willis towers watson - 2019 annual report...towers watson australia pty ltd has arrangements in...

2019 Annual ReportTowers Watson Superannuation Fund

1 willistowerswatson.com

Read more:Time for your annual super check .............................................................3

Review our performance ...............................................................................5

How we invest your super..............................................................................8

What’s new in super ? .................................................................................... 15

About your Fund ............................................................................................. 19

Financial summary ......................................................................................... 21

Welcome to your 2019 Annual Report for members of the Towers Watson Superannuation Fund (ABN 93 268 215 348).

The Fund’s investments ended the year on a positive note, despite another year of ups and downs in investment markets. Impacting the returns of markets were factors like geopolitical risks, for example uncertainty over Brexit and the trade war between the US and China.

During the year, there were some changes to the Directors of Wycomp Pty. Limited, the Trustee of the Fund (see page 19 for details). We thank outgoing Directors Andrew Boal and Alex O’Dea and welcome David McNeice and Tracy Polldore to the Board.

You can also read more on pages 15 and 16 about the “protecting your super” changes which came into effect on 1 July 2019. These legal measures were introduced to protect small or inactive superannuation accounts from erosion by fees.

The Fund is designed to help you grow your retirement savings so you can have the retirement you are wanting. If you have questions about your super, we are here to help – please contact the Fund Administrator on 1800 127 953. You can also visit https://super.towerswatson.com/super/twsf to learn more about the Fund.

A message from the Trustee

The information in this document is general information only and does not take into account your particular objectives, financial circumstances or needs. It is not personal or tax advice. Any examples included are for illustration only and are not intended to be recommendations or preferred courses of action. You should consider obtaining professional advice about your particular circumstances before making any financial or investment decisions based on the information contained in this document. Information on tax and superannuation legislation is current as at 1 July 2019 and may change.

Issued by Wycomp Pty. Limited (ABN 33 002 101 377), as Trustee of the Towers Watson Superannuation Fund (ABN 93 268 215 348). Preparation of this Annual Report was completed on 31 October 2019.

2 2019 Annual Report

Our performance

Note: Investment returns are net of tax and investment fees.

* Defined Benefit assets are invested in the Growth option.

Another volatile year for investments ended on an up. Past performance is not necessarily a reliable indicator of future performance.

$37,365,602 in Fund assets

Is it time for your super health check? See page 3 to learn more about what you can do to stay on track

1800 127 953Contact us

https://super.towerswatson.com/super/twsf

What’s new in super this year? – see page 15

204 members have benefits in the Fund

0

1

2

3

4

5

6

7

8

Five-year compound average net return to 30 June 2019 per year

Year to 30 June 2019

CashModerateBalancedGrowth*Aggressive

6.4% 6.5%

6.5%

5.8% 6.

1%

5.0

% 5.5%

4.0

%

1.8%

1.7%


Time for your annual super check

Are you super savvy or do you need some tips so you can be? Annual Review time is a good opportunity to review your super arrangements to ensure you are getting the most from your super.

Can you contribute more?

Making voluntary contributions is a good way to boost your final balance from the Fund. You have the choice of making contributions from your before-tax salary (subject to Company approval) or after-tax salary.

There may be tax advantages to making contributions before tax. Just be aware of the Government’s caps which limit the amount you can contribute to super at reduced (concessional) tax rates. See the Product Disclosure Statement for details on the current caps. In certain circumstances, you may also qualify for a co-contribution from the Government to boost your super account.

To arrange contributions, or increase your existing level of voluntary contributions, you should complete an Application to make Voluntary Contributions. You can also learn more about voluntary contributions by reading the Super Guide.

Is your super invested the right way for you?

If you are an Accumulation member, you can choose how your entire super is invested. If you are a Defined Benefit member, you only have investment choice for your Accumulation accounts, additional voluntary contributions and rollover accounts. The Fund offers five investment options for your super – Aggressive, Growth, Balanced, Moderate and Cash. You can change how your super is invested as your investment needs and life stages change.

You can learn more about these options by reading the Investment Guide. Or, for the latest performance information on each of the investment options and asset classes, refer to pages 5 to 7 of this Annual Report. To make or change your investment choice, simply complete an Investment Switching form or log into the Member Centre.

Have you combined your super?

Are you struggling with a number of small superannuation accounts? Perhaps you’ve changed jobs a few times over the years and your super is now invested in several different funds. If so, consider consolidating them into one account in the Fund and save yourself both fees and the hassle of having to keep track of your super.

There are no fees for rolling amounts into the Fund. However, before transferring any super, check the Product Disclosure Statement(s) of your other fund(s) to see if you will lose any valuable benefits such as insurance cover.

It’s easy to arrange a super “rollover” from another super fund into the Fund. Complete a Transfer Request Form and send it to the administrator of the other fund(s) or log into the Member Centre to roll over online. Your benefit will then be transferred to the Fund.

