Update: 14 June 2007

The Earnings Rate policy has been approved by ARIA at its Trustee meeting of 13 June 2007. A copy of the policy can be found here.

Update: 1 June 2007

Allocation of Fund earnings - how are we doing it?

In 2004 we changed the way we allocate earnings to members' accounts.

This change meant that we could allocate fund earnings more equitably between members who leave the scheme and those who stay. As a result each member's share of Fund earnings is allocated fairly when they claim a benefit.

The next step in this process is to allocate unallocated Fund earnings to members' accounts since 30 June 2003.  This process will be completed during 2007/08.

You will continue to receive your fair share of earnings when you leave the CSS. The changes to the method of allocating earnings simply mean that earnings will now be allocated to your account regularly, rather than on exit. Earnings can be positive or negative, depending on investment returns and will be shown on your Transaction Summary when you get your Member Statement.

A Minimum Amount on Exit (MAE) will apply. The MAE is the balance of your account at 30 June 2003 (this is the date on which the last allocation to continuing members was made) plus contributions from that date to 30 June 2007. Your MAE will be shown on your 2007/08 Member Statement.

How is your benefit affected?

If you are a contributing member, the member and/or productivity components of your benefit are affected by investment earnings.

However, if you leave as an age retiree, your CPI-indexed pension, the most significant part of your benefit, is not affected by investment performance. This is because it is determined by your final salary for superannuation purposes, length of membership and age at exit. Any other money paid to your account (e.g. co-contributions or money you have transferred from another fund) will be affected by investment earnings. The earnings will depend on whether you are in the Default Fund or have elected to transfer to the Cash Investment Option.

If you are a deferred benefit or associate member, or are planning on deferring your benefit, the member and/or productivity components of your benefit are affected by investment earnings, Your CPI-indexed pension, which is calculated and payable when you claim your entitlement is also affected. The earnings will depend on whether you are in the Default Fund or have elected to transfer to the Cash Investment Option.

You can find more information in our Fund allocation fact sheet

Update: 19 September 2006

The SLA (SSOM) Bill 2005 was passed by the Senate on the 19th of September 2006 (including the amendment to the date for negative crediting - 1 July 2007) and is awaiting Royal Assent.

Super Safety Bill paves way for more equitable distribution of earnings

In last year's annual report, we advised members that legislation (called the Superannuation Legislation Amendment (Superannuation Safety and Other Measures) Bill 2005) had been introduced into Parliament. It will enable the Board to allocate more equitably Fund earnings between members who leave the scheme during a period of negative earnings and those who stay.

We took the first step in a transition phase towards more equitable distribution of earnings with the changes to the crediting and exit rate policies in 2004, which took effect from 1 July 2003.

The Bill represents the next step in this transition phase. It will enable the Board, in the future, to remove the prohibition on negative crediting rates so that returns more accurately reflect the actual earnings of the Fund and more choices can be offered to members.

However, administration capabilities must be assessed, and upgraded if necessary, before the Board can lift the prohibition on negative rates. This means that, although the Bill is expected to be passed in 2006, it is not expected the Board will make any changes to the relevant policies immediately.

If and when the Board lifts the prohibition, members' balances will not fall below those as at 30 June 2003, and any contributions up until when the Bill takes effect.

In addition to administration capabilities, the Board has to consider:

Of course, there may be other factors in the future which will require consideration, but we will give members notice of any changes if and when they are decided.

8 March 2006