Pillar Administration - Parliament of NSW · Pillar Administration Annual Report 2007/08 supporting your business. 31 October 2008 Mr Joe Tripodi MP Minister for Finance, Minister

Superannuation Administration Corporation trading as

Pillar Administration

Annual Report 2007/08

supporting your business

31 October 2008

Mr Joe Tripodi MPMinister for Finance,Minister for Infrastructure,Minister for Regulatory Reform,Minister for Ports & Waterways,Level 31, Governor Macquarie Tower1 Farrer PlaceSYDNEY NSW 2000

Dear Minister,

This is the ninth annual report of the Superannuation Administration Corporation, which trades as Pillar Administration. We have pleasure in submitting it 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 the Corporation’s primary business of superannuation administration was conducted profitably within a competitive environment.

The financial statements for 2007/08 which form part of the Annual Report have been submitted to and certified by the Auditor-General of New South Wales.

Yours sincerely,

Dr Col Gellatly Mr Peter BeckChairman Chief Executive Officer


ContentsPart A – The BusinessThe Business in Brief ......................................................................A1

Organisation Chart ........................................................................A2

The Chairman’s Message ................................................................A3

The Chief Executive Officer’s Review ................................................A4

Summary of Goals and Achievements ...............................................A6

Administration Snapshot .................................................................A10

Our People and Our Community .......................................................A12

Ensuring our Capacity to Meet Client Needs.......................................A15

Part B – Detailed Corporate InformationCorporate Governance ....................................................................B1

The Board ....................................................................................B2

Management .................................................................................B7

Executive Remuneration .................................................................B9

Equal Employment Opportunity Information ......................................B12

Consumer Response ......................................................................B13

Freedom of Information ..................................................................B14

Compliance with Specific Policies .....................................................B26

Additional Financial Related Data .....................................................B28

Other Corporate Information ...........................................................B30

Part C – Audited Financial StatementsIndependent Auditor’s Report ..........................................................C1

Directors’ Declaration for the Year ended 30 June 2008 ......................C3

Income Statement for the Year ended 30 June 2008 ..........................C4

Balance Sheet as at 30 June 2008 ...................................................C5

Statement of Changes in Equity for the Year ended 30 June 2008 ........C6

Cash Flow Statement for the Year ended 30 June 2008 .......................C7

Notes to the Financial Statements for the Year ended 30 June 2008 ......C8


Part A – The BusinessContents

The Business in Brief ........................................................................A1

Organisation Chart ..........................................................................A2

The Chairman’s Message ..................................................................A3

The Chief Executive Officer’s Review ..................................................A4

Summary of Goals and Achievements .................................................A6

Administration Snapshot ...................................................................A10

Our People and Our Community .........................................................A12

Ensuring our Capacity to Meet Client Needs.........................................A15

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Pillar Annual Report 2007/08

The Business in BriefThe Superannuation Administration Corporation trading as Pillar Administration:

provides superannuation administration and related services in both the public and private sectors;

is a New South Wales statutory State owned corporation established by the Superannuation Administration Authority Corporatisation Act 1999 (NSW); and

is governed by a Board of Directors that reports to Shareholding Ministers appointed under the State Owned Corporations Act 1989 (NSW), and to a Portfolio Minister.

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

to be a successful business;

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 Administration (ABN 80 976 223 967) 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 Administration (Pillar) presently provides such services to the trustees of superannuation funds.

Those funds include both defined benefit and accumulation funds for individuals who are in the workforce, in both the public and private sectors, and those who have retired. Pillar has an Australian Financial Services Licence (AFS Licence No. 245591) and is licensed to provide general product advice to members of the superannuation funds under its administration, and to deal in superannuation products.

The services provided include:

collecting and processing member and employer contributions;

maintaining member, accounting and other fund records;

processing claims and paying benefits including pensions;

processing investment elections;

answering member and employer enquiries through a Contact Centre and a Member Interview service, in accordance with contractual and Licence obligations;

managing and developing fund websites that provide 24 hour-a-day information on member accounts;

issuing member statements and literature;

assisting employers;

keeping trustees informed of details of administration activities and performance;

interacting with custodians and other service providers;

superannuation consultancy services for trustees; and

where required, corporate services and fund secretariat services.

As at 30 June 2008 Pillar administered superannuation funds that had approximately 1.78 million members (including members receiving superannuation pensions) and total fund assets of over $56 billion.

Pillar has approximately 650 employees and operates from the following locations:

Sydney: at 83 Clarence St;

Illawarra: at 5 Old Springhill Rd, Coniston (Pillar’s National Service Centre);

at the Corporate Centre, Bridge Rd, Coniston; and

at 16 Gladstone Ave, Wollongong.

