revenue and changes in net market value of investments

82,424 12,690

Insurance proceeds and rebates 2,282 581

Total revenue 189,117 26,344

Less

Benefits paid 77,134 7,741

Administration expenses 3,601 385

Contribution surcharge tax 6 —

Insurance premiums 1,494 148

Income tax expense 17,178 2,451

Total expenses 99,413 10,725

NET ASSETS AT END OF YEAR 987,169 147,212

Statement of net assets

Total assets 991,029 148,973

Less

Total liabilities 3,860 1,761

NET ASSETS AT END OF YEAR 987,169 147,212

The Plan’s financial positionAs noted earlier, the Plan is administered as two sub-plans, the IAG sub-plan and the NRMA sub-plan, each with separate accounts.

The Plan’s actuary determines how much each employer needs to contribute to ensure that the respective sub-plans have sufficient assets to pay Defined Benefit entitlements in the future. The required level of employer contributions will vary over time depending on how the value of Defined Benefit members’ entitlements compares with the assets attributed to each sub-plan to support those entitlements.

The market value of the assets attributed to the IAG sub-plan as at 30 June 2011 covered 100.0% of the value of benefits that would have been paid to members registered in that sub-plan if they all left their employment with IAG on that day. For the NRMA sub-plan, the corresponding percentage coverage was 103.5%.

The Trustee confirms that employer contributions have been paid into the Plan as recommended by the actuary.

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How your Plan is managed The TrusteeThe Trustee, IAG & NRMA Superannuation Pty Limited, manages the Plan.

The Trustee normally has nine directors. Two directors are appointed by Insurance Australia Group Services Pty Limited. Two directors are appointed by National Roads and Motorists’ Association Limited. Four directors are elected by members of the Plan for a period of three years. One member representative director is elected by NRMA Road Service Patrols and three directors are elected by other employees who are members of the Plan.

As at 30 June 2011, there was also one independent director, the Hon Susan Ryan AO who was appointed by the other Trustee directors. However, since that date, Ms Ryan has resigned as a director of the Trustee to take up the role of Australia’s first Age Discrimination Commissioner. The Trustee is currently considering the appointment of a replacement for Ms Ryan.

The directors of the Trustee company as at 30 June 2011 were:

Chair and Independent director

Susan Ryan AO

Company-appointed directors

Dianne Day NRMA Lisa Bray NRMA Dennis Fox IAG Nola Watson IAG

Member-representative directors

Mark Gold IAG Christopher Hutchinson IAG Elaine Loo IAG Jonathan Street NRMA–Road Service Patrol

Changes to the Trustee over the yearCesare Galli joined the Trustee as a member-representative director in August 2010 following the resignation of Sanjay Gund.

Mark Gold and Elaine Loo joined the trustee on 1 May 2011 following a trustee election. Cesare Galli and Nicholas Mowat ceased to be directors at that time. Our thanks to Cesare, Nicholas and Sanjay for their contribution while serving on the board.

A chance to have your sayAs member representative directors are elected by the members of the Plan, you get the chance to nominate and vote for representatives on the Trustee Board. The Plan has a specific set of rules applying to the appointment and removal of member elected directors and the filling of casual vacancies. These rules are available by calling the Plan Helpline on 1300 424 676.

Indemnity insuranceThe Trustee and its directors may be reimbursed and indemnified out of the Plan for all liabilities which they properly incur in administering the Plan including liabilities that arise as a result of an ‘honest mistake’. To protect the assets of the Plan against certain losses arising from the conduct of the Trustee and its directors and administrators, the Trustee has taken out trustee indemnity insurance cover.

Trust Deed and RulesThe Trust Deed and Rules may be amended from time to time. During the year to 30 June 2011, amendments were made to the Trust Deed and Rules to allow for the extension of Member Investment Choice to the Defined Benefit members in respect of their additional accumulation accounts.

Concessional tax treatmentIn order to qualify for concessional tax rates, funds have to be classified as ‘complying superannuation funds’ under the income tax laws. To be eligible, funds must report regularly to APRA and demonstrate their compliance with superannuation laws and APRA guidelines.

The Plan is classified as a complying superannuation fund and the Trustee is not aware of any matter that would cause the Plan to lose its complying status.