Do you have enough insurance?

One of the Fund’s important features is that it may provide an insurance payment if you die or are totally and permanently disabled*. The Fund also offers voluntary insurance for eligible members which allows you to apply to purchase extra cover. This feature provides you and your loved ones with important financial protection, particularly if you have a large mortgage or other expenses. See the Super Guide for details of the terms and conditions that apply.

* Note: Casual employees and permanent part-time employees who work less than 15 hours per week are entitled to insurance cover for death and terminal illness only. There is no total and permanent disablement cover available.


Is your beneficiary nomination up to date?

By keeping your beneficiary nomination current, the Trustee has a guide as to how you would like your super benefit to be paid should the unexpected happen. The Fund offers both binding and non-binding beneficiary nominations. The main difference between them is that a binding nomination obliges the Trustee to pay your benefit according to your instructions, while a non-binding nomination means that the Trustee will consider your circumstances at the time of your death before deciding how your benefit will be paid. If you have previously made a binding nomination, check it hasn’t expired as they are valid for only three years.

Remember that the Fund’s rules generally allow your death benefit to be paid to:

�� your spouse (including your de facto or same sex partner),

�� your children (including children of your spouse),

�� your legal personal representative (your estate), or

�� any person who is dependent on you or in an interdependency relationship with you.

You can find out more by reading the Super Guide.

Complete the Nomination of Beneficiaries Form and return it as directed to make or change your beneficiary nomination.

Get some advice

As part of your super review, you may benefit from discussing your situation with a licensed financial adviser. This can be helpful if you are not sure about how to invest your super, how much insurance you need or the level of contributions you should make. They can help you get on track to meet your personal goals and individual circumstances.

For tips on finding a financial adviser, how to prepare for meetings and what to expect, you can use the interactive “Financial advice toolkit”. Go to www.moneysmart.gov.au and enter “Financial advice toolkit” in the search bar.

Towers Watson Australia Pty Ltd has arrangements in place to help you with your financial planning. Discounted fees are available for employees of Willis Towers Watson and associated employers. To speak to one of Willis Towers Watson’s licensed financial advisers, contact Susan Rio on (03) 8681 9800.

Finding the information and forms you need

To complete your super review, you can view or download any of the publications or forms mentioned in this article by visiting https://super.towerswatson.com/super/twsf. However, if there’s something you can’t find or if you have a question, call the helpline on 1800 127 953.


The table below shows the Fund’s investment returns. Your super performance will fluctuate each year depending on how investment markets perform. Super returns can be either positive or negative. In most cases though, super is a long-term investment. For instance, returns earned over a period of 10 years, instead of one or two years, are likely to better indicate your super’s performance.

If you are a Defined Benefit member, the defined benefit part of your retirement benefit is generally not affected by investment performance.

You can also see your investment returns on your Personal Statement of Benefits or on the website at https://super.towerswatson.com/super/twsf by logging into the Member Centre.

Review our performance

A history of your returns

Past performance is not necessarily a reliable indicator of future performance.

Investment option

2019 2018 2017 2016 2015 Five-year compound average

net return (per year)

10-year compound average

net return (per year)

Aggressive 6.39% 7.55% 11.11% 0.23% 7.59% 6.51% 6.77%*

Growth 6.47% 6.35% 8.96% 0.93% 6.50% 5.81% 8.17%

Balanced 6.13% 5.21% 7.02% 1.23% 5.37% 4.97% 5.27%*

Moderate 5.53% 3.87% 4.96% 1.46% 4.19% 3.99% 4.22%*

Cash 1.78% 1.63% 1.66% 1.80% 1.73% 1.72% 1.73%*

CPI 1.59% 2.08% 1.93% 1.02% 1.51% 1.63% 2.14%

Returns are for periods to 30 June, unless otherwise stated.

Note: Investment returns are net of tax and investment fees.

* The Aggressive, Balanced, Moderate and Cash options commenced on 1 December 2013, so the 10-year compound average net return shown is for the five year and seven-month period from inception to 30 June 2019.

Investment update

The 2018/19 financial year provided a mix of positive and negative headlines. These ranged from the persistent threat of a US and China trade war which resulted in tariffs imposed from both sides in September, to failed Brexit negotiations resulting in Theresa May’s resignation in June, falling bond yields and surprisingly strong share markets.

The US Federal Reserve raised the target range for interest rates in September, coinciding with an unemployment rate of 3.7% which was then the lowest reading recorded since December 1969. The committee also reaffirmed an outlook for gradual interest rate increases in 2019. US inflation was relatively constant over the 2018/19 financial year.

The US share market (as measured by the S&P 500) rallied to produce a return of 7.9% over the financial year in local currency terms. The US market started the financial year on a positive note on the back of solid economic growth and unemployment data.