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The Chairman’s Message

Dr Col Gellatly

The 2007/08 year has been a challenging year for Pillar but also a year in which the Corporation has been successful in consolidating its position as the third largest provider of superannuation administration services in Australia. For Pillar to do this is quite an achievement during a period when significant legislative changes had to be implemented and at a time of growing expectations of trustees and fund members about the services and responsibilities of fund administrators.

Despite the additional workload involved with legislative change and increased member interest in superannuation, Pillar made a profit in 2007/08 and part of our business planning involves ensuring that the acquisition of each new client contributes to increased profitability.

In 2007/08 Pillar was appointed to administer the superannuation business, including a master-trust and an eligible rollover fund, of a well-known financial services company. The take-on of this business will occur in 2008/09. Furthermore, during the year Pillar successfully completed the transition of the administration of a retail superannuation fund.

During the year the Board and the various Board Committees met regularly. The new Productivity & IT Committee, whose charter involves overseeing management’s effective use of technology and quality, process and productivity improvements, commenced its work. The Board also amended the name of the Audit Committee to the Audit & Risk Management Committee to reflect the increased emphasis on risk management by the Corporation.

Pillar is a major employer in the Illawarra region and prides itself on its strong client focus and the competence of its people. Pillar now employs over 600 people in its Coniston and Wollongong offices and approximately 650 people overall.

In November 2007 Pillar bade farewell to its Chief Executive Officer (CEO), Peter Cormack. Peter served as CEO from July 2004 and prior to that had been Pillar’s General Manager–Operations. On behalf of the Board and staff I would like to thank Peter for his hard work and contribution to Pillar’s growth and success and wish him all the best in his future endeavours.

I also welcome Pillar’s new CEO, Peter Beck to the organisation. Peter has a long and distinguished record in the financial services sector and brings highly valued experience and knowledge of the industry to Pillar.

In the 2008/09 year, the Board expects that Pillar will continue to achieve productivity gains, which will help it to win new business whilst maintaining high standards of service to existing clients. The continued success of Pillar can only be achieved with the active engagement of staff so, on behalf of the Board, I would like to thank all staff for their efforts and hard work in the past year.

Dr Col GellatlyChairman

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The Chief Executive Officer’s Review

Mr Peter Beck

The 2007/08 year began with the commencement of legislative changes to superannuation that occurred when the Federal Government’s Simpler Super/Better Super initiatives took effect at 1 July 2007. This required large scale administration system changes for all funds including implementation of changes in policy, procedure and member communications. These were successfully implemented in conjunction with our trustee clients.

However, the impact of the increased workload caused by the implementation of these changes was exacerbated by an increase in demand for superannuation fund services by members, alerted by Government advertising and media coverage of the Federal Budget and the changes to superannuation. The 2007/08 year saw a substantial increase in the volume of phone calls and emails made to Pillar by members enquiring about their superannuation, along with substantial increases in member transactions. Further, a number of Pillar’s trustee clients made changes to the products and services their funds offered, and the number of fund members and employers also increased.

All of this placed a considerable demand upon Pillar to continue to achieve high levels of efficiency and effectiveness and to satisfy member and trustee clients whilst still complying with the strict legislative and regulatory requirements involved with superannuation. Pillar employed more resources and used technology more effectively to process the increased volumes of work and to ensure adequate capacity for 2008/09.

In the highly competitive superannuation administration marketplace, the smooth absorption of new business is extremely important to Pillar’s continued profitability and growth. To this end, Pillar has continued to standardise the technology platforms that it uses. Pillar uses multiple systems in the administration of its superannuation funds and this both provides flexibility for the further take-on of new business and avoids over-reliance on a single supplier.

A continuing focus is on productivity through people, process and technology. Speed of transaction processes and ease of system use have been amongst Pillar’s information technology (IT) strengths for a number of years and during this year we have implemented on-line web functionality for members of a number of superannuation funds. New technology has been deployed to improve the process of scanning forms sent from members and employers to update the details to our administration systems. Business processes have been and will continue to be reviewed with the aim of improving the flow of work throughout the organisation and making our processing more efficient.

Compliance with legislative requirements and trustee policies is a high priority within Pillar. Pillar has a dedicated Compliance team that maintains a very strong focus on ensuring that there is full compliance with the increasingly complex provisions of superannuation legislation. Pillar also maintains a regime of strong internal controls. This regime includes six-monthly assurance audits on the effectiveness of controls over key areas of interest to clients. These regimes are part of Pillar’s overall risk management which remains a key interest for the Board and management.

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Pillar has an Australian Financial Services (AFS) Licence and must work to retain this. To this end, all personnel whose duties involve contact with superannuation fund members are required to maintain their knowledge and skills in accordance with the Australian Securities & Investments Commission’s Regulatory Guide 146. Training and the transfer of knowledge by means of employee coaching and mentoring are key drivers of Pillar’s success.

