Following the implementation of the MySuper legislation, ANZ as shareholders of OnePath – through no choice of ours – launched a very basic MySuper product in December 2013. The product, called the ANZ Smart Choice Superannuation Fund became the Company’s default superannuation fund for all employees with effect from 2 December 2013.
The consequence of this move to ANZ Smart Choice, was that all new employees of RAG would be unable to access insurance cover in line with that offered to existing employees. The ANZ Smart Choice Fund, whilst cheap from an investment fee perspective did not provide the flexibility necessary for a Company such as RAG to incorporate an associated employee insurance plan for new employees. In addition, existing employees who made a decision to roll over their OnePath Super fund balance to the ANZ Smart Choice Product would also lose their insurance cover.
RAG therefore decided to conduct a review of a number of superannuation fund providers including Colonial, BT, MLC, REST and Australian Super with a view to identifying a new product provider capable of delivering a Superannuation and Insurance offering in line with our previously established plan with OnePath.
Following the review, RAG has selected Colonial FirstChoice Employer Super (CFS – FCES) as the new RAG Default Superannuation Fund with effect from 1 October 2014.
The Colonial offering was selected on the basis that it provides the appropriate balance of cost, investment performance and sustainability, insurance cover and support.
Who can join the fund?
The new fund is for:
- all existing members of the current default fund, and
- new employees from 1 October 2014 – who are area managers and above.
Opt out process
Members of the existing default fund have the opportunity to remain with the existing fund rather than following the Company’s new arrangements.
A letter will be sent to all members of the current ANZ Smart Choice (previously named OnePath Integra) default superannuation fund, providing the option to opt out of the new CFS-FCES Default Fund.
In the event that no action is taken following receipt of this letter, members will automatically have their post 1 October 2014 Superannuation contributions directed to the new RAG default fund.
What are the benefits associated with the new fund?
The insurance design – which is consistent with the original One Path Plan – provides eligible employees with access to certain levels of insurance cover, without health checks; including Life, Total and Permanent Disability (TPD) and Salary Continuance Insurance. These group insurance policies are often more cost effective than retail insurance policies and also tax effective, as the premiums are deductible to the Superannuation Fund.
The following levels of cover apply:
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Category 1
Permanent Staff and Permanent Part-time Staff
(Members whose base salaries are < $100,000 pa)
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Category 2
Management
(Members whose base salaries are >$100,000)
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o 30 day waiting period
o 2 year benefit period
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o 30 day waiting period
o 2 year benefit period
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It is important to note that additional insurance cover is available above these automatically applied levels – at the same Group Insurance rates. However, medical underwriting is required and you may be required to have a medical examination.
What do I have to do to join the new RAG Fund?
There is nothing you have to do. You will automatically join the new fund unless you choose to opt out as previously mentioned.
If you would like to specify an alternative plan for your future superannuation contributions, you will need to complete the ATO Standard Choice Form which is available from Karen Symonds.
The default investment selection
CFS – FCES’s MySuper investment option is a Lifestage option. This will become the new Default Plan option with effect from 1 October 2014. There are 11 investment options automatically allocated based on your birth date.
In general, younger employees have a greater proportion of their superannuation contributions allocated to growth orientated investments. Over time the member’s superannuation portfolio and new contributions will shift toward a more defensive asset allocation.
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Designed for people born within this five year age band
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Option Name
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1945 and 1949
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FirstChoice Lifestage 1945 to 1949
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1950 And 1954
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FirstChoice Lifestage1950 to 1954
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1955 and 1959
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FirstChoice Lifestage 1955 to 1959
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1960 and 1964
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FirstChoice Lifestage1960 to 1964
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1965 and 1969
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FirstChoice Lifestage1965 to 1969
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1970 and 1974
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FirstChoice Lifestage1970 to 1974
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1975 and 1979
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FirstChoice Lifestage1975 to 1979
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1980 and 1984
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FirstChoice Lifestage1980 to 1984
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1985 and 1989
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FirstChoice Lifestage1985 to 1989
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1990 and 1994
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FirstChoice Lifestage1990 to 1994
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1995 and 1999
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FirstChoice Lifestage1995 to 1999
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It is important to note that you do not have to remain with any of these 11 investment options. There are other investment options available on the investment menu from which you can select.