It then saw a near 20% sell off during the last quarter of 2018 but rebounded in the following quarter, despite the Federal Reserve lowering its projections for US growth and inflation as well as expectations for interest rate increases. The market continued its positive run into 30 June, despite a short sell off in May.

Economic data in the Eurozone was mixed over the 2018/19 financial year. While unemployment data was positive over the period, manufacturing indicators fell over the same period, as did GDP growth. As a result, the European Central Bank kept interest rates at 0% throughout the entire period, with ECB President Mario Draghi stating that interest rates “could fall even further into negative territory if needed”.

Unsurprisingly, Brexit uncertainty continued to take centre stage as far as economic and political news was concerned. Numerous Brexit issues led to the UK Prime Minister’s resignation in June 2019. UK GDP grew on an annualised basis between July 2018 and the March 2019 quarter. Likewise, unemployment data improved over the financial year, whilst inflation decreased marginally from 1.9% to 1.7% over the period.

Brexit uncertainty coupled with a softer global growth outlook weighed on UK and Eurozone shares over the financial year. The FTSE All-Share Index finished the first half of the financial year down 11.0% in local currency terms, before recouping losses to finish the 12 months +0.6% in local currency terms. The Euro Stoxx 50 Index followed a similar trend, ending the year up 2.3% in local currency terms.

In China, policy makers unveiled measures including increased spending, tax cuts, stabilising employment and boosting consumption. These measures, together with continuing talks over trade issues between President Xi and President Trump, gave comfort to investors. GDP growth in China, as expected, steadily declined, as did core inflation, which fell over the year to June 2019. Unemployment improved over the last financial year, ending at a record low of 3.7% at the end of the March quarter.

In Australia, housing markets in Melbourne and Sydney were weak over the financial year, and building approvals significantly lower. The Reserve Bank of Australia (RBA) Board cut the cash rate to a record low of 1.25% and then again in July 2019, to 1%. The RBA Board’s June minutes noted that inflation had been lower than the 2 to 3% target range for three years, which partly reflected slow wages growth, pressure in retail consumption and weak growth in rents. Inflation fell below expectations and unemployment stood at 5.2% as at May, down 0.1% from 12 months earlier.

The Australian share market followed the trend of international shares, with the ASX 300 Accumulation Index returning 11.4% over the 2018/19 financial year. Shares rallied strongly into June after the Coalition defeated Labor to hold government for another term. Telecommunications were the best performing sector, returning nearly 40%, whilst energy stocks dropped by around 6.1%.

The Australian 10-year bond yield ended the year down at 1.32% in June, from 2.63% a year earlier. Australian fixed interest returned 9.6% for the year (Bloomberg AusBond Composite Bond Index (All Maturities)). Australian cash, as measured by the Bloomberg AusBond Bank Bill Index, returned 2.0% for the financial year.

The Australian dollar (AUD) fell 4.0% against Australia’s major trading partners, as measured by the Trade Weighted Index. Over the financial year, the AUD depreciated by 5.11% against the USD.

Note: This investment commentary does not constitute advice. All investment figures quoted relate to before-tax performance of the relevant industry benchmark. © 2019 Willis Towers Watson. All rights reserved.


Returns on your super

Accumulation membersYour accounts receive the actual investment return for your chosen option after allowing for tax and investment fees. The monthly returns for each investment option are shown in the table below.

Investment returns can be positive or negative.

Defined Benefit membersYour leaving service and retirement benefits are generally not affected by investment returns. These benefits are instead linked to your salary at or near the time of ceasing employment. However, any additional accumulation contributions and rollover accounts you have are affected by investment returns, whether positive or negative.

As a Defined Benefit member, investment returns (net of tax and investment fees) for your chosen investment option (or the Growth option if you have never made a choice for these accounts) are applied to your Accumulation accounts, additional voluntary contributions and rollover accounts.

Note: Surcharge payments (if any) are deducted from members’ benefits.

If you leave during the yearIf you are an Accumulation member, your super remains invested in your chosen investment option until the date your benefit is paid from the Fund.

It will receive the relevant net earnings rate of your chosen investment option (which may be positive or negative).

If you are a Defined Benefit member, there are two parts to your benefit. Your defined benefit (including any surcharge account) is converted to cash at the date of ceasing employment and receives net earnings at the cash rate until the date of payment. Any additional voluntary contributions or rollover accounts you may have remain invested in your chosen investment option (or the Growth option if you have never made a choice for these accounts) until the date your benefit is paid from the Fund. They will receive the relevant net earnings rate (positive or negative) of your chosen investment option.

If you leave the employment of Willis Towers Watson your super cannot stay in the Fund. You will need to choose another fund to roll over your benefit to, or take some or all of your benefit in cash if you satisfy the preservation rules (see page 18 under “When can I access my super?”). Otherwise your benefit will be moved to the Eligible Rollover Fund (see page 20).

