MySuper Transition Plan · WASF) and National Australia Bank Group Superannuation Fund A (NABGSF)...

NAB.005.734.0001

MySuper Transition Plan NULIS Nominees (Australia) Limited

Document Name MySuper Transition Plan

Version Number 4.0

Approval Date 22 May 2017

Next Review Date Not required as Final

Document Owner NULIS Nominees (Australia) Limited

Responsibility for General Manager, Corporate Super Product Maintaining this Document

Details of Document NULIS Nominees (Australia) Limited Approval Authority

Commercial in Confidence Page 2 of 23

MySuper Transition Plan

Table of Contents

NULIS Nominees (Australia) Limited .................................................................................. 1

1 Overview ............................................................................................................ 3

2 Scope of the Plan .................................................................................................. 3

3 MySuper design ..................................................................................................... 4

4 Principles for developing the Transition Plan ................................................................ 5

4.1 Review and amendment of the Plan ..................................................................... 5 4.2 Identification of ADAs ...................................................................................... 5 4.3 Identification of suitable MySuper Product ............................................................. 6 4.4 Identification of impediments to moving ADAs ........................................................ 6

1.1.1 4.5 Resolution of impediments to moving ADAs 9 4.6 Communications strategy ................................................................................ 10 4.7 Implementation of transition ............................................................................ 12 4.8 Dealing with exceptions .................................................................................. 13

5 Transition Plan review and Key Milestones schedule ...................................................... 13

6 Glossary of terms used in this document .................................................................... 16

7 Review and document history ................................................................................. 17

8 References ........................................................................................................ 18

9 Appendix A - ADA transition to the tailored NAB Staff MySuper ........................................ 19

9.1 Overview for tailored NAB Staff MySuper ............................................................. 19 9.2 NAB Staff MySuper design ................................................................................ 19 9.3 Identification of ADAs .................................................................................... 19 9.4 Identification of suitable MySuper Product ........................................................... 20 9.5 Identification of impediments to moving the remaining ADAs .................................... 20 9.6 Resolution of impediments to moving the remaining ADAs ........................................ 20 9.7 Communications strategy ................................................................................ 21 9.8 Implementation of transition ............................................................................ 21 9.9 Transition Plan review and Key Milestones schedule ............................................... 21

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2 Overview NULIS Nominees (Australia) Limited (Trustee) launched its MySuper product for the MLC Super Fund (MLCSF), MySuper, effective 1 July 2016. This Transition Plan (Plan) outlines the approach taken by MLC Nominees Pty Limited and PFS Nominees Pty Limited (the Previous Trustees) and the Trustee to complete the transfer of Accrued Default Amounts (ADAs) identified following the introduction of MySuper and prior to the end of the transition period (1 July 2017).

The Trustee acknowledged the Australian Prudential Regulation Authority (‘APRA’) expectation that the transfer of ADAs to MySuper was to occur at the earliest opportunity possible, where it is in the best interests of beneficiaries to do so. This Plan outlines the Trustee’s timeline for the execution of the transition, whilst considering the impediments identified by the Previous Trustees.

The identified ADAs were successor fund transferred (SFT) to the MLCSF from The Universal Super Scheme (TUSS), the Plum Superannuation Fund (PSF), BHP Billiton Superannuation Fund (BHPBSF), Worsley Alumina Superannuation Fund (WASF) and National Australia Bank Group Superannuation Fund A (NABGSF) (known collectively as the Funds) on 1 July 2016. Following the successor fund transfer, members in the BHPBSF, WASF and NABGSF became members of employer sponsored plans within the Plum Super product, which includes the Plum Personal Plan.

ADAs were held in the following products offered within the MLCSF.

• MLC MasterKey Business Super, incorporating MLC MasterKey Personal Super (MKBS/PS) - MKBS/PS is a corporate superannuation product that offers a highly adaptable solution for employer sponsored plans. MKBS/PS offers over 40 investment options and flexible Death, Total and Permanent Disablement and Income Protection insurance. This offer has evolved since inception and is supported by an infrastructure that includes online and phone based servicing and advice, and is distributed and supported by NAB Limited and financial advisers.

• Plum Super, incorporating employer plans as well as the Plum Personal Plan (Plum Super’s retained division) - Plum Super is a corporate superannuation product that provides outsourced superannuation solutions to large employers. Plum Super offers highly tailored workplace designs including defined benefits, customised investment solutions and insurance. This offer includes online and phone based servicing and advice, workplace education and comprehensive website and online capability.

The Trustee considered that the MySuper transition plans created by the Previous Trustees were appropriate for the transfer of ADAs that were transferred to MLCSF and those plans formed the basis of this Plan. The purpose of the Plan is to document the Trustee’s timeframes for the transition of ADAs to MySuper, including the objectives of the transition, the roles and responsibilities of relevant parties, the review process, the identification of ADAs, the impediments to transitioning ADAs, the resolution of the impediments, how the ADAs were managed during the transition period, the communication strategy and how the final transition was executed.

The Trustee monitored the progress of the Plan and updated it regularly throughout the transition period, and included measures to periodically assess the effectiveness of the transition.

3 Scope of the Plan This Plan covers ADAs identified by the Previous Trustees for members of MKBS/PS, PSF, BHPBSF, WASF and NABGSF. It includes the roles and responsibilities of the Trustee in the

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management of these balances through to the transition which was required no later than 1 July 2017.

This Plan outlines the transition of ADAs into the generic MySuper which is offered by the Trustee for members in MKBS/PS and Plum Super products. The few members with ADAs in NABGSF were transitioned to the tailored NAB Staff MySuper and the ADAs and impediments identified are described in the separate appendix (refer Appendix A).