Nomination of a beneficiary
Important: You will need to nominate your beneficiary on your new account at CFS – FCES.
Frequently asked Questions:
What happens if I do nothing?
- Your future employer contributions will be paid to CFS – FCES.
- Your existing account balances with both ANZ Smart Choice and OnePath Integra will be retained.
- You will have insurance cover with both OnePath Integra and CFS – FCES.
What happens if I do not wish to remain in the ANZ Smart Choice and /or OnePath Integra Fund?
- If you wish to transfer your funds to CFS – FCES, a rollover form will be sent to you in late October or early November once your account at CFS – FCES has been set up. This form needs to be completed by you.
- Take care and check your superannuation fund balances. You may have balances with ANZ Smart Choice AND One Path Integra. You may wish to roll over BOTH these balances in order to fully consolidate your superannuation into CFS-FCES. You are able to roll over both your ANZ and OnePath account on 1 single rollover form.
What happens if I had insurance cover higher than the company default structure?
Your insurance cover that you had with OnePath will be transferred across to CFS – FCES with the same conditions that you had at OnePath.
Cost comparison
The tables below illustrate the total costs paid by a male or female aged 30, earning a base salary of $80,000 pa with $250,000 of Life and TPD Insurance cover and a superannuation balance of $10,000.
When one compares costs between different providers, one needs to consider not just the headline investment cost but also the cost of insurance premiums.
Importantly, it is also the operational capability of the Superannuation Provider that requires evaluation. Although the ANZ product is very cost competitive, its features and systems are inferior to the broader market.
The default offering of the ANZ Smart Choice product includes smoking rates. Members who decide to remain with ANZ should call ANZ to reduce their premiums charged to non-smoker rates.
Male
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OnePath Balanced Fund
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ANZ SmartChoice
(Smoker)
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ANZ SmartChoice (non smoker)
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CFS
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Investment and administration Fee inc annual member fee
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$152.00
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$100.00
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$100.00
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$160.00
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Life & TPD Premium
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$172.50
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$182.50
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$164.25
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$165.00
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Salary Continuance Premium
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$157.50
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$135.00
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$121.50
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$131.00
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Total Annual Cost
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$482.00
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$417.50
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$385.75
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$456.00
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Female
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OnePath Balanced Fund
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ANZ SmartChoice
(Smoker)
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ANZ SmartChoice (non smoker)
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CFS
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Investment and administration Fee inc annual member fee
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$152.00
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$100.00
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$100.00
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$160.00
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Life & TPD Premium
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$80.00
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$125.00
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$112.50
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$72.50
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Salary Continuance Premium
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$242.50
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$208.50
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$187.65
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$216.50
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Total Annual Cost
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$474.50
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$433.50
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$400.15
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$449.00
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Fees
The Fees associated with CFS-FCES Superannuation account are as follows:
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Investment And Administration Fees
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Colonial First Choice
First Choice Employer Super
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Total Management Expense Ratio
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1% pa*
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Annual Member Fee
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$60
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* Charged on the balance in the account on a monthly basis.
What do we require from you?
We believe that the new Superannuation Fund addresses your needs for:
- a base level of Risk Insurance, and.
- a mechanism for you to provide for your retirement.
When assessing insurance levels and cover we have taken cognisance of the demographic breakdown of our current employees, in respect of gender, age, occupation and salary.
We hope that the new plan appeals to you and that you maximise the opportunity provided to address the two above mentioned important personal issues.
Please feel free to call Brian May if you have any questions, concerns or suggestions at any time.
Brian May
Ph 02 9392 8700
Email: info@horizonwealth.com.au