Interim crediting rate If you switch investment options or make a withdrawal or rollover from your account or leave employment, an interim crediting rate will be applied to the part of your account that you‘re switching or withdrawing to calculate investment returns at that time.

Monthly returns

Aggressive Growth Balanced Moderate Cash

July 2018 1.09% 0.86% 0.65% 0.43% 0.17%

August 2018 1.04% 0.86% 0.69% 0.48% 0.15%

September 2018 -0.26% -0.22% -0.14% -0.04% 0.14%

October 2018 -3.82% -2.86% -1.96% -0.94% 0.15%

November 2018 -0.51% -0.29% -0.16% -0.04% 0.14%

December 2018 -1.46% -1.00% -0.54% 0.01% 0.13%

January 2019 3.08% 2.57% 1.95% 1.15% 0.16%

February 2019 2.88% 2.32% 1.79% 1.21% 0.16%

March 2019 1.09% 1.18% 1.12% 0.97% 0.14%

April 2019 1.81% 1.43% 1.11% 0.76% 0.15%

May 2019 -1.33% -0.74% -0.32% 0.12% 0.14%

June 2019 2.82% 2.30% 1.86% 1.32% 0.12%

Year to 30 June 2019 6.39% 6.47% 6.13% 5.53% 1.78%


The Fund has five investment options for you to choose from, each with a different set of investment objectives and strategy.

If you are an Accumulation member, you can choose how your entire super is invested. If you are a Defined Benefit member, you only have investment choice for your Accumulation accounts, additional voluntary contributions and rollover accounts.

See pages 9 to 13 to read about the investment objectives and strategy of each option. More information on the Fund’s investment managers is to the right.

Our investment objectives

Investment objectives are specific goals that the Trustee sets for the performance of the Fund and each investment option. They are not intended as forecasts or guarantees of future investment returns.

In general, the Trustee aims to:

�� Invest the Fund’s assets prudently as permitted by the Trust Deed and by superannuation law,

�� Invest across a diverse range of assets,

�� Ensure that the Fund is able to make benefit payments to members when they are due, and

�� Monitor the performance of the Fund’s investment managers to ensure they exercise integrity, prudence and professional skill in fulfilling the investment tasks delegated to them.

See pages 9 to 13 to learn more about the specific investment objectives for each investment option.

Our investment strategy

An investment strategy is the plan the Trustee follows to achieve the objectives of an investment option. Each investment option has its own investment strategy. For details, see pages 9 to 13.

Investment managers

The Trustee appoints professional investment managers to manage the Fund’s investments. These managers and their products may be changed from time to time without prior notice to, or consent from, members.

There have been some changes to the Fund’s managers. The iShares Hedged International Equity Index Fund replaced the MFS Fully Hedged Global Equity Trust in January 2019. The Northcape Capital Core Australian Shares Fund replaced the Karara Australian Equities Fund in July 2019. The Fulcrum Diversified Absolute Return Fund replaced the K2 Advisors Diversity Fund in August 2019. On 30 June 2019 the K2 Advisors Diversity Fund investment proceeds were in the Fund’s bank account awaiting transfer to the Fulcrum Diversified Absolute Return Fund.

Amounts invested with the Fund’s investment managers at 30 June 2018 and 30 June 2019 were:

How we invest your super

$ mil

2019 2018

Arnhem Core Australian Equity Fund 0.0 2.1

Alphinity Australian Share Fund 1.5 0.0

GQG Partners Global Equity Fund 3.3 2.5

Karara Australian Equities Fund 1.0 1.9

Vinva Australian Equities Fund 1.7 1.9

MFS Fully Hedged Global Equity Trust 0.0 2.5

iShares Hedged International Equity Index Fund

2.3 0.0

K2 Advisors Diversity Fund 0.0 3.5

Polaris Global Equity Fund 2.8 2.8

Macquarie True Index Australian Fixed Interest Fund

3.4 3.5

Schroder Real Return Fund 4.7 4.7

Ardea Inflation Plus Fund 3.3 3.5

iShares Emerging Markets IMI Equity Index Fund

1.2 1.2

AQR Global Risk Premium Trust Class A 4.1 3.9

Colonial First State Wholesale Institutional Cash Fund

0.7 0.7

Resolution Capital Global Property Securities Fund

1.8 1.9

ICG Australia Senior Loan Fund 1.8 1.4


Aggressive

What are the investment objectives for this option?

�� To invest purely in return-seeking assets in order to achieve a higher return than the Growth option over the long term, accepting that annual returns will vary considerably and be significantly negative quite frequently.

�� To achieve a return (net of tax and investment fees) that exceeds the increase in CPI by at least 3.5% p.a. over moving 10-year periods.