Management assistanceThe Plan is administered by Mercer (Australia) Pty Ltd. The administrator performs such functions as determining member benefits, processing and allocating contributions and ensuring all membership data is correct. Contact details for Mercer can be found on the back page of this report. The Plan’s compliance status is monitored by the Plan’s Compliance Manager.

The Trustee is assisted by a number of professional organisations who provide advice and assistance in the administration of the Plan. These include:

Superannuation, Actuarial and Communication consultingMercer (Australia) Pty Ltd

AuditorKPMG

InsurerColonial Mutual Life Assurance Society Limited - CommInsure

Investment consultingMercer (Australia) Pty Ltd

Solicitormackenzie thomas

CustodianJPMorgan

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If you leave the Plan On ceasing service with IAG or NRMA, if your account balance is $5,000 or more, you have the option of leaving your super in the Plan. By leaving your super in the Plan you can continue death and total and permanent disablement insurance cover (on modified terms) and you can continue to benefit from the other features the Plan provides such as access to Retirement Income Stream products.

Your super is an important investment and you are encouraged to consider carefully how you wish to receive it and/or where you want to invest it.

Receiving your benefit as a lump sumIf you leave employment before you reach your preservation age, part or all of your superannuation benefit will be subject to preservation and cannot be paid directly to you.

If your account balance is $5,000 or more, you can remain a member of the IAG & NRMA Superannuation Plan in the Reserved category. If you don’t give the Trustee instructions as to where to transfer your super, you will automatically remain a member of the Plan as a Reserved member.

If your account balance is less than $5,000, see below under the heading “Eligible Rollover Fund and unclaimed money”.

If you were an Accumulation member before becoming a Reserved member, you will continue in the same investment option(s). You can elect a new investment choice at any time.

If you were a Defined Benefit member before becoming a Reserved member:

■ the amount of your benefit represented by your additional accumulation account will remain invested in the same investment option(s), and

■ the remainder of your benefit (your defined benefit entitlement) will be invested in the Cash Option.

As a Reserved member you may change your investment options at any time.

Additionally, if you are a Reserved member and are now employed with another employer, by exercising your right to choose your super fund, you may be able to have your employer contribute to the IAG & NRMA Superannuation Plan. To do this, you must complete a Standard choice form and return this form to your new employer. Your new employer can contribute to the Plan via BPAY© on the Plan website www.iagnrma.superfacts.com or by completing the Employer remittance form and sending the Plan a cheque.

These forms are available from the IAG & NRMA Superannuation Plan website or by calling the Plan Helpline on 1300 424 676.

You can also make personal contributions (after-tax) to the Plan. These can be made using BPAY© using your phone or internet banking facilities or by completing the Application to make

lump sum contributions form and sending the Plan a cheque. As a Reserved member you can also continue to make rollovers of other superannuation monies into your account in the Plan.

You can transfer your entitlement to another approved superannuation entity, including an eligible rollover fund, superannuation fund, deferred annuity, approved deposit fund, retirement savings account or Allocated Pension. See page 23 for details on preservation.

Receiving your benefit as an Allocated PensionAfter you reach your preservation age and provided your benefit in the Plan is at least $50,000 you can choose to receive your benefit from the Plan as an Allocated Pension.

Please see the Plan’s Retirement Income Stream Product Disclosure Statement (RIS PDS) for more information. You can request a copy of the PDS by calling the Plan Helpline on 1300 424 676 or download a copy from the Plan website.

Receiving your benefit as a Lifetime PensionCertain categories of Defined Benefit members may be entitled to a Lifetime Pension or to a Deferred Pension (a Lifetime Pension that commences at a future date) on ceasing employment. If this is the case, you will be informed about your pension options.

Other members can request the Trustee to provide them with a pension in lieu of their lump sum entitlements. In this case, the terms of any pension offered are at the discretion of the Trustee in conjunction with advice from the Plan’s actuary.