MLCSF also offers retail super products, where members do not have any ADAs or investment in MySuper. The interests of these members were also considered, along with the default members with ADAs, since the ADA transition impacted some of the choice investment options given the movement of assets within the investment pools.

4 MySuper design MLCSF incorporates a MySuper compliant offer within the MKBS/PS and Plum Super products. The Trustee’s MySuper offer, ‘MySuper’, provides a simple default superannuation solution. MySuper is a single diversified investment option, with a neutral (long term) 70%/30% growth/defensive strategic asset allocation and is designed to deliver competitive risk adjusted returns after fees and taxes. It also provides a ‘needs based’ MySuper compliant life cycle insurance solution as a default, with employers able to tailor designs appropriate to their work places where required. The indicative investment fee for MySuper is 0.46% p.a. (including an allowance for performance related costs). An estimated indirect cost ratio of 0.08%p.a. also applies.

The previous trustee for TUSS, MLC Nominees Pty Ltd, launched its MySuper product, MLC MySuper, effective 29 November 2013. PSF Nominees Pty Ltd launched its MySuper product for PSF, Plum MySuper, effective 1 December 2013. PFS Nominees Pty Ltd also launched the MySuper Default Option and MySuper WASF Default Option for the BHPBSF and WASF respectively, effective 1 January 2014.

The Trustee completed the annual scale determination for MLCSF in October 2016, in accordance with section 29VN of the Superannuation Industry (Supervision) Act 1993 and determined that the MySuper members in the MySuper product were not disadvantaged when compared to MySuper beneficiaries in other funds.

The core MySuper design involves the maintenance of two ‘interests’ within a single member account, one MySuper and one Choice. This allows the segregation of interests so that specific rights and obligations applicable to MySuper can be applied and also provides an enduring model for the management of members who elect Choice. Having considered the interests of all MLCSF beneficiaries, it was the Trustee’s intention to use as much of the transition period as considered necessary to act in the best interests of members.

From the launch of the MySuper products by the Previous Trustees, where an existing member had:

- not provided investment instructions, the entire account balance (less any applicable exclusions, e.g. SFT cash defaults) was identified as an ADA, or

- provided investment instructions that the entire account balance held in the Previous Trustees’ default investment options, then the entire account balance was also identified as an ADA, or

- provided investment instructions and none or only part of the existing account balance was invested in the Previous Trustees’ default investment options then their entire member account was not considered an ADA (including any portion held in the Previous Trustees’ default investment options),

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the value of the ADA (having excluded applicable Cash investments) was identified to be transferred to MySuper as part of the ADA Transition (unless member investment instructions were provided prior to the transition date).

Since the introduction of MySuper any members who did not elect a Choice option or who had actively elected the Trustee default investment option will have all future contributions allocated to the MySuper option within their account. All new members default into the MySuper option, and have future contributions allocated to the MySuper option unless they make an active investment Choice for future contributions. Members were able to elect to remain in the existing option at any time throughout the transition period, which made them a Choice member. At that point in time the Trustee ensured that the member was not classified as a default / MySuper member for the purposes of future reporting and this Plan. Existing members can voluntarily move their balance and/or their future contributions between MySuper and Choice options in their member account at any time.

5 Principles for developing the Transition Plan In addition to the general statutory and fiduciary duties imposed on the Trustee, a number of principles were used in the development of this Plan. These principles were also used in the ongoing review of the Plan and in all decisions relating to ADAs and are as follows:

• Give priority to the interests of members; • Manage risks and costs and consider the impact on all members of MLCSF; • Minimise the impact on members, their retirement outcomes and benefits; and • Ensure members are given sufficient information and are engaged in a way that

promotes informed choice and advice.

The Trustee retained ADAs within the transition period allowed under the regulations to reposition MKBS/PS and Plum Super products and members for the new environment. The goal was to have all ADAs transitioned as early as possible within the transition period whilst considering the overall best interests of members consistent with APRA’s guidance and expectations.

The transition of ADAs was undertaken in stages as the impediments were resolved for each group of members, and where this did not result in a detriment to other members of MLCSF.

5.1 Review and amendment of the Plan The Plan wasreviewed regularly by the Trustee in accordance with the APRA guidelines (current version 3.3). A formal review was conducted annually, with ongoing monitoring and review of ADAs by the Trustee taking place on a quarterly basis, including details of remaining ADA members in line with APRA’s SPS 410 requirements and APRA SPG 410 guidance. The Trustee investigated the reasons for any divergence from expectations during the transition, identifying any risks arising from the divergence and put in place mitigating measures.

The Trustee continued to update the Plan (where applicable) due to changes in legislative, regulatory and environmental factors such as investment markets, changes in any of the base assumptions used and as new information becomes available or as the demographics of MLCSF changed. Any changes were considered in line with the principles outlined above.

5.2 Identification of ADAs All ADAs for existing members were initially identified within the Funds effective 30 September 2013 by the Previous Trustees and have been reported to APRA quarterly, in accordance with the MySuper legislative requirements.

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These balances were flagged on the administration systems, which allowed for analysis and reporting on a quarterly basis.

In regards to any SFTs made post MySuper, a member’s investment status (i.e. default or Choice) and any ADAs were obtained from the previous trustee in accordance with the specific SFT MySuper requirements.

In regards to identifying members with ADA who joined the Funds post MySuper and MLCSF as a result of the SFT the following procedures applied:

• The Trustee obtained information regarding the Previous Fund’s historical default arrangements from the previous trustee;

• Electronic data was received from the previous administrator which included member investment instructions and asset history;

• The Trustee analysed and reconciled the electronic data to identify members who clearly provided investment directions, based on the historical default information provided by the previous trustee. These members were flagged as Choice members; and

• All remaining members (including any members that are unable to conclusively be determined as having provided an investment instruction) were flagged as Default members.