�� To limit the probability of achieving a negative gross of tax return over moving one-year periods to approximately five years in 20.

What investment strategy does this option use?

�� To invest totally in return-seeking assets, which includes Australian shares, international shares, emerging market shares, property, hedge funds, multi asset funds and alternative credit.

How was the option invested at 30 June?

2019 2018

Investment options

Range %

Australian Shares 13.3 – 17.3

International Shares (unhedged) 21.3 – 25.3

International Shares (hedged) 5.8 – 9.8

Emerging Market Shares 2.6 – 6.6

Fund of Hedge Funds –

Global Listed Property 3.0 – 7.0

Multi Asset Funds 35.0 – 39.0

Alternative Credit 5.0 – 9.0

Australian Fixed Interest –

Australian Inflation-linked Bonds –

Cash –

CSH

AIB

AFI

ALC

MAS

GLP

FHF

EMS

ISH

IS

AS

CSH

AIB

AFI

ALC

MAS

GLP

FHF

EMS

ISH

IS

AS

27.3%

6.7%

9.3%*

5.0% 4.9%4.8%

9.3%8.1%

20.6%16.0%

18.3%22.5%

5.0%

36.4%

0.5% (Cash) 5.3%

*As at 30 June 2019, this option no longer invests in Fund of Hedge Funds.


Growth


�� To invest in a broadly diversified range of investments that will achieve a better return than the Balanced option over the medium to long term, accepting that annual returns will vary quite widely and be negative on occasions.


�� To limit the probability of achieving a negative gross of tax return over moving one-year periods to approximately five years in 20.


�� To invest largely in shares, property, hedge funds, multi asset funds and alternative credit (approximately 80%) with the balance in fixed interest investments.


2019 2018

Range %









Australian Fixed Interest 8.0 – 12.0

Australian Inflation-linked Bonds 8.0 – 12.0

Cash –

C

AILB

AFI

AC

MAS

GLP

FHF

EMS

ISH

IS

AS

C

AILB

AFI

AC

MAS

GLP

FHF

EMS

ISH

IS

AS

10.1% 10.0%

4.9%

5.0%

3.1%3.2%

11.9%15.6%

6.1% 7.0%

10.3% 9.9%

31.8%

22.7%

16.6%13.7%

9.3%*

4.7% 3.6%

0.5% (Cash)



Balanced


�� To invest in a broadly diversified range of investments that will achieve a better return than the Moderate option over the medium to long term, accepting that annual returns will vary quite widely and be negative on occasions.


�� To limit the probability of achieving a negative gross of tax return over moving one-year periods to approximately four years in 20.


�� To invest largely in shares, property, hedge funds, multi asset funds and alternative credit (approximately 60%) with the balance in fixed interest investments and cash.


2019 2018

Range %











Cash 8.0 – 12.0

C

AILB

AFI

AC

MAS

GLP

FHF

EMS

ISH

IS

AS

8%

18%

10%

13%11%

26%

5%9%

C

AILB

AFI

AC

MAS

GLP

FHF

EMS

ISH

IS

AS

10.0%10.5%

14.9%15.4%

15.0%15.1%

20.0%26.4%

6.8%*

3.0%

3.0%

9.7%11.1%

10.6%8.4%

2.3%2.2%

5.0%4.3%

2.7%3.6%



Moderate


�� To provide a better return over the medium term than the Cash option, while accepting a small chance of a negative annual return.


�� To limit the probability of achieving a negative gross of tax return over moving one-year periods to approximately three years in 20.


�� To invest largely in fixed interest investments and cash with the balance (approximately 35%) largely in shares, hedge funds, multi asset funds and alternative credit.


2019 2018

Range %






Global Listed Property –





Cash 23.0 – 27.0

C

AILB

AFI

AC

MAS

GLP

FHF

EMS

ISH

IS

AS

C

AILB

AFI

AC

MAS

GLP

FHF

EMS

ISH

IS

AS

25.0%25.2%

13.6%17.6%

19.9%

20.1% 20.0%

20.5%

4.3%*

3.0%

5.6%4.9%

1.4%1.3%

5.7%2.5%

1.5%2.2%

5.7%



Cash


�� To ensure that the amount invested will not decrease in value at any time.

�� To achieve a return (net of tax and investment fees) that exceeds the increase in CPI over moving 10-year periods.

�� To have a minimal probability of achieving a negative gross of tax return over 20 years.


�� To invest only in secure short-dated bond-type investments, such as bank deposits, bills, mortgages, floating-rate notes and short-dated bonds.