Staff turnover is significantly below industry standards. At Pillar we recognise that our people are our greatest asset and staff receive comprehensive training, access to leading-edge technology, competitive employee benefits and a flexible working environment to help them achieve an optimum balance between their work and home lives.

Because most of our staff live and work in the Illawarra, Pillar is connected to the local community. Pillar aims to be a good corporate citizen and supports the Illawarra region in a variety of ways such as: sponsoring students and programs at the University of Wollongong; supporting local charities and fund-raising activities; and providing surplus older computers to local schools.

Pillar prides itself upon being environmentally responsible and is committed to extending re-cycling initiatives and reducing energy usage. To this end, Pillar has embarked upon a sustainability program in conjunction with the NSW Department of Environment and Climate Change and Wollongong City Council.

Further details of Pillar’s achievements against its objectives are included in the next section of this Report.

I endorse the Chairman’s thanks to our staff for their hard work during the year. 2008/09 will most likely be a challenging year but I am confident that Pillar will continue its growth and success. Pillar’s vision is to secure our future through high performance. We have the people, processes and technology to deliver a secure future for our clients, our staff and our shareholders.

Peter BeckChief Executive Officer

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Summary of Goals and AchievementsThe focus for 2007/08 as set out in the Superannuation Administration Corporation’s Statement of Corporate Intent was on the following inter-related goals:

ensure that each client contributes to profitability;

retain all clients;

have an obsessive focus on processes and productivity improvement;

win new business – industry, retail, ERF and public sector;

enhance our scalable business capability;

ensure that people are skilled with a performance focus;

maintain our culture of governance and control;

partner with the local community; and

be environmentally responsible.

Performance

The following section provides brief highlights of Pillar’s performance against the above listed goals during the 2007/08 year. Elaboration on selected areas is contained in later sections. Financial information is contained elsewhere in this Annual Report at Part C - Audited Financial Statements.

Ensure that each client contributes to profitability

Pillar, with agreement from its trustee clients, started to review the fees for administration services. The aim is to more closely align the fees with the work performed by Pillar which is largely transaction based.

2007/08 saw an increasing focus on productivity measures and reducing the costs of administration, using technology where appropriate and streamlining and standardising administration processes.

Pillar achieved a post tax profit of $2.345 million for 2007/08.

Selected groups of staff have started using time recording software to help better measure the cost of administering each fund and therefore productivity.

Retain all clients

Maintenance of close relationships with clients is a key strategy. Pillar has long term contracts in place with our major public sector client and our biggest public offer fund client and the relationship with each client is on a sound footing.

Our industry fund clients have acknowledged that Pillar has responded to the challenges of handling increased volumes of transactions and changes to their product offerings.

The ‘Simpler/Better Super’ legislative changes that came into effect from 1 July 2007 were successfully implemented on time both to the computer systems that Pillar uses to administer its superannuation funds and in the revised procedures required.

One of the complex public sector defined benefit schemes that Pillar administers was successfully converted to a new administration system during the year.

New system functionality was introduced by Pillar for a number of different funds in 2007/08, including better on-line and web-based services and the implementation of the processing of ‘salary sacrifice’ contributions for some of the public sector schemes.

Pillar assisted with new or improved product offerings, including changed insurance arrangements, for a number of clients during the year.

Pillar provided administrative support and planning to assist a trustee client with the merger of its fund and another fund, which occurred on 1 July 2008. Pillar will administer the merged fund.

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Have an obsessive focus on processes and productivity improvement

Due to the continued increase in the public’s interest in super and increasing transaction volumes, Pillar has intensified its focus on improving productivity and our processes. Controlling operating costs is imperative if Pillar is to continue to be profitable and to succeed in the competitive superannuation administration market.

A new management committee focusing specifically on operational effectiveness and quality assurance was set up in 2007/08. Its terms of reference include reviewing the operational structure, efficiency and controls of major processes. The Productivity & IT Committee, a new Board Committee, was also instituted during the year. There has also been an increased focus on measuring the cost of each function and process within Pillar.

A major focus during 2007/08 and onwards is on productivity through technology. On-line switching of member’s investment strategies was implemented for a number of industry fund clients, saving time and effort for members and for Pillar. Upgraded optical character recognition software was also implemented during the year, making the receipt and processing of forms much more efficient and less time consuming.

Pillar’s business process improvement program continues to deliver improvements and aims to reduce operational costs. For example, the moving of business analysts into operational areas so that analysis of changes required to systems can incorporate the needs of the operations staff before being passed to IT to program.

The Contact Centre introduced a program for assessing the way staff handled phone calls from members and for providing feedback to staff. This has resulted in a decrease in call handling time and reduced complaint levels.

Pillar successfully maintained its certification to the ISO 9001:2000 quality management standard in relation to the

provision of superannuation administration services.