Therefore, whilst physical paper copies of a member's investment direction may not be held by the Trustee, the above procedure allowed the Trustee to identify Default versus Choice members.

5.3 Identification of suitable MySuper Product The Trustee received authorisation from APRA, in June 2016, to offer ‘MySuper’ as a MySuper compliant investment option within MKBS/PS and Plum Super products within MLCSF. MySuper was implemented as the Trustee’s default investment option for all members on 1 July 2016.

The Trustee chose ‘MySuper’ as the MySuper option for the eventual transition of ADAs in the MKBS/PS and Plum Super products (excluding NAB Group corporate plan). Default contributions for these members weredirected into the respective MySuper option in the member’s fund as stated in Section 3. From the date of the SFT, default contributions have been directed to the MySuper option in MLCSF. The Trustee determined that the transfer of ADAs to that option will promote the financial interests of members and classes of members. As set out in section 4.4, there were risks associated with the transition of ADAs. As such, the Trustee’s knowledge of the MySuper product, the ability for the Trustee to maintain control of the entire transition process, and the fact that MySuper is the default option led to the choice of MySuper for the transition of all ADAs from the historical default options and specifically created transition options.

5.4 Identification of impediments to moving ADAs When the previous MySuper options were launched within the Funds, MLC Nominees Pty Ltd and PFS Nominees Pty Ltd resolved that transitioning ADAs immediately would create significant risks and would have significant impact on members. The key impediments identified were:

• investment issues (section 4.4.1);

• loss or change of member benefits and access to services (section 4.4.2);

• execution risks (section 4.4.3); and

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• successor fund transfer issues (section 4.4.4).

The sections below outline the high level position on these impediments and the strategies put in place to deal with them.

5.4.1 Investment issues

The majority of the Funds’ ADAs were initially held in the MLC Horizon investment options in TUSS and the Pre-mixed investment options in PSF with many differing growth/defensive asset allocations. These ADAs were subsequently transferred to transition investment options in June and July 2015.

The purpose of the transition investment options was to change the underlying investment strategy and asset allocation for the previous default investment options to the long term asset allocation for MySuper of 70% growth / 30% defensive. The investment changes also took into account the different exposures at an asset class level, the different investment managers, and the different active/passive split and levels of illiquid assets. Further advantages from the use of transition investment options are documented in section 4.5.

Other investment impacts being managed include:

• Some of the assets held were illiquid and not be able to be redeemed in full immediately. Illiquid assets are a very important part of the Trustee’s diversification strategies, providing both better returns and reduced volatility for members. There are rigorous controls over the allocation to these assets to ensure that member level liquidity is always maintained. These illiquid assets were transferred to MySuper where appropriate to do so.

• When the remaining ADAs held outside of the transition investment options were transferred from existing investments to MySuper it was possible that some investment funds may have been too small to be viable and so needed to be closed. The Trustee monitored the Investment Menu in light of the ADA transitions: it has been determined that none of the investment options was required to close as a result of the ADA transition impacting the size of the investment option.

• The transition of ADAs to MySuper incurred transactional costs as a result of the sale and/or purchase of underlying investments. Transactional costs were borne by members. However the Trustee minimised these costs by using strategies such as in specie transfer of assets.

Whilst these issues applied at the commencement of transitioning ADAs, using the transition period allowed the Trustee to plan for all the underlying investment impacts. The Trustee executed the transition of the ADAs in accordance with statutory and fiduciary obligations whilst considering, and acting in, the overall best interests of all MLCSF members. The Trustee planned for an equitable outcome across the entire membership (as opposed to just the MySuper membership) using the natural turnover of the member base to diminish the size (and therefore the investment cost and impact) of the eventual transition.

5.4.2 Loss or change of member benefits and access to services

There were a number of areas where material benefits and access to services were changed or removed in the MySuper environment. Given the impact on members, the removal or change of these benefits and services was taken into consideration for the transition of ADAs. The Trustee communicated to members and provided them with the opportunity to understand what the changes meant to them so they could make informed choices.

The benefits and services that changed or do not apply to MySuper include:

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• Loss of advantageous fee arrangements

The Trustee acknowledged that transitioning ADAs to MySuper represents a cost saving for some members; however it may have a detrimental impact on others. The Trustee reduced this impact by undertaking a communication and education program.

• Overriding informed investment choices

There are a number of members who made an informed choice to remain fully invested in their prior default and considered it to be appropriate for their retirement needs. Regulation dictates that any 100% member balance held in a previous default option as well as all future contributions for these members must be directed to MySuper. The Trustee believed that giving members’ time to make informed choices assisted managing the risk of inadvertently overriding informed investment choices.

A SEN was mailed to all MKBS/PS and Plum Super members from the Previous Trustees prior to the SFT to MLCSF informing them of the pertinent MySuper changes. Members had time to consider the changes, obtain advice and make further informed decisions before the ADA transition SEN was mailed post the SFT.

• Access to Advice Services

The MKBS/PS business model and services provided to members has been built up over many years. MLC Limited, the administrator for MKBS/PS prior to the SFT, developed a multifaceted, enduring advice model for all members which consist of over 5,000 advisers servicing members in MKBS/PS. Advisers act as a key contact point for many members with adviser contact details provided to all members in a variety of collateral. The Trustee expected that, post the SFT, members would continue to contact their advisers for a variety of reasons.