2019 2018

100.0% 100.0%

Range %

Cash 100.0


Other investment information

DerivativesThe managers of the Fund’s investments in multi-asset strategies (Schroder Real Return Fund, AQR Global Risk Premium Trust Class A and Fulcrum Diversified Absolute Return Fund), which in total represent approximately 25.8% of the Fund’s invested assets at 30 June 2019, may make use of derivatives to assist in achieving their return and risk objectives. The managers do not hold uncovered derivatives. The Fund’s other investment managers only use derivatives for risk-control purposes or to more efficiently shift asset allocations.

Investment managers are required to have risk management processes in place in relation to the use of derivatives and the purposes for which they are used. Each year, the Trustee obtains confirmation from the managers that they have complied with their processes.

Actuarial reviewThe Fund’s financial position is reviewed by the actuary at least every three years. The actuary then makes recommendations to the Company on the appropriate level of future contributions needed to maintain members’ benefits.

The most recent review was completed effective 30 June 2016 and showed that the Fund was in a satisfactory financial position. The 2019 review will be completed by 31 December 2019. The Company continues to contribute in line with the actuary’s recommendations.

Reserves The Trustee does not maintain investment reserves. However, super funds are required to set aside financial resources to address operational risks.

An Operational Risk Financial Requirement (ORFR) reserve of 0.25% of net assets has been set aside out of the Fund’s Defined Benefit assets for this purpose. The ORFR reserve is invested in the same way as the Growth option.

The desired level of 0.25% has been reached. The Trustee will periodically monitor the reserve to ensure that it remains close to this level. Should the reserve fall below a predetermined shortfall limit, the Trustee will enact a plan for its replenishment. The Trustee will update members annually on the status of the reserve.

Level of reserve

As at 30 June ORFR reserve % of net assets

2019 0.27%

2018 0.25%

2017 0.25%


“Protecting your super” changes

The 2018 Federal Budget proposed some measures to help protect small or inactive superannuation accounts from erosion by fees, including insurance fees. Below is a summary of some of the key measures that took effect from 1 July 2019.

Most Fund members will not be affected by the changes. This is because the Company pays standard insurance and administration costs on behalf of Accumulation members. The changes are also not applicable to Defined Benefit members.

What’s new in super?

What’s changing? What does this mean for Fund members?

Category D and Category B members

Insurance Only members

Exit fees

Super funds are no longer able to charge exit fees. An exit fee is generally a fee to recover the costs when you withdraw or transfer money out of a fund.

No change. The Fund did not charge exit fees.

3% cap on certain fees for small accounts

Account balances less than $6,000 will be subject to a 3% per year cap on the amount of administration and investment fees that can be charged.

No change. The Company pays for administration fees on your behalf.

Also, the Trustee has already negotiated investment fees which fall under the cap.

Not applicable.

‘Inactive’ members and insurance cover

If your account has been ‘inactive’ for a continuous period of 16 months, a fund can only provide you with insurance cover if you have elected to receive the insurance cover.

You are considered to be ‘inactive’ if you have not had any contributions or rollovers into your account over the relevant period. Super funds are required to write to you to warn you that your insurance cover will stop, unless you elect for the cover to continue.

Likely no impact.

It would be rare for members to meet the definition of inactive, since WTW makes compulsory SG contributions to the Fund and pays for standard insurance cover on their behalf.

Likely no impact.

It would be rare for members to meet the definition of inactive, since WTW pays for insurance cover on their behalf.


Royal Commission update

In February 2019, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report. A number of recommendations were made for the superannuation industry, which have been endorsed by both the Government and the Opposition. However, it is still a long way before the recommendations can be turned into actions, as legislation will need to be passed.

The Trustee does not expect any significant changes to the Fund as a result of the recommendations. This is because the Towers Watson Superannuation Fund is a not-for-profit fund, sponsored by Willis Towers Watson and run for the benefit of employees. We will keep you informed of developments.

What’s changing? What does this mean for Fund members?

Category D and Category B members

Insurance Only members

Small inactive accounts

Inactive accounts that are less than $6,000 will be required to be paid to the ATO. The ATO will consolidate your small inactive accounts within 28 days after they are satisfied they have correctly identified an active super account for you.

It is important to note that the definition of ‘inactive’ is different to the insurance test mentioned on page 15. Generally, you will not be considered ‘inactive’ if you have made a contribution or rollover, an investment change, lodged a binding nomination or made a change to your insurance.

Likely no impact.

It would be rare for members to meet the definition of inactive, since WTW makes compulsory SG contributions to the Fund and pays for insurance cover on their behalf.

Likely no impact.

It would be rare for members to meet the definition of inactive, since WTW pays for insurance cover on their behalf.


What are the latest super thresholds?

Super thresholds are usually set by the Government from 1 July each year. Below are some for 2019/20.

Government co-contributionsUnder the co-contribution scheme, the Government pays up to fifty cents for every dollar of after-tax contributions you make to your super if you earn less than $38,564 a year. The maximum co-contribution is $500 per year, which reduces by 3.33 cents for every dollar of income above $38,564, with no co-contribution payable once your annual income reaches $53,564. If you qualify for the co-contribution, the Australian Taxation Office (ATO) automatically pays it to your account in the Fund after processing your annual tax return.