Win new business – industry, retail, ERF and public sector

In 2007/08 Pillar was appointed, as part of an outsourcing arrangement, to administer the superannuation business of a well-known financial services company. The take-on of this business, which includes a master-trust and an eligible rollover fund, will occur in the first half of 2008/09.

Pillar also successfully completed the transition during the year of the administration of a retail superannuation fund with approximately 11,000 members.

Pillar now administers superannuation member accounts for almost 1.8 million members and is the third largest provider of superannuation administration services in Australia. Because of Pillar’s success and profile in the industry, we receive an increasing number of invitations to participate in new business tenders and expressions of interest across all superannuation market segments.

Pillar also hosts visits by industry consultants and potential clients to our National Service Centre at Coniston.

Pillar continued its sponsorship of the monthly ASFA luncheons in Melbourne and once again in 2007/08 we were the exclusive sponsor of the ASFA Melbourne trivia night.

Trivia night prize winners

Pillar was a supporting sponsor of the Investment and Financial Services Association (IFSA) conference in August 2007.

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Pillar was the exclusive sponsor of the after dinner party at the Conference of Major Superannuation Funds (CMSF) in March 2008. The theme of the party was “relaxing with your fellow superheroes at the Pillar Superhero Bar”, which promoted the “superhero” marketing theme that Pillar introduced in November 2007.

Pillar Superhero marketing theme

Enhance our scalable business capability

Pillar continued to standardise its technology platforms during the year with the aim of becoming even more efficient in its use of administration systems. Pillar uses multiple systems in the administration of its superannuation funds and this both provides flexibility for the further take-on of new business and avoids over-reliance on a single supplier.

As part of Pillar’s focus on productivity through technology, we continue to develop the use of ‘straight-through processing’ and on-line functionality wherever possible. The year saw the continued rollout to employers of electronic file contribution processing functionality – enhancing our capability to efficiently process contributions. Pillar continues to work towards the realisation of its ‘end to end automation’ program in relation to superannuation processing.

Pillar’s Contact Centre relocated during the year to a larger office in Wollongong to ensure that we have the capacity to quickly expand staff numbers to accommodate new clients and increased volumes of calls. The PABX system used by the organisation was upgraded at the same time.

The new Productivity & IT Committee of the Board has the specific responsibility for overseeing management’s enhancement of Pillar’s scalable business capability through the effective use of technology and through quality, process and productivity improvements.

Ensure that people are skilled with a performance focus

All staff whose duties involve contact with fund members are required to attain Association of Superannuation Funds of Australia (ASFA) qualifications to meet the requirements of the Australian Securities & Investments Commission’s (ASIC)’s Regulatory Guide 146. Staff who have already achieved these qualifications undergo an annual ‘refresher’ course.

During 2007/08 most Pillar staff took part in at least one training or briefing session. There were 123 different training or briefing sessions run by Pillar training staff. The types of courses provided included training on the rules, systems and processes of different superannuation funds, Anti-Money Laundering & Counter-Terrorism Financing Act briefings, human resources related sessions such as anti-bullying and harassment sessions and business letter writing courses.

Pillar provides specific leadership development training to staff who manage teams to develop their people management skills.

Pillar also strives to ensure the transfer of knowledge by way of employee coaching and mentoring. All of the training and staff development that Pillar undertakes is aimed at maintaining an experienced, skilled and satisfied workforce that will enhance our long-term competitiveness and potential for growth.

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Maintain our culture of governance and control

Pillar’s management and control arrangements are designed to ensure proper, efficient and effective processes and protect both our interests and those of our trustee clients. These arrangements include oversight by the Board and Board Committees, frequent independent audits, clear delegation of authorities, a regime of internal controls, a Compliance Program and a risk management framework.

Pillar has a comprehensive Compliance Program and a dedicated Compliance team that maintains a very strong focus on ensuring compliance with the applicable superannuation legislative and contractual obligations. All of Pillar’s operational units have responsibilities under the Compliance Program, including the comprehensive documenting of procedures.

The regime of internal controls includes six-monthly assurance audits on the effectiveness of controls over key areas of interest to clients including manual and computer process controls. There are also due diligence checks on new staff.

During 2007/08 Pillar’s risk management process was further reviewed and specified in greater detail. The process of ensuring that our risk management framework was aligned with those of our trustee clients was initiated. “Risk Management” was added to the title of the Board Committee with responsibility for overseeing risk management (now the Audit & Risk Management Committee) to indicate the increased emphasis on risk management within Pillar.

Pillar has a specific policy on the prevention of fraud and corruption, as part of an overall framework that aims at both fostering a positive corporate culture focusing on service delivery and ethical behaviour and ensuring that staff work within specified and effective controls.

In 2007/08 the Australian Prudential Regulatory Authority (APRA) conducted an extensive assessment of Pillar’s operations, including internal control and risk management, in March and April 2008 as part of the regulator’s review of superannuation administrators.