• Changes to Insurance benefits

Over 200,000 default members were covered by grandfathered insurance arrangements following the SFT to MLCSF. These arrangements were amended when the ADAs were transferred to MySuper and covered by the Trustee’s default MLC Lifestage Insurance at the MySuper standard premium rates. This means that, whilst their level of cover will not be impacted, the members’ premiums may have changed. Members were informed of the impact of the ADAs Transition on their insurance premiums prior to implementation and allowed a period of time for consideration of the changes.

5.4.3 Execution risk

Throughout the implementation, the Trustee reviewed the project pipeline for all initiatives impacting the SFT to MLCSF, to ensure they did not impact the ADA transition.

5.4.4 Successor fund transfer issues

The Trustee aimed to achieve further scale through the SFT into MLCSF.

A large change program was implemented to prepare the Funds for the transition including:

• harmonisation of insurance benefits; and

• alignment of the previous MySuper investment options.

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5.5 Resolution of impediments to moving ADAs In July 2014, the Previous Trustees agreed an alternate approach based on initial analysis which indicated that it may be possible to improve the likely member outcome. The ADA transitions were managed through the following 2 approaches:

1. Direct - transitioning some groups of members directly to MySuper if they were in smaller investment options or the member had ADA across multiple investment options; and

2. Transition - segregating the investments supporting the ADAs. This segregation was achieved through the implementation of the transition investment options in June/July 2015. The Trustees’ investment advisers managed the required change in strategy and asset allocation over an extended period of time. The final transition therefore required very little change in the composition of the assets.

The following diagram depicts this approach:

In accordance with the above diagram, the transition of the ADAs commenced from mid-2015 and was completed following the SFT by 31 March 2017.

Further explanation in respect of the above transition and impediment resolution strategies is provided below.

• Using the transition period allowed natural turnover to minimise the number of members impacted. Allowing new contributions and rollovers to default into MySuper whilst holding ADAs had the same impact as dollar cost averaging. The effect of members leaving and being replaced by new members organically moved a substantial proportion of the member base towards MySuper over time without the need for Trustee intervention.

Further, where a particular investment became cash flow negative and/or impacted due to DTAs, the impact on the remaining Choice members was minimised by implementing a gradual approach where natural attrition significantly reduced the

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impact and allowed for any remaining situations to be dealt with on a case by case basis.

• In addition to the abovementioned natural progression, the transition period allowed for the efficient management of the underlying investments. A number of strategies were implemented to assist in reducing the investment issues and transaction costs to members, including:

- the use of derivative strategies to minimise market impact for the transitioned assets and asset allocation disruption;

- the use of transition investment options during the transition period allowed for the segregation of the Choice members’ assets from the transitioning ADAs to quarantine the costs and investment risks of transitioning ADAs from Choice members; and

- legal investigations and/or negotiations with international counterparties for the sale of illiquid assets and release from existing contracts which commit to future investments over many years.

The ADA transition involved multiple investment options, across multiple asset classes and a large number of investment managers. It was of a size and scale that required additional resources over a significant period of time. The process carried risk and was vulnerable to unforeseen market events particularly due to the significant asset allocation change.

The Trustee considered, planned and implemented strategies to reduce the Investment impediments.

• Using the transition period and continuing a program of engagement and communication with members also provided the opportunity for members to engage with their superannuation provider or adviser and make informed choices. Some of the impacts outlined may have had significant implications on retirement outcomes. The Trustee believed that clear member communications allowed members to make informed decisions that suited their particular circumstances and provided better outcomes.

In April/May 2015, the Previous Funds’ Trustees provided the affected members with a Significant Event Notice (SEN) 30 days prior to the segregation of assets into the transition investment options, allowing the member to opt-out of the transfer. Whilst all affected members were provided with a SEN, it was considered necessary to engage with the members on a number of occasions and through different communication channels, to ensure that they were provided with sufficient time and information to make an informed decision. Members continued to have the opportunity to opt-out or transfer directly to MySuper at any time during the transition phase. However the vast majority of members chose to continue with the transition to MySuper. At the final stage a SEN allowing the member 90 days to opt-out of the transition to MySuper was sent in accordance with the regulations.

5.6 Communications strategy The Trustee used communications to members as a way to promote engagement and as an opportunity to inform members of the various options that were available to them following the introduction of MySuper. The goal was to ensure delivery of a seamless customer experience through clear, simple and concise customer communications. The communications included information to educate members on how to make an informed choice about their superannuation.

The communication strategy had three key components:

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• SENs were sent to members in October 2013 by the Previous Funds’ Trustees advising them of the introduction of the MySuper option in the Funds. Where applicable, it also outlined that their future contributions will be made to the MySuper investment option. This communication also provided details of Death and TPD insurance and how to opt-out if they wish.

• The strategy included partnering with employers and advisers to ensure that key messages to members were consistent and that employers and advisers felt supported. New member communications and standard fund disclosure were updated with details of MySuper. Since the launch of the MySuper options, all new members to the Funds received a MySuper updated PDS and welcome kit outlining the investment and insurance options available to them.

• Annual statements were enhanced to inform members about MySuper and their investment choices since 30 June 2014.