What are concessional and non-concessional contributions? If you are an Accumulation member, concessional contributions include the Company’s contributions and any contributions you make from your before-tax salary (by salary sacrifice). Any administration and insurance fees the Company pays for you are also concessional contributions.

If you are a Defined Benefit member, concessional contributions include notional contributions in respect of your defined benefit (rather than the Company’s actual contributions) which the Fund Administrator reports to the ATO each year. The notional contribution is determined by the Fund’s actuary using a formula set by the Government. Any additional contributions that you pay from your before-tax salary and any Company accumulation contributions also count towards your concessional contributions.

Contributions you make from your after-tax salary are an example of non-concessional contributions, along with amounts you transfer from overseas funds (except to the extent an election applies to them to be taxed in the fund), excess concessional contributions (except if they are refunded to you) and certain other less common amounts.

Concessional contributions

Non-concessional contributions#

What is the annual limit?

$25,000## regardless of your age

$100,000, however, if your total superannuation balance on 30 June 2019 was more than $1.6 million any non-concessional contributions you make in the 2019/20 year will be excessive

What tax applies if my contributions are within the cap?

Generally 15% contributions tax*^

Nil

# If you are under age 65 and you want to make larger non-concessional contributions to your superannuation fund, you may be able to bring forward up to two years of caps, to make total contributions of up to $300,000 over three years. The maximum you can contribute over three years is $300,000 and further restrictions may apply if your total superannuation balance on 30 June 2019 was greater than $1.4 million.

## From 1 July 2019, you may be able to make extra concessional contributions above the cap, if you did not use all of your concessional cap in the 2018/19 year. This option is only available if your total superannuation balance on 30 June 2019 was less than $500,000. Unused cap amounts can be carried forward for a maximum of five years.

* If your relevant income is over $250,000 per year, you may receive an additional tax assessment from the ATO.

^ If you earn less than $37,000 per year you may receive a refund of the 15% contributions tax deducted from your compulsory Company contributions through the low income superannuation tax offset. The refund ranges from $10 to $500 a year. Each year the ATO will determine whether you are eligible, and if so, will pay the refund to your superannuation fund.

Contribution capsContribution caps are limits the Government sets on the amount of super contributions each year which can receive concessional tax rates. The caps are shown in the table below.


What happens if I exceed the caps? This table shows the extra tax applicable if you exceed the caps.

If you exceed the concessional contributions cap, you can elect to release up to 85% of the excess contributions from the superannuation system. The amount will be paid by your superannuation fund to the ATO and used to meet any of your outstanding tax liabilities (including the tax on the excess contributions) with the remainder then paid back to you. Amounts that you withdraw will not count towards your non-concessional contributions cap.

If you exceed the non-concessional cap, you can elect to release the excess contributions from superannuation, together with an amount of “associated earnings”. The amount of associated earnings is determined by the ATO and may not reflect what your superannuation contributions actually earnt.

The ATO will send you a form to enable you to make your elections.

When can I access my super? Your super generally must be preserved in the superannuation system until you retire (or satisfy another condition of release). This means you can’t take your super money out to spend or invest in a non-super environment. Generally, you can only take your benefit in cash when you:

�� Reach age 65,

�� Retire on or after your preservation age (see table below),

�� Leave your employment at age 60 or over,

�� Die or become totally and permanently disabled or have a terminal medical condition,

�� Satisfy a condition of release on “compassionate grounds” (by applying to the ATO) or due to “financial hardship”, or

�� Leave your employment and your benefit entitlement is less than $200 (the minimum limit under the law).

Your preservation age depends on when you were born, as shown in the following table.

For more information, refer to the Fund’s Product Disclosure Statement available on the website at https://super.towerswatson.com/super/twsf.

What are associated earnings?An amount that the ATO calculates using a prescribed interest rate. It may not reflect the actual earnings on the contributions in the Fund.

Preservation age

Date of birth Preservation age

Before 1 July 1960 55

Between 1 July 1960 and 30 June 1961 56




On or after 1 July 1964 60

Concessional contributions

Non-concessional contributions

How much tax applies to the excess if I exceed the limit?

Your marginal tax rate less 15% (reflecting tax already paid by the Fund), plus an interest charge

If you withdraw the excess from superannuation: Nil tax on contributions. Associated earnings taxed at your marginal tax rate

If you leave the excess in superannuation: Up to 47%


About your Fund

The Trustee manages the Fund and uses several advisers who provide their services to the Fund.

Who is your Trustee?