Partner with the local community

It is very important to Pillar that we connect and engage with the local community in the Illawarra where most of our staff live and work.

Pillar has continued to strengthen its relationship with the University of Wollongong through further promotion and support of the University’s graduate, scholarship and work experience programs. Management have met with University staff to look at ways to continue and strengthen the relationship over the next 12 months.

Pillar has developed an indigenous cadetship and has established networks with the University of Wollongong, local TAFEs and indigenous cluster groups with a view to providing more indigenous people with career opportunities within the organisation.

Pillar seeks to be a good corporate citizen and continues to maintain its involvement with selected local charities and provides support for local disadvantaged schools by donating surplus computers as they become available.

Be environmentally responsible

Pillar has embarked upon a sustainability program in conjunction with the NSW Department of Environment and Climate Change and Wollongong City Council, aiming for a 3 star rating by 2010. Entering this program makes good business sense for Pillar as it aligns us with our clients and their ethical base, lowers cost via reduced consumption and less waste while establishing our “licence to operate” within the community and engaging our employees in a commonly held set of environmental values and activities.

A ‘grass roots’ group has been established within Pillar to identify initiatives for reduction in the use of energy, stationery and other consumables.

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Administration SnapshotThe following graphs indicate the steady increase in transaction volumes that result from Pillar taking on additional superannuation fund clients, the recent significant changes in the superannuation industry and increased public interest in superannuation generally.

Phone calls answered

The volume of phone calls from fund members received by Pillar has increased by over 80% in the last 5 years. Given the increased public interest in superannuation and the impact of recent legislative changes, it is likely that the volume of calls will continue to increase.

Contributions allocated and lump sum benefits paid

As the number of members whose superannuation funds are administered by Pillar increases, the amounts of contributions allocated to and benefits paid from the funds consequently increase. In particular, as Pillar wins more industry fund business, the workload involved in processing contributions increases significantly. Industry funds have many small employers contributing to the funds, as opposed to public sector schemes that have fewer (and larger) employers making contributions. Further, legislative changes allowing greater ‘portability’ of members’ benefits means more benefits are ‘rolled over’ from fund to fund.

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Annual Statements produced and mailed

It is a legislative requirement that all members of the superannuation funds that Pillar administers have to be sent an Annual Statement each year (apart from those members who are classed as “lost” because we do not have a current address for them). Half-yearly statements are not legislatively required but a growing number of funds provide them to members.

Written correspondence received and answered

Written correspondence includes both letters and emails sent by superannuation fund members, requesting information and/or asking questions and requiring a written response.

Mail volumes

The graph shows the increasing volumes of mail handled by Pillar’s Document Management Unit. Items of incoming mail include letters from fund members, superannuation forms completed by members, contribution cheques and supporting documentation. Items of outgoing mail include welcome letters to new members, benefit payments and supporting documentation and correspondence to employers.

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Our People and Our Community

Developing our People

Pillar has over 600 staff working out of 3 locations in Coniston and Wollongong and approximately 50 staff located in our Sydney office.

A key focus for the business is the on-going training and development of our people, with particular focus on superannuation industry and leadership training. Superannuation training enables staff to keep abreast of regulatory and legislative changes that affect the superannuation industry. Training is also provided to maintain compliance with requirements of the Corporations Act 2001 (Cth) that are relevant to Pillar’s Australian Financial Services (AFS) Licence.

A considerable number of staff have obtained Association of Superannuation Funds of Australia (ASFA) qualifications. These qualifications are required, under our AFS Licence, for Contact Centre staff and others who have direct contact with fund members but other staff have also obtained these qualifications. All staff who have obtained the relevant ASFA qualifications have to undergo an annual ‘refresher’ course, run by Pillar’s Compliance team, in order to ensure that they maintain the requisite level of superannuation knowledge.

An on-going commitment to improve Pillar’s performance in customer service is a vital part of our ethos. The focus of the training for Pillar’s Contact Centre staff is on the management of both technically complex calls and customers with diverse needs. The training entails active communication skills, problem resolution and effective questioning techniques.

Pillar provides training courses to staff on a wide variety of topics, not just superannuation related, that cover the roles our staff carry out and the knowledge they need to have. The types of courses provided included training on the rules, systems and processes of different superannuation funds, Anti-Money Laundering & Counter-Terrorism Financing Act briefings, human resources

related sessions such as anti-bullying and harassment sessions and business letter writing courses. Pillar also provides specific leadership development training to staff who manage teams in order to develop their people management skills, and there is also a focus on employee coaching and mentoring.

We believe that our people are our competitive advantage and help to ensure our long-term competitiveness and growth. Maintaining an experienced and skilled workforce and developing our people contribute to Pillar’s strong performance culture and positive employee relations.

One of our staff of whom we are all extremely proud of is Brendan Dowler.