Eligible rollover fund and unclaimed moneyIf you do not tell the Trustee within 90 days how you want your benefit paid and your account balance in less than $5,000, it will automatically be transferred to an eligible rollover fund (ERF). An ERF is a fund approved by APRA to receive benefits payable to members who cannot be located, or who do not advise how and where their benefit is to be paid. The ERF currently used by the Trustee is SuperTrace Eligible Rollover Fund (SuperTrace). Its contact details are:

The Senior Administrator SuperTrace Eligible Rollover Fund Locked Bag 5429 Parramatta NSW 2124 Tel: 1300 788 750

If you have reached Government pension age when you leave your employer and you have not given the Trustee instructions regarding the payment of your benefit from the Plan, and you cannot be contacted, your benefit may be treated as ‘unclaimed money’ according to superannuation law. In this instance, your benefit will be placed with the Australian Tax Office.

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If your benefit is transferred to an ERF or treated as unclaimed money, you will no longer be a member of the Plan. However, you have rights to claim your benefit from the ERF or the relevant Government body as the case may be.

About SuperTrace

Set out below is a summary of some of the more significant features of SuperTrace.

The assets of SuperTrace are invested in an investment policy (the SuperTrace Policy) issued to Colonial Mutual Superannuation Pty Ltd by The Colonial Mutual Life Assurance Society Limited (CMLA). The SuperTrace Policy is invested solely in the Capital Stable Fund in CMLA’s No. 2L Statutory Fund. There is no investment choice available to members.

The investment objective of the Capital Stable Fund is to provide a reasonably high level of security and consistent returns.

The investment strategy for the assets in the Capital Stable Fund is to invest in a broad range of assets with a majority in defensive investments.

Investment returns are credited to members’ accounts as an annual crediting rate effective 30 June. The crediting rate is derived from the earning rate of the SuperTrace Policy which is net of tax on investment earnings, less any asset charge. The crediting rate is not guaranteed and the rate applied can be negative.

The following fees and charges apply in SuperTrace:

■ an asset charge of 1.55% p.a. (actual cost net of tax) is deducted from the earnings of SuperTrace prior to the crediting rate being declared

SuperTrace is unable to accept contributions from members or their employers; however rollovers from other superannuation funds are permitted.

SuperTrace does not provide insurance cover.

Should you wish to know more about SuperTrace, contact the SuperTrace Customer Service Representatives on 1300 788 750 between 8.30am and 6pm Monday to Friday (Eastern Standard Time) or www.supertrace.com.au for a copy of their Product Disclosure Statement.

Contribution surcharge taxWhile the contribution surcharge tax was abolished with effect from 1 July 2005, it still has potential application in some cases (possibly where there has been an amended assessment or a transfer of benefits to the Plan with an outstanding surcharge liability).

In such a case, the applicable surcharge will be levied against your benefit in the Plan. If you are an Accumulation member, this will usually be by deduction from your accounts. If you are a Defined Benefit member, if the Trustee is required to pay surcharge tax, the amount paid will be accrued, with interest at the Plan’s net earning rate, and deducted from your benefit when it is paid.

Restrictions on when you can access your benefitsPreservation rules

Superannuation is a long-term investment and the Federal Government has placed restrictions on when a person can have access to benefits. These restrictions are known as ‘preservation’. When you leave the Plan, some or all of your benefit may have to be preserved. This means you may not be able to take all your benefit (less tax) in cash when you leave the Plan. Your benefit statement shows how much of your benefit is preserved.

Preserved benefits must generally be kept in the superannuation system until you:

■ retire permanently at or after your preservation age (see below)

■ leave your employer at or after age 60

■ reach age 65

■ become permanently incapacitated or suffer a terminal medical condition as defined by Superannuation Industry Supervision (SIS) law (see below), or

■ die.

Your preserved amount is shown on your benefit statement.

Your preservation age depends on your date of birth according to the table below:

Date of birth Your preservation age

Before 1 July 1960 55

1 July 1960 to 30 June 1961 56

1 July 1961 to 30 June 1962 57

1 July 1962 to 30 June 1963 58

1 July 1963 to 30 June 1964 59

After 30 June 1964 60

Preservation of disablement benefits

In some cases it is possible that, even though you may have qualified for a total and permanent disablement benefit from the Plan, the benefit may not be paid to you in cash until you have satisfied one of the above payment triggers. This is due to the difference in definitions between the terms ‘Total and Permanent Disablement’, as defined in the Trust Deed (or the Plan’s insurance policy) and ‘permanent incapacity’ in SIS.