Below are the delivery dates for MySuper communications which were sent by the Previous Funds’ Trustees:

November 2012 • First round of employer engagement commenced for PSF, BHPBSF and WASF

January / February 2013

• 31 December PSF Member Statements included a flyer requesting the member’s authority to use their TFN to search for other superannuation through SuperMatch

• Launch of a general Microsite on the PSF public website to provide information to members

• A general Stronger Super update for employers of plans in PSF in planned member education seminars

• Further employer engagement based on detailed analysis of benefit designs

March 2013 • Launch of a general Microsite on the BHPBSF website to provide information to members

• A general Stronger Super update in planned member education seminars • Further employer engagement based on detailed analysis of benefit

designs May/June 2013 • Launch of Microsites to provide information to MKBS/PS members,

employers and advisers • Adviser MLC MySuper education and training begins

July / August 2013 • Distributed June 2013 member statements and included messaging about MySuper launch

August 2013 • Launch of specific MLC MySuper adviser microsite and webinar August/September 2013

• Continued Plum Corporate Super employer engagement and signed Memorandum of Understanding outlining the agreed investment, fee and insurance changes for their sub-plan, and which will be reflected in the participation schedule in due course

September 2013 • Employer mailing detailing proposed changes to MLC MySuper October 2013 • Member mailing detailing proposed changes to MLC MySuper, Plum

MySuper, MySuper Default Option and MySuper WASF Default Option November 2013 • All compulsory notifications regarding changes to Plum MySuper received

• Education seminars at selected workplaces commenced December 2013 • Provide general communications advising MLC MySuper and Plum MySuper

was live January 2014 • Communications advising MySuper Default Option and MySuper WASF

Default Option are live January 2014 • Distribution of updated December 2013 PSF, BHPBSF and WASF member

statements including details of MySuper and ADAs July/August 2014 • Annual statements distributed included details of MySuper and ADAs January 2015 • Distribution of updated December 2014 PSF, BHPBSF and WASF member

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statements including details of MySuper and ADAs April 2015 • MKBS/ PS member mailing detailing transfer to transition investment

options for impacted members May 2015 • PSF member mailing detailing transfer to transition investment opt ions for

impacted members July 2015 • PSF member mailing detailing transfer direct to Plum MySuper for

approximately 500 impacted members July I August 2015 • Annual statements distributed included details of MLC MySuper, Plum

MySuper, transition investment options and ADAs

Below are the delivery dates for the MySuper communication sent by the Trustee:

July 2016 • Plum Super member mailing detailing transfer from tailored investment options and transition investment opt ions to MySuper

August 2016 • MKBS/ PS member mailing detailing transfer from transition investment options to MySuper and any changes to insurance for impacted members

December 2016 • Plum Super member mailing detailing transfer from investment opt ions and transition investment options to MySuper that were excluded from the previous mailing due to data integrity issues

December 2016 • MKBS/ PS member mailing detailing transfer from other options direct to MySuper and any changes to insurance for impacted members

In addit ion to the above, members received ongoing updates in respect of the impact of the MySuper changes on their superannuation benefits (including investments, fees, insurance arrangements etc.) . This communication took place through the standard communications which occured throughout the year as well as through specific member, employer and adviser education sessions and advice campaigns.

5. 7 Implementation of transition

The transfer of ADAs was a significant undertaking as outlined in section 4.4 involving significant member impact, change and investment governance. The Previous Funds' Trustees completed the following transitions:

ADAs in MKBS/ PS transferred to 435,000 Transition Investment Opt ions

ADAs in PSF transferred to Transition 71 , 180 Investment Options

Small groups of members with 596 multiples ADAs in PSF transferred direct to Plum MySuper

The Trustee completed the implementat ion as follows:

Members in previous default investment opt ions Plum Super transferred direct to MySuper

Members in Transition


22,034

55,784

9,023 Completed • June 2015

4,063 Completed • July 2015

47 Completed • October 2015

2,227 5 November 2016

3,460 5 November 2016



Investment Options in Plum Super transferred to MySuper

Members in Transition Investment Options in MKBS/PS transferred to MySuper

317,386 ,6257 3 December 2016

Small group of members with multiple ADAs or previous default investment options in MKBS/PS transferred direct to MySuper

16,906 563 25 March 2017

Small group of members in Plum Super transferred direct to MySuper

69 7 30 March 2017

Implementing the transition of ADAs followed existing protocols, including the Trustee’s Assurance Framework. The Assurance Framework included three lines of assurance:

• Line one was the responsibility of the front line business/project team to effectively operate internal controls, incorporating elements of self-assessment including attestations regarding Business Readiness, Technology Readiness, and External/Customer Readiness;

• Line two was the responsibility of the risk and compliance divisions and included reviews and assessments by independent project quality reviewers as to the effective management of key risks; and

• Line three was provided by internal or external audit providing an independent and objective assessment of the effective operation of controls designed to mitigate key risks.

The Trustee relied on this framework to assess the effectiveness of the transition process whilst in development, review and execution.

5.8 Dealing with exceptions Existing frameworks for dealing with opt-outs, exceptions and complaints were utilised throughout the introduction of MySuper, and continued to be used for the MySuper ADA transition period.

Any requests by members to transition their ADA early to the MySuper option were actioned.

Complaints received from members in regard to MySuper were handled using the Trustee’s existing complaints resolution processes including board reporting. MySuper was added as a category of complaint for tracking purposes. No complaints have been received to date.

6 Transition Plan review and Key Milestones schedule The Plan has been reviewed regularly by the Trustee, as intended for legislative, prudential and regulatory requirements. The Trustee reviewed the status of ADAs held in the Funds prior to the SFT and in MLCSF post the SFT and the impediments to transitioning these on a regular basis, including quarterly monitoring of ADAs in line with APRA Prudential Standard SPS 410 requirements.

The Trustee has achieved its goal to have all ADAs transitioned prior to 1 July 2017 and the key milestones of this Plan (including the current status) are detailed below.