Brendan Dowler in action

Brendan has been a regular member of the Australian men’s Wheelchair Basketball team (nicknamed the ‘Rollers’) since 2001, and has played over 100 games in that time. Since his first major tournament in 2001 he has represented Australia at two World Championships and at the 2004 Athens Paralympics. The team finished 3rd at the last World Championships and won the silver medal at the 2004 Paralympics.

In September 2008, Brendan represented Australia at the 2008 Beijing Paralympic Games and was part of the Rollers team

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that won the gold medal, beating defending champions Canada 72-60. Everyone at Pillar offers their congratulations to Brendan on this amazing achievement.

An initiative for staff that Pillar continued this year was the ‘Healthy Lifestyle’ week, held during September 2007. This health and wellbeing initiative included activities such as Red Cross Blood Bank donations, free health checks, massages, stretching classes and the grand finale on the Friday was the soccer & touch football corporate challenge between the National Service Centre and Coniston Corporate Centre buildings. Following this a healthy lunch was provided for all staff.

Pillar issued an Employee Attitude survey to staff in 2008. The results of this survey will be used in the development of initiatives to enhance the organisation’s culture, performance and focus on client service.

Support for our Community

Pillar seeks to be a good corporate citizen and, given the location of three of its offices in Coniston and Wollongong, aims to actively support the Illawarra region.

Pillar has continued to strengthen its relationship with the University of Wollongong through further promotion and support of the University’s graduate, scholarship and work experience programs. We employed one of the two 3rd year students who completed the 2007/08 Work Experience Scholarship program. Pillar’s IT division is looking for 2 graduate analyst programmers from the University of Wollongong and will look to graduates of the University for other IT positions as they become available.

During the year, the University’s ‘Dean’s Scholars Program’ gave a 1st year Commerce student the chance to have a short-term vacation work placement at Pillar. We have also developed an indigenous cadetship with a view to providing indigenous people with career opportunities within the organisation. The development of the cadetship has involved Pillar establishing networks with the University of Wollongong, TAFE colleges in the Wollongong area and indigenous ‘cluster’ groups. Our first recipient of the cadetship,

Nyssa Murray, continued her work placement at Pillar during the year. Nyssa started at Pillar in June 2007 and is studying a Bachelor of Commerce full time at the University of Wollongong and will complete a 12 week work placement for each year of her degree.

Pillar staff have taken part in all of the University of Wollongong’s career days over the past 12 months, including the annual Illawarra Graduate Career’s Fair held at the University. The Career’s Fair provides a variety of opportunities for students to meet with employers and discuss graduate employment opportunities available within the Illawarra. Pillar IT staff also took part in an University information night for Year 12 students and their parents.

Pillar management have recently met with University staff to look at ways to continue and strengthen the relationship over the next 12 months.

Pillar has been involved during the year with the LUCY mentoring program developed by the Office for Women (OFW) and the NSW Department of Premier & Cabinet. This program aims to encourage the development of women, who given the right opportunities and support will become our future leaders. Over a period of weeks mentors and students worked together on a small work-related project while also attending some larger group sessions to meet and learn from other program participants. Senior Pillar staff have provided mentoring and support for two female university students through this program. Both young women spent time at Pillar during the year.

Nyssa Murray

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In 2007/08 Pillar maintained its involvement with local charities and fund-raising events. Some examples of this support include:

A team of dedicated walkers from Pillar again participated in the NSW Cancer Council’s annual Relay for Life in October 2007, taking turns walking around Beaton Park in Wollongong. They raised over $1,700 for the NSW Cancer Council.

Pillar, together with two of our trustee clients, sponsored a team of 15 riders from Coniston and Sydney in the 26th Multiple Sclerosis ‘Sydney to the Gong’ bike ride

in November 2007. The riders collected over $1,400 for this worthy cause, raising money and awareness of those people who suffer from multiple sclerosis.

Pillar was a ‘silver sponsor’ of the Canberra Mothers Day Classic, which was held to raise funds for breast cancer research, in May 2008.

During the month of June 2008, the Sydney Children’s Hospital celebrated ‘Gold Week’. A total of $1,617 was donated to the hospital after a mufti day gold coin collection by Pillar staff and a contribution of $808 from the Corporation.

Pillar again sponsored a hole at the Super Review Charity Golf Day held at Manly Golf Club in February 2008. We also entered a team in the event.

During the year, Wollongong Hospital’s Neurosciences Ward was the recipient of a donation of over $15,000 raised from various staff fund-raising activities plus a $5,000 donation from the Corporation. The Neuroscience ward is a 36 bed unit which provides acute patient care to people experiencing a variety of neurological conditions such as meningitis, brain tumours, head injuries, multiple sclerosis and Parkinson’s disease.

Pillar’s Web Services team provided support to Coniston Public School by helping in the re-design and development of the School’s web-site. Surplus computers (which were no longer in use) were donated to local public primary schools (Lindsay Park, Figtree, Mount Pleasant, and Kemblawarra). Further support was provided by Pillar to Warrawong High School’s Computer Lab throughout the year.