For preservation purposes, ‘permanent incapacity’, in relation to a member who has ceased to be gainfully employed, means ill-health (whether physical or mental), where the Trustee is reasonably satisfied that the member is unlikely, because of the ill-health, ever again to engage in gainful employment for which the member is reasonably qualified by education, training or experience.

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Super news In July 2011, the Government announced its proposed carbon tax and related tax reform package. These changes will not directly impact on superannuation although, in making investment decisions, trustees and investment managers will need to take into account any impact of the proposed carbon tax on different market sectors.

Over the last two years, a number of changes to superannuation have been implemented. A number of other changes have been announced but not legislated.

Changes already in placeAccount based pensions

For the year 1 July 2011 to 30 June 2012, the minimum amount required to be drawn down from an account based pension has been reduced by 25%. This is a smaller reduction than the 50% reduction allowed in the two previous financial years. The reduced drawdown requirements were put in place to enable pensioners to reduce the amount they withdraw from their account based pensions and hence provide more time for asset values to recover following the Global Financial Crisis.

Reportable employer superannuation contributions

From 1 July 2009, employers have been required to report details of employees’ reportable employer superannuation contributions. This is shown on payment summaries given to you by your employer each year so that you can include it in your tax return.

Generally, your reportable employer superannuation contributions will include any salary sacrifice contributions you make and any voluntary employer contributions over which you have some control.

The Government has amended the definition of reportable employer superannuation contributions retrospectively to 1 July 2009. This change may mean that the amount reported by employers may reduce for some members. If your employer provides you with an updated payment summary for previous years, you may need to lodge an amendment to your tax return for those years to take advantage of any reduction in the reported amount.

Your reportable employer superannuation contributions are taken into account in assessing your eligibility for various benefits including Government superannuation co-contributions, the eligible spouse superannuation contribution tax offset, mature age worker tax offset and family tax benefits.

Greater use of tax file numbers

Super fund trustees are now able to use tax file numbers (TFNs) to locate members’ accounts and facilitate account consolidation, whether in the same fund or across multiple funds, making it easier to track lost super and combine members’ accounts.

Flood levy

From 1 July 2011, many superannuation benefits will be treated as income for the purposes of determining whether a person is subject to the flood levy for the 2011/12 year. The flood levy will apply to taxable income as follows:

Taxable income Flood levy on this income

$0 to $50,000 Nil

$50,001 to $100,000 Half a cent for each $1 over $50,000

Over $100,000 $250 plus 1c for each $1 over $100,000

Taxable income will include the following in relation to superannuation:

■ the taxable component of all superannuation lump sum and pension benefits received before age 60

■ the taxable component of a lump sum death benefit paid to certain dependants

■ the taxable component of a pension death benefit where the recipient is under age 60 and the deceased member died before age 60.

It will not apply to superannuation benefits that are rolled over or to income which is exempt from tax.

Announced changesA number of changes have been announced but not yet legislated. These are not expected to impact until 1 July 2012 or later and still need to be passed by Parliament. The important changes are set out below.

Changes to the Superannuation Guarantee

The Government has announced that it will gradually increase the Superannuation Guarantee from 9% to 12% in small increments from 1 July 2013 to 1 July 2019. The aim of increasing the rate is to improve the adequacy of retirement benefits provided to Australians and the sustainability of Australia’s retirement income system.

The Government will also raise the Superannuation Guarantee age limit from 70 to 75 with effect from 1 July 2013. This is also a positive change which broadens the range of employees covered by the Superannuation Guarantee.

Superannuation contribution for low income earners

A new contribution of up to $500 (not indexed) will be provided by the Government for individuals with an adjusted taxable income* of up to $37,000. This is designed to effectively return the 15% contribution tax on Superannuation Guarantee contributions and will commence in respect of contributions from 1 July 2012 with the first payments being made in the year commencing 1 July 2013.

*Your adjusted taxable income includes your taxable income plus a number of other items, including any reportable employer superannuation contributions and any fringe benefits

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This change will improve the tax effectiveness of superannuation for eligible low income earners, as well as provide a boost to their superannuation savings.

