Freqently Asked Questions - Superannuation Professionals
What Are The Key Advantages Of ISPF?
- Small inactive member accounts can place a significant cost upon superannuation funds. By transferring small inactive or lost accounts to ISPF this reduces the cost of member benefit protection and improves the retirement savings for remaining active members. ISPF then protects the small inactive or lost accounts.
- 70/30 investment strategy with the potential for greater investment returns over the longer period.
- ISPF has a reserving policy which enables the fund to have greater exposure to growth assets.
- ISPF was formed by four Queensland based industry funds. A representative of each fund is a Director on the Board of Management who advises the Trustee in relation to the strategic direction of the fund.
- ISPF is a not-for-profit fund where all profits are returned to members
What Contributions Can ISPF Accept?
The Independent Superannuation Preservation Fund (ISPF) was established by a trust deed dated 25 June 2002. ISPF can receive and protect benefits paid from other Superannuation Funds, Approved Deposit Funds (ADF), Retirement Savings Accounts (RSA), Superannuation Guarantee (SG) shortfall payments, and amounts paid from the Superannuation Holding Accounts Reserve (SHAR).
What Fees Are Charged By ISPF?
ISPF deducts a fee from members' accounts at the rate of 27.5 cents per week. This fee is limited by member benefit protection rules. Refer to the most recent Annual Report & Member Handbook for full details on Fees and Charges.
Are Commissions Paid To Agents?
ISPF does not pay commissions to sales agents or financial advisers. ISPF is a not-for-profit fund which means that all earnings after operating costs and taxes are returned to members.
What Interest Rates Have Applied To ISPF?
For the year ended 30 June 2005, ISPF has credited interest to member's accounts at the rate of 11 % per annum.
The table below shows the interest rate credited to members, compared with the earning rate, after tax and fees.
| Financial Year Ended |
Interest % Credited to Members |
Fund Earning Rate % |
| 30 June 2005 |
11.0 |
12.25 |
| 30 June 2004 |
7.0 |
7.48 |
| 30 June 2003 |
2.0 |
3.9 |
| Average* |
6.60 |
7.82 |
*Average is the compound average of the net earning rates and crediting rates since inception.
Past performance is not necessarily an indication of future performance.
What Is ISPF's Investment Strategy?
ISPF has a 70/30 investment strategy. That means that 70% of assets are invested in growth investments with 30% in defensive assets. Growth assets have a potential for greater returns over the longer period. The investment objectives and strategy is as follows:
Investment Objectives
The Trustee aims to achieve a rate of return which is competitive against a peer group of other Eligible Rollover Funds through investment in a diversified range of assets whilst also maintaining sufficient liquidity to cover all operating costs of the Fund. Earnings are expected to exceed inflation by at least 2% averaged over rolling 5 year periods. However, despite this objective, there may be periods when the net returns, after tax and expenses, are negative.
In making decisions on the asset strategy, the Trustee will have regard to the protection of members' account balances, the Trust Deed provisions and will comply with all applicable legislative requirements. The Fund's investments will be managed to ensure that there is sufficient liquidity to meet expected cash flow requirements.
Investment Strategy
In seeking to achieve these objectives, the Trustee will adopt a diversified asset allocation which will contain defensive assets to ensure stability and liquidity as well as growth assets which have the potential for higher returns over the longer period. Defensive assets include cash, bank bills and other securities which have a lower expected volatility of return but usually offer lower returns in the longer run. Growth assets such as Australian and International shares carry a higher level of investment risk over shorter periods with the possibility of higher returns over the longer term.
The Trustee will invest the assets of the fund in a number of carefully selected specialist fund managers. However, the Trustee does not specifically take into account labour standards or environmental, social and ethical considerations in the selection of fund managers. The international equity portfolio is fully hedged back to Australian Dollars but may be changed at a later time. The Trustee regularly reviews the performance of the fund managers.
Where Are The Assets Invested?
The following tables show the types of investment assets held by the Fund at 30 June 2005.
| Investment Portfolio |
30 June 2005 |
30 June 2004 |
Type of Asset |
| $ |
% |
$ |
% |
| NAB Corporate Cheque Account |
175,256 |
2 |
277,750 |
5 |
Cash |
| NAB Business Investment Account |
0 |
0 |
134,699 |
2 |
Cash |
| Perennial Cash Enhanced Trust |
2,701,387 |
34 |
2,358,585 |
38 |
Cash deposits, bank bills, & corporate securities |
| Perennial Value Australian Shares |
2,602,750 |
34 |
1,819,536 |
29 |
Australian Shares |
| Credit Suisse International Shares fully hedged |
2,374,441 |
30 |
1,595,115 |
26 |
International Shares |
| Total |
7,853,834 |
100 |
6,185,685 |
100 |
|
There are no investments made in any associated enterprise. The Fund has not invested in any derivative (futures and options) products except to hedge against currency risk.
Investments are made in accordance with the asset benchmark allocations.
What Is The Reserving Policy?
In order to provide members with an exposure to growth assets and therefore a greater capacity for higher longer term returns on investments, the Trustee will from time to time retain a reserve. The level of reserves will not exceed 5% of the Fund's assets. The level of reserves will be monitored regularly by the Trustee in the prudential management of the Fund and in accordance with the crediting rate policy outlined above.
The reserve consists of any surplus from administration fees deducted from members' accounts over operating costs together with any difference between investment earnings and the amount of interest credited to members' accounts.
What Is The Crediting Rate Policy?
At the end of each financial year, the Trustee will determine an interest rate which will be credited in arrears to members' account balances for the financial year ended 30 June. This rate may not be the same as the Fund's investment return and will be determined by the Trustee having regard to the actual investment return on the Fund's assets after tax and all expenses and any amount held in the reserves.
The effect of extreme fluctuations in returns will be cushioned by the use of reserves.
An interim crediting rate will be determined from time to time by the Trustee for the purpose of crediting to exiting members. This interim rate will be determined on the same basis as the final crediting rate.
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