As part of its commitment to the environment and sustainability, Pillar, along with a number of other organisations based in the Illawarra, signed up to the Sustainability Advantage Program, an initiative of the NSW Department of Environment and Climate Change. By committing to this initiative Pillar anticipates it will meet its strategic sustainability goals, as set out below:

Aligning Pillar with the carbon neutral (by 2020) goal of the NSW Government;

Understanding our environmental ‘footprint’ by June 2009 and developing policies, targets and processes to reduce it by 5% per annum;

Developing, by March 2009, systems to effectively monitor and report progress in reducing our environmental footprint;

Engaging the entire staff to adopt the principles of sustainability and empower them to develop “grass roots” initiatives;

Reducing polluting emissions from our activities by reducing the number of journeys to work by car by 10% in 3 years; and

The sustainability program is to be cost neutral over time.

Pillar golf team

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Ensuring our Capacity to Meet Client Needs

Our Systems

Pillar operates within a business sphere of low margins with high volume transaction processing which requires stable, robust, secure and sophisticated administration systems to meet the demands of its clients. In the past year, Pillar continued its investment in information technology to enhance the computer system facilities that are used in the administration of superannuation funds.

Pillar has enhanced its systems performance capacity in recent years through the upgrading of servers and improved network capability, system functionality, internet connections and access security. This has resulted in Pillar having better and more secure system facilities for clients and our staff and more effective deployment of software across the organisation.

A continuing focus of Pillar has been on productivity through technology and the 2007/08 year saw the extension of our capability for processing web-based and on-line transactions. Pillar commenced the standardisation of the administration forms that it uses to enable increased use of optical character recognition (OCR) functionality in the processing of forms received from members and employers. We have also integrated the workflow, OCR and Contact Centre systems and implemented further improvements in workflow and scanning capability software, allowing more real-time ‘straight-through processing’, reducing manual overheads and improving data quality.

These achievements helped to ensure that ease of use and speed of transaction process continue to be administration strengths for Pillar. The ‘straight-through’ processing system has been re-designed for increased usage by Pillar’s member and employer user base, with increased use of automated ‘end-to-end’ administration transactions through-put exceeding 95% for some funds. The use of ‘straight-through’ processing and systems integration allows Pillar to achieve high

levels of customer and member satisfaction as employers and members are able to complete their enquiries or data transfers in minimum time while ensuring better provision of service and the highest levels of security of information. It also provides Pillar with a greater ability to continue to take on new business as it is won.

Pillar has continued to standardise the technology platforms that it uses. Our integrated administration systems solution through the full administration cycle from new member to final benefit payment has been applied to the administration systems solutions for our two latest trustee clients. Pillar’s web-based system solutions have been tailored to seamlessly interact with the administration platforms that we use.

Pillar aims to achieve the highest levels of security across all of its networks and systems. The Infrastructure team (part of the Information Technology division) retained its ISO 9001 accreditation in 2007/08 and has aligned its information security processes with the AUS/NZ 27001:2005 information security standard.

We carry out continuous systems risk assessments and regularly review the system access security profiles of staff, with the results provided to the appropriate Board Committees.

Pillar has a fully integrated Contact Centre that uses new technology for real-time reporting and new workforce management tools that enable the management team to make pro-active decisions. The Contact Centre also uses customer relationship management (CRM) functionality that enables all contacts between members and the Contact Centre to be recorded and hence analysed and reported. Statistics such as member interactions with a fund, grouped by age, employer, postcode or account balance, are becoming crucial to member retention and growth strategies for superannuation funds. Pillar’s ability to report this information to trustees is important to our strategy for growth.

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The 2007/08 year also saw the installation of a new PABX system for the Contact Centre. The new system incorporated voice over internet protocols (VOIP) and improved integrated voice recording (IVR) functionality.

Pillar’s information technology facilities and its enhanced systems performance capability has enabled it to successfully implement a number of substantial changes that, because of either legislative requirements or trustee requests, had to be made to the superannuation administration systems that we use. The implementation of the ‘Simpler Super/Better Super’ legislative changes for all of Pillar’s superannuation fund clients, culminating in the rollout of the extensive system changes from 1 July 2007 onwards, involved up to 9 months of planning, documenting of specifications, programming, updating and testing. The successful outcome indicates that Pillar’s system facilities and capabilities are stable, robust, secure and sophisticated.

Extensions to the product offerings of our trustee clients that have been or are being implemented by Pillar including insurance changes and the provision of income stream products and Eligible Rollover Funds (ERFs).