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Key Milestones and Actions

Completed by the Previous Funds' Trustees:

ii' . -- ir'\.._:...1• • --.. . ••• I Ill • - - -By 1 June 2013 Prepare the initial MySuper Transition Plans including MySuper Proj ect

strategies to deal with impediments Team

By 30 September 2013 Identification of all members with an ADA and the MySuper Proj ect amount of that balance Team

By December 2013 Launch of MLC MySuper and Plum MySuper MySuper Proj ect Team

December 2013 First Trustee review of the Transition Plans and status Product T earn of implementation

By 1 January 2014 Launch of MySuper Default Option and MySuper WASF MySuper Project Default Option Team

Quarterly from 30 Identify and report on any remaining ADAs and Finance Team September 2013 until progress of the Plan through quarterly APRA reporting transition completed of SRF 410.0

July I August 2014 In conjunction with annual and bi-annual member Operations T earn statements, provide information to members with an ADA as specified in the Corporations Regulations 2001

December 2014 Second Trustee review of the Transition Plans and Product T earn status of implementation

December 2014 Project Advisory Board established to provide ADA Transition governance for the ADA Transitions Project Project Team

March 2015 Planning and scheduling for the timeline of all ADA ADA Transition transfers directly to MySuper or via the transition Project Team pools completed

April/ May 2015 Provide impacted members in MKBS/ PS with a SEN ADA Transition regarding the proposed move of ADAs to the Project Team appropriate Transition Investment Option at least 30 days prior to the transfer

May I June 2015 Provide impacted members in PSF with a SEN ADA Transition regarding the proposed move of ADAs to the Project Team appropriate Transition Investment Option at least 30 days prior to the transfer

July 2015 Provide impacted members in PSF with a SEN ADA Transition regarding the proposed move of ADAs directly to Plum Project Team MySuper at least 90 days prior to the transfer for members who hold ADA in multiple options or the ADA value in the investment option is considered too small to use the transition approach

24 October 2015 If no contrary instruction is provided by the member ADA Transition wi thin three months of the date of providing the Project Team and


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iii~..,_: 11: •1•1 - -.. - 1:,:.,.,1 . ................... - - -specified information, the Trustee will move the PSF Asset Management member' s ADA to Plum MySuper within 120 days of providing the specified information to an affected member, in accordance wi th legislative, prudential and regulatory requirements

December 2015 Third Trustee review of the Transition Plans and Product T earn status of implementation

February 2016 Provide members with a SEN regarding changes to ADA Transition their insurance Project Team

March 2016 Implementation of MySuper compliant insurance ADA Transition tables in the Compass Administration System Project Team

Completed by the Trustee:

iii~..,_: 11: 1111 - -.. - 1:,:.,.,1 . ................... - - -July 2016 Provide Plum Super members wi th a SEN regarding ADA Transition

the proposed move of ADAs from tailored investment Project Team opt ions and from transition investment opt ions to MySuper at least 90 days prior to the expected transfer

SEN template approved by Disclosure Governance Committee in June 2016

August 2016 Provide MKBS/ PS members with a SEN regarding the ADA Transition proposed move of ADAs from the transition Project Team investment options to MySuper at least 90 days prior to the expected transfer


5 November 2016 If no contrary instruction is provided by the Plum ADA Transition Super member wi thin three months of the date of Project Team and providing the specified information, the Trustee Asset Management moved the member's ADA to MySuper within 120 days of providing the specified information to an affected member, in accordance wi th legislative, prudential and regulatory requirements

3 December 2016 If no contrary instruction is provided by the MKBS/ PS ADA Transition member within three months of the date of providing Project Team and the specified information, the Trustee moved the Asset Management member' s ADA to MySuper within 120 days of providing the specified information to an affected member, in accordance wi th legislative, prudential and regulatory requirements

December 2016 Provide MKBS/ PS members with a SEN regarding the ADA Transition proposed move of ADAs directly to MySuper at least Project Team 90 days prior to the expected transfer for members who hold ADA in multiple options or the ADA value in the investment option is considered too small to use


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December 2016 Provide Plum Super members (excluded from previous ADA Transition mailing) with a SEN regarding the proposed move of Project Team ADAs directly to MySuper at least 90 days prior to the expected transfer for members who hold ADA in multiple opt ions or t he ADA value in a small investment option


25 March 2017 If no contrary instruction is provided by the MKBS/ PS ADA Transition member within three months of the date of providing Project Team and the specified information, the Trustee moved the Asset Management member' s ADA to MySuper within 120 days of providing the specified information to an affected member, in accordance wi th legislative, prudential and regulatory requirements

30 March 2017 If no contrary instruction is provided by the Plum ADA Transition Super member wi thin three months of the date of Project Team and providing the specified information, the Trustee Asset Management moved the member's ADA to MySuper within 120 days of providing the specified information to an affected member, in accordance wi th legislative, prudential and regulatory requirements

April 2017 A Post Implementation Review of the transi tion ADA Transition process undertaken following the completion of all Project Team ADA transitions in accordance with the Projects at NAB process

May 2017 Final Trustee review of the Plan and status of Product T earn implementation

7 Glossary of terms used in this document "Accrued Default Amount" is defined in section 20B of the Superannuation Industry (Supervision) Act 1993 and, in summary means, the total amount attributed by the Trustee to a member of the Fund (i.e. the member's total balance) where either (i ) the member has given the Trustee of the Fund no direction as to how to invest that total amount or (ii) the total amount is invested in the Fund's current default investment opt ion. There are a number of carve-outs from this definition, including where the member is a defined benefit member.

"Affected member" refers to a member of the Fund who has an accrued default amount as defined.