Higher concessional contribution limit for some members aged 50 or more to continue

The current transitional limit of $50,000 applicable to those aged 50 or more only applies until 30 June 2012. The Government has announced it will continue to provide the higher limit for those aged 50 or more, but only for those with total super balances below $500,000.

Again, this is a welcome change which will provide greater scope for eligible members to use concessional contributions to top-up their superannuation. The Government has not yet finalised the details of how this change will operate.

Proposed changes to super following the Cooper Super System Review

The Super System Review, led by Jeremy Cooper, examined the governance, efficiency, structure and operation of Australia’s superannuation system.

The Review Panel’s final report was released early July 2010 and made a total of 177 specific recommendations.

The Government provided its initial response on 1 August 2010 undertaking to:

■ Work with industry and employers to improve the administration of the super system with the first step being to make tax file numbers (TFNs) the primary identifier of member accounts from 1 July 2011

■ Introduce a new simple superannuation system called “MySuper”, from 1 July 2013. MySuper funds will need to meet a number of new standards and will have no unnecessary fees or charges. They will also be simpler than current arrangements and the Government believes that it will be easier to compare fund performance

■ Enable APRA to monitor and publish MySuper fund investment returns and costs ‘to ensure members are getting value for money’.

In December 2010, the Government announced its Stronger Super package as its response to the Cooper Review. This package indicated the Government’s support for most of the review panel’s recommendations. The Government also established a ‘Stronger Super Peak Consultative Group’, which was tasked with advising the Government on how to best implement the Stronger Super package. Since then, further consultation has occurred.

Whilst the Consultative Group has effectively completed its role, the outcomes and final Government decisions are not yet available.

Once fully implemented, the changes are expected to generate cost savings for superannuation funds which should eventually result in lower fees being applied to superannuation members. The changes include greater standardisation of forms and back-office practices used by the industry as well as working towards employers providing better data in respect of contributions paid.

Other changes will impose higher standards on trustees and improve the governance and security of superannuation.

These changes have also not yet been legislated.

Co-contributions reduced but still valuable

The Government will continue to contribute up to $1 for each $1 contribution you make from your after-tax income. The maximum co-contribution is $1,000 a year if your total income* is less than $31,920 a year. The co-contribution reduces gradually for those earning up to a maximum of $61,920. These thresholds have been in place for the last two years and will continue for a further year, after which indexation will recommence from 1 July 2013.

*Your total income includes your assessable income, reportable fringe benefits and your reportable employer superannuation contributions (see page 24) less any deductions for carrying on a business.

Refund of excess concessional contributions

In May 2011, the Government announced that, from 1 July 2011, individuals who breach the concessional contributions cap by $10,000 or less can request that the excess contributions be withdrawn from their super fund and refunded to them. Those excess concessional contributions will be taxed at the individual’s marginal tax rate.

This measure, if passed by Parliament, will only apply for first time breaches of the concessional cap and only apply to contributions made from 1 July 2011 onwards.

Super contributions on payslips

From 1 July 2012, employers will be required to provide information on an employee’s payslip about the amount of super actually paid into the employee’s super fund account during the pay period. Employees will also receive a quarterly notification from their super fund if regular super payments cease. These changes, if passed by Parliament, are intended to help employees keep track of their employer’s contributions.

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More information Resolving Disputes and ComplaintsIf you have a question about your benefits in the Plan, please contact the Plan Helpline on 1300 424 676. Most enquiries can be dealt with over the phone. If not, you may be asked to put your enquiry in writing and provide a contact address for the reply. Enquiries will generally be answered within 28 days.

Complex queries should be addressed to:

The Enquiries Officer IAG & NRMA Superannuation Pty Limited Level 26 388 George Street Sydney NSW 2000

If you have a query or a problem, which is not resolved to your satisfaction, you should send a written complaint (including all relevant details) to:

The Complaints Officer IAG & NRMA Superannuation Pty Limited Level 25 388 George Street Sydney NSW 2000

The matter will be investigated by the Complaints Officer and, where necessary, the Risk Management and Compliance Committee on behalf of the Trustee. You will be advised of the Trustee’s decision as soon as possible and within 90 days of your complaint being received or within 30 days of the Trustee’s decision, whichever is earlier.