Risk Management

Superannuation administration carries with it a high level of inherent risk and risk management continues to be a key area of interest for the Board and management. Areas of particular interest during 2007/08 included risks associated with:

Pillar’s key operational priority - the day to day processing of fund member’s instructions and accounts, which are subject to intensive surveillance;

business expansion - which affects all areas of the organisation and is supported structurally by a well developed project management framework;

regulatory risk – which arises from the finance and superannuation industries’ complex regulatory requirements including, on behalf of trustee clients, risks associated with: the Superannuation Industry (Supervision) Act 1993 (Cth) and

associated Regulations; the Anti-Money Laundering & Counter-Terrorism Financing Act 2006 (Cth) and associated Rules; and in relation to Pillar alone: the Corporations Act 2001 (Cth) and associated Regulations (these apply to Pillar as an Australian Financial Services License holder); and

risk management itself – the need to ensure that risk management processes are complete and effective.

In relation to the latter, the risk management process was further reviewed and specified in greater detail during the year and the policy tightened to ensure clarity of the key requirements. As in previous years, consistency of the policy and processes with the Australian and New Zealand Risk Management Standard (AS/NZS 4360) was maintained.

Pillar’s risk profile is reviewed by all levels of management, each with a different focus from strategic to operational detail:

the Executive Committee, under the Board’s direction, is responsible for business risk management from a high level perspective;

the CEO, assisted by the Company Secretary, is responsible for ensuring risk management throughout the organisation is effective and complies with Pillar’s policy; and

individual senior executives, their direct reports and other risk specialists have responsibilities at greater levels of detail covering the divisional, sub-divisional or other component level.

All functional areas and activities are covered by risk management including: client and member services; finance and accounting; human resources; information security; fraud and corruption prevention; business take-ons; and system migrations.

The risk of disasters is addressed by a comprehensive Business Continuity and Disaster Recovery Plan. This is regularly tested and includes arrangements for an alternative computer system and processing site that allows the maintenance of the main business functions in the event of a disaster.

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Compliance with Superannuation Law and Contractual Obligations

Superannuation in Australia is highly regulated and subject to an extensive legislation and policy framework. This framework has undergone consistent and substantial change over a number of years.

Pillar has a comprehensive Compliance Program that sets out the basis by which Pillar ensures compliance with the full range of superannuation legislative and contractual matters required to be undertaken in the administration of superannuation funds. The overriding objectives set out in the Compliance Program are:

1. The correct and timely performance of all superannuation processes, in accordance with the relevant Commonwealth, State and trustee requirements.

2. The undertaking of all acts required under the conditions of its Australian Financial Services Licence.

3. The promotion of a culture of compliance within the organisation.

4. The maintenance of existing business and the winning of new business, by demonstrating the strength of the organisation’s commitment to achieving compliance.

The Compliance Program is overseen by the Board’s Superannuation Compliance Committee. The Committee is provided with a range of reports on compliance matters and holds regular meetings to discuss the reports and current and up-coming superannuation compliance matters.

As part of its Compliance Program, Pillar has a dedicated Compliance unit that is responsible for:

Determining the mechanisms, procedures and processes by which superannuation related compliance is to be achieved;

Monitoring the superannuation compliance environment to ensure that Pillar has the complete and timely information necessary to meet the compliance requirements for the superannuation schemes that it administers;

Detailing requirements with which Pillar must comply;

Determining the legislative and related issues that need to be communicated to Pillar staff and the method of that communication;

The provision of advice concerning the application of superannuation legislation within Pillar;

Ensuring that all system specifications, procedures, standard letters, forms, scheme literature, on-line reference material and training guides are in line with superannuation rules and policies;

Reporting breaches of requirements to Pillar’s Chief Executive Officer and also to the Board’s Superannuation Compliance Committee;

Ensuring that action is taken to resolve breaches and monitoring the progress of the required action.

The Compliance Program is not limited to the Compliance unit. It includes measures to ensure that all levels of staff, irrespective of their role and/or seniority, are aware of and complete their compliance responsibilities in their day to day duties.

The effectiveness of the Compliance Program can be demonstrated by the implementation of the Federal Government’s Better Super legislative changes into Pillar’s systems, processes and procedures. The Better Super initiatives effective from 1 July 2007 represented comprehensive changes to the Australian superannuation environment, and impacted every area and every role in Pillar’s operations. All new and changed compliance requirements had to be determined, specified and then implemented into administration systems, processes and procedures. All staff were fully trained on the new requirements. The implementation occurred on time and was seen as a success by our trustee clients.

Further during 2007/08, Pillar helped clients develop their programs for dealing with the requirements of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).

Pillar has continued to meet the conditions of its Australian Financial Service Licence and also successfully maintained its certification to the ISO 9001:2000 quality management standard in relation to the provision of superannuation administration services.

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Documents

Pillar Administration - Parliament of NSW · Pillar Administration Annual Report 2007/08 supporting your business. 31 October 2008 Mr Joe Tripodi MP Minister for Finance, Minister