" BHPSF" refers to the BHP Billiton Superannuat ion Fund

"Choice" refers to a class of beneficial interest which is not a MySuper product


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" Defined Benefit member" refers to a member entitled on reti rement to be paid a benefit defined, wholly or in part, by reference to either or both of the following:

a) the amount of the member's salary: at the date of the member's retirement or an earlier date, or averaged over a period before retirement , or

b) a specified amount

" Fund" refers to TUSS, PSF, BHPBSF and WASF

"MKBS" refers to MLC MasterKey Business Super

"MKPS" refers to MLC MasterKey Personal Super

"MLCSF" refers to MLC Super Fund

" NABGSF" refers t o the National Australia Bank Group Superannuation Fund A

" PSF" refers to the Plum Superannuation Fund

"SFT" refers to successor fund transfer

"Trustee" refers to NULIS Nominees (Australia) Limited

"TUSS" refers to The Universal Super Scheme

"WASF'' refers to the Worsley Alumina Superannuation Fund

8 Review and document history A review of the appropriateness, effectiveness and adequacy of the MySuper Transition Plan will be undertaken annually, or more regularly if required. The results of the review will be reported to the Trustee for consideration.

Aut hor Version Date Revision Detail Approval Date

Corporate 1.0 December Initial 13 December 2012 Super 2015

Corporate 1.2 October Update to ini t ial Plan for MLC 4 December 2013 Super 2013 Nominees Pty Lt d and PFS Nominees

Pty Ltd

Corporate 2.0 October Update to Plan and inclusion of 4 December 2014 Super 2014 t ransition and direct approach for

MLC Nominees Pty Ltd and PFS Nominees Pty Lt d

Corporate 3.0 October Update on progress to Plan for MLC 3 December 2015 Super 2015 Nominees Pty Lt d and PFS Nominees

Pty Ltd

Corporate 3.4 January Consolidation of previous plans and 2 March 2016 Super 2016 update on progress for NULIS

Nominees (Aust ralia) Limited

Corporate 4.0 April 2017 Updated t o reflect completion of Trustee Board - 22 May Super the ADA t ransition 2017




9 References APRA Prudential Standard SPS 410 – MySuper Transition

APRA Prudential Practice Guide SPG 410 – MySuper Transition

http://strongersuper.treasury.gov.au/content/consultations/working groups/mysuper/IP transition mysuper/downloads/IP MySuper transition.pdf

Superannuation Industry (Supervision) Act 1993 – Part 2C - MySuper

Superannuation Industry (Supervision) Regulations 1994 – Part 9A – Requirements relating to MySuper Products

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10 Appendix A - ADA transition to the NAB Staff MySuper

10.1 Overview for tailored NAB Staff MySuper National Australia Bank Superannuation Fund Pty Ltd (‘NABSF Trustee’) launched the MySuper product for the National Australia Bank Group Superannuation Fund A (‘NABGSF’) effective 1 January 2014. The transition plan prepared at that time outlined the approach National Australia Bank Superannuation Fund Pty Ltd intended to implement in offering its MySuper product and to transfer the ADAs arising from the introduction of MySuper prior to the end of the transition period.

NABSF Trustee implemented the transfer of the ADAs that existed within NABGSF as at March 2014 (approximately $1.5 billion). Prior to their transfer, ADAs were held within the Growth investment option (NABGSF’s default investment option prior to the introduction of MySuper) in the individual retirement accounts of affected members incorporating employed members and members in the Retained Benefit division.

Following the successor fund transfer to the MLCSF effective 1 July 2016, the members from the NABGSF will became a corporate plan of the Plum Super product within MLCSF with NULIS Nominees (Australia) Limited as the Trustee.

This Plan outlines the approach the Trustee intends to take to transfer the remaining identified ADAs following the completion of the previous Transition Plan by the NABSF Trustee. The transition of the remaining ADAs was completed in November 2016 following the SFT, as the impediments for completing the transition were resolved, and did not result in a detriment to other members of MLCSF or members of the NABGSF plan.

10.2 NAB Staff MySuper design In the NABGSF corporate plan, a tailored MySuper option , NAB Staff MySuper, if offered which will provide a simple default superannuation solution.

NAB Staff MySuper is a single diversified investment option, with a long term approximately 78%/22% growth/defensive strategic asset allocation and is designed to deliver competitive risk adjusted returns after fees and taxes. It also provides MySuper compliant death and total & permanent disablement (TPD) cover.

10.3 Identification of ADAs ADAs for existing members were initially identified by NABSF Trustee effective 30 September 2013. Following the introduction of NABGSF MySuper, effective 1 January 2014, all default contributions were allocated to the NABGSF MySuper option within a default member’s account. Identified ADAs were transferred to NABGSF MySuper in March 2014 in accordance with NABSF Trustee’s Transition Plan. Subsequent to this transfer, additional members with ADA have been identified where a Defined Benefit member achieved a condition of release and the member had not provided written investment instructions. And the money was invested into the previous default investment option.

New ADAs arose from various transactions and movement of members between categories, including:

• Defined Benefit (A3) members voluntarily moving to accumulation accounts (Category M);

• A1N members invested 100% in the current Growth option, making a partial withdrawal, thus losing their N category defined benefit guarantee and becoming subject to the MS regulations;

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• A3 and A1N members invested 100% in the current Growth option, leaving the service of NAB and “porting” to Category M as an ex-employee member.

These ADAs were transferred to the NAB Staff MySuper post the SFT of NABGSF to the NABGSF plan within the Plum Super product within MLCSF.

10.4 Identification of suitable MySuper Product The Trustee chose NAB Staff MySuper as the MySuper option for the eventual transition of the identified ADAs. Default contributions were directed into this MySuper option post the SFT. The Trustee considered that the transfer of ADAs to that option promoted the financial interests of members and classes of members.

10.5 Identification of impediments to moving the remaining ADAs The Trustee recognised the following risks in transferring the identified ADAs immediately:

• Ongoing identification of new ADAs (section 9.5.1); and

• Loss or change of member benefits (section 9.5.2).