Please remember to include an address to which the response can be mailed.

If the Trustee has not responded to your complaint within 90 days, or you are not satisfied with the Trustee’s decision, you may be able to take the matter to a special government body called the Superannuation Complaints Tribunal (see right).

While the Trustee has a process in place to deal with complaints from members, the Trustee’s objective is to avoid complaints by providing a good level of service to members, and if complaints do occur, to resolve them to the satisfaction of all concerned.

A copy of the Trustee’s dispute resolution procedures is available on request from the Plan Helpline on 1300 424 676.

Superanuation Complaints Tribunal

The Tribunal is an independent body set up by the Federal Government to provide a low-cost, informal forum for resolving most superannuation disputes. Before the Tribunal can consider a complaint, it must be satisfied that the matter has been referred to the Trustee under the procedure set out above.

Any complaints must be lodged with the Tribunal within certain time limits. In particular, there is a two year time limit on complaints about total and permanent disablement claims. For more information about requirements and time limits, you can call the Superannuation Complaints Tribunal on 1300 884 114.

If the Tribunal accepts your complaint, it will try to help you and the Trustee reach a mutual agreement through conciliation. If conciliation is unsuccessful, the Tribunal can make a determination, which is binding.

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If you’d like more informationFor Accumulation members, full details of the benefits provided by the Plan are set out the Plan’s Product Disclosure Statement, which is available on the Plan website or from the Plan Helpline.

For Defined Benefit members, full details of the benefits provided by the Plan are set out in a member’s booklet.

As a member of the Plan, you can inspect other Plan documents by contacting the Helpline, the documents available include:

■ the Plan’s Trust Deed and rules

■ the Plan’s Product Disclosure Statement Plan

■ the Plan’s Retirement Income Streams Product Disclosure Statement

■ the Plan’s Lifetime Pensions Product Disclosure Statement

■ the Trustee’s Risk Management Strategy and Plan

■ the Plan’s insurance policy for death and permanent disablement benefits

■ the Plan’s investment policy statement

■ extracts from actuarial reports

■ the latest audited Plan accounts

■ the Plan’s Privacy Policy Statement

■ the rules covering the appointment and removal of member representative Trustee directors and the independent Trustee director, and

■ the Plan’s enquiries and complaints procedures.

There is no charge for this additional information.

Be aware that the Trustee cannot provide you with any financial advice. For financial advice regarding superannuation, the selection of an investment option(s) and insurance options, you should speak to a licensed or appropriately authorised financial adviser. Financial advice can be arranged through the Plan’s Administrator by calling the Plan Helpline on 1300 424 676.

Questions?If you have questions about your superannuation benefits, please call the Plan Helpline on 1300 424 676.

Mercer (Australia) Pty Ltd (Mercer) administers the Plan on behalf of the Trustee. You can write to the Plan Administrator at:

Plan Administrator IAG & NRMA Superannuation Plan GPO Box 4303 Melbourne Vic 3001

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This Annual Report has been prepared by the Trustee to meet its legislative obligations under the Corporations Act. The information contained in this Annual Report does not take the specific needs, personal or financial circumstances of any person into account. It is recommended that readers obtain advice from a licensed or appropriately authorised financial adviser before making any changes to their own superannuation arrangements or investments. You should also read carefully the Plan’s Product Disclosure Statement.

The terms of your membership in the Plan are set out in the Plan’s Trust Deed, and should there be any inconsistency between this Annual Report and the Plan’s Trust Deed, the terms of the Plan’s Trust Deed prevail. While all due care has been taken in the preparation of this report, the Trustee reserves its right to correct any errors and omissions.

This document contains general information about investments and investment performance. Please remember that past performance is not necessarily a guide to future performance.

Issued by: IAG & NRMA Superannuation Pty Limited ABN 77 000 300 934 as Trustee of the IAG & NRMA Superannuation Plan ABN 58 244 115 920


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Documents

NExT IAG & NRMA Superannuation Plan PAGE Annual … · 1 IAG & NRMA Superannuation Plan Annual Report 2011 A message from the Trustee Dear Member, At the IAG & NRMA Superannuation