The sections below outline a high level position on these impediments.

10.5.1 Ongoing identification of new ADAs

As detailed in section 9.3, processing of various transactions and movement of members between categories allowed for the creation of new ADAs. The operational processes were reviewed and amended in NABGSF to cease the future creation of ADAs and ultimately ensure legislative compliance prior to the SFT. These amended processes will continue to apply following the SFT to MLCSF.

10.5.2 Loss or change of member benefits

There are a number of areas where material benefits will be changed or removed in a MySuper environment. Given the impact on members, the removal or change of these benefits needed to be taken into consideration in terms of the transition of ADAs. The Trustee required time to communicate to members and provide them with the opportunity to understand what the changes will mean to them so they could make informed choices.

Following the SFT, the NABGSF plan will continue to provide minimum guaranteed benefits in the following circumstances;

• Insured members, who joined the Fund prior to 1st January 1995 are provided a minimum 3.5 times Fund Salary benefit upon their Death or Total and Permanent Disablement; and

• Members who joined the Fund prior to 1st July 1988, have a minimum insured benefit of 15% of Fund Salary to age 62 upon their Death or Total and Permanent Disablement.

These minimum benefits will be forgone upon transfer to the NAB Staff MySuper offering.

10.6 Resolution of impediments to moving the remaining ADAs Explanations in respect of the impediment resolution strategies utilised by the Trustee are provided below.

• Using the transition period to implement operational process changes to cease the creation of ADAs ensured that all accumulation assets of a member who had not provided a written investment instruction are held in NAB Staff MySuper. Further, waiting for these changes to be implemented allowed for the transfer of any remaining ADAs to take place as part of a final bulk transition to NAB Staff MySuper.

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• Using the transition period and continuing a program of engagement and communication with members also provided the opportunity for members to engage with their superannuation provider and make informed choices. Some of the impacts outlined may have had significant implications on retirement outcomes. The Trustee believes that clear member communications allowed members to make informed decisions that suited their particular circumstances and provided better outcomes.

This Plan enabled a review of all impediments and the strategies put in place to deal with them. The Trustee executed the transition of any remaining ADAs at the earliest opportunity possible and ensured the best interests of members.

10. 7 Communications strategy

Below is the delivery date for the Trustee's legislatively required NAB Staff MySuper communication:

July 2016 • Transition SEN detailing ADA transfer to NAB Staff MySuper for impacted members

In addition to the above, members continued to receive ongoing updates in respect of the impact of the NAB Staff MySuper changes on their superannuation benefits (including investments, fees, insurance arrangements etc). This communication took place through the standard communications which occur throughout the year as well as through specific member, employer and adviser education sessions and advice campaigns.

10. 8 Implementation of transition

Based on the impediments detailed in section 9.6, the Trustee implemented the remaining ADA transition as follows:

Small group of members wi th ADAs t ransferred direct to NAB Staff MySuper

24 5 5 November 2016

Note: Further to the above timetable, a ref ined process for the crystallisation of defined benefit members was implemented prior to 30 June 2017.

Employer communication occured alongside the member communication timeline.

10. 9 Transition Plan review and Key Milestones schedule

The key milestones of this Plan are detailed below.

Key Milestones and Actions

Completed by the Previous Funds' Trustee:

ii' - - -.. - • 1111 -By 1 June 2013 Prepare the ini t ial MySuper Transition Plan including

strategies to deal with impediments

By 30 September Identif ication of all members wi th an ADA and the


iF' - --. . ltlh , .... - -National Australia Bank Superannuation Fund Pty Ltd

National Australia Bank Superannuation

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ii - - - T.~nilTII .. - • ., .. ·~l:....-.,1 • - - -2013 amount of that balance Fund Pty Ltd

By January 2014 Launch of NABGSF MySuper National Australia Bank Superannuation Fund Pty Ltd

Quarterly from 31 Identify and report on any remaining ADAs and National Australia December 2013 until progress of the Plan through quarterly APRA Bank Superannuation transition completed reporting of SRF 410.0 Fund Pty Ltd Since

Dec 14 - Finance Team

July I August 2014 In conjunction with 6-monthly member statements, National Australia provide information to members with an ADA as Bank Superannuation specified in the Corporations Regulations 2001 Fund Pty Ltd Since

Dec 14 - Operations Team

December 2015 PFS Nominees Pty Ltd review of the revised Corporate Super Transition Plan and status of implementation Product T earn

March 2016 Implementation of a process for investing defined Corporate Super benefit members' default assets at the time of Product I Operations converting to accumulation. Team

Completed by the Trustee:

ii' - - - iF' - --.. - • ., .. . . ltlh , .... - - -July 2016 Provide members with a SEN regarding the proposed ADA Transition

move of ADAs directly to NAB Staff MySuper at least Project Team 90 days prior to the expected transfer for members who hold ADA in Choice investment options


5 November 2016 If no contrary instruction is provided by the member ADA Transition within three months of the date of providing the Proj ect Team and specified information, the Trustee moved the Asset Management member's ADA to NAB Staff MySuper within 120 days of providing the specified information to an affected member, in accordance with legislative, prudential and regulatory requirements

April 2017 A Post Implementation Review of the transition ADA Transition process will be undertaken following the completion Proj ect Team of all ADA transitions in accordance with the Projects at NAB process

May 2017 Final Trustee review of the Plan and status of Product T earn implementation




NAB.005.734.0023

MySuper Transition Plan · WASF) and National Australia Bank Group Superannuation Fund A (NABGSF)...

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Transcript of MySuper Transition Plan · WASF) and National Australia Bank Group Superannuation Fund A (NABGSF)...