Wycomp Pty. Limited (ABN 33 002 101 377) (Wycomp) is responsible for managing the Fund. The sole purpose of Wycomp is to be the Trustee of the Fund. The Trustee’s responsibilities are carried out by a Board of four directors. Half the directors are appointed by Towers Watson Australia Pty Ltd (TWA) and half are elected by Fund members.

At 30 June 2019, the directors were:

Following Andrew Boal’s resignation from the Board in January 2019, TWA appointed David McNeice to take over Andrew’s former position as Company-appointed Director. Tracy Polldore was elected in April 2019 to fill the remainder of the vacant term which arose after Alex O’Dea’s resignation earlier in 2019. The next election will take place in June 2020.

Wycomp is a subsidiary of Towers Watson Australia Pty Ltd (ABN 45 002 415 349, AFSL 229921), who also acts as Administrator (via an outsourced arrangement), actuary, internal auditor and secretary to the Fund.

How to contact the Trustee Towers Watson Superannuation Fundc/- Wycomp Pty. LimitedLevel 16, 123 Pitt StreetSydney NSW 2000Phone (02) 9285 4000

Indemnity insurance

The Trustee is currently covered by a Trustee Professional Indemnity insurance policy that protects the Fund’s assets from a legal liability to the extent allowed by law and the policy conditions.

Who advises the Fund?

The following organisations provide specialist services to the Trustee.

How can you resolve any problems or concerns?

Although our aim is to ensure that the Fund’s level of service meets your expectations, sometimes problems may arise. If you have an enquiry or complaint, you should contact the Fund Administrator (see page 22 for contact details). Privacy-related enquiries should also be directed to the Fund Administrator.

The Trustee has a formal process for reviewing enquiries and complaints if you are not satisfied with the response you receive. To make a formal enquiry or complaint, please obtain an Enquiry and Complaint Form from the Fund Administrator. The Trustee will respond to you within 90 days. You can request the Trustee’s reasons for its decision on your complaint. A copy of the Trustee’s Enquiries and Complaints Policy and Form is also available from the Fund Administrator or can be downloaded from the Fund’s website.

If you are not satisfied with the Trustee’s response, you may contact the Australian Financial Complaints Authority (AFCA), except in relation to privacy-related matters. AFCA provides fair and independent financial services complaint resolution that is free to consumers.

Consultant and actuary

Towers Watson Australia Pty Ltd

Administrator Towers Watson Australia Pty Ltd (outsourced to Australian Administration Services Pty. Limited ABN 62 003 429 114 a Corporate Authorised Representative (No. 307946) of Pacific Custodians Pty Limited ABN 66 009 682 866, AFSL 295142)

Investment consultant

Towers Watson Australia Pty Ltd

External auditor

Crowe

Insurer Hannover Life Re of Australasia

Company-appointed Member-elected

Brad Jeffrey Tracy Polldore

David McNeice Chris Porter


There are some complaints that AFCA cannot consider, such as complaints relating to the management of the Fund as a whole. In addition, time limits may apply. Please contact the Fund Administrator on 1800 127 953 or refer to AFCA’s website at www.afca.org.au as soon as possible for further information.

You can contact AFCA at:

Australian Financial Complaints Authority GPO Box 3 Melbourne VIC 3001 Email: [email protected] Tel: 1800 931 678

You can direct complaints about your privacy that have not been resolved to your satisfaction to the Office of the Australian Information Commissioner (OAIC). The OAIC can be contacted on 1300 363 992 or [email protected].

What will happen if you leave?

If you leave your employer or choose another super fund, the Fund Administrator will ask you how you want to receive your super benefit. The Trustee may roll your benefit over to an Eligible Rollover Fund (ERF) if:

�� You fail to give the Fund Administrator instructions within 90 days of receiving details of your benefit, or

�� The fund you nominate won’t accept your benefit.

The ERF is:

AUSfundLocked Bag 5132Parramatta NSW 2124Phone 1300 361 798Email [email protected] The AdministratorWebsite www.ausfund.com.au

Once your benefit is transferred to the ERF, you stop being a member of the Fund and no longer have any rights under the Fund. You will then need to contact the ERF directly about your benefit. You can also obtain the ERF’s Product Disclosure Statement using the contact details above.

The investment and crediting rate policy of the ERF will be different to those that applied in the Fund. Also, the ERF will not offer any insurance cover. You should seek advice from a licensed financial adviser about whether the ERF is a suitable investment for you.

Do you need to provide proof of identity?

Before you withdraw a benefit from the Fund, you may need to establish your identity by providing certified copies of certain documents. The Trustee may also require additional identification information to verify your identity from time to time.

In some cases, the Trustee may have to disclose information about you to the Australian Transaction Reports and Analysis Centre (AUSTRAC). Due to the sensitive nature of the information, the Trustee is not permitted to inform you when this happens.

Need to know more? Other information about your benefits, such as your choices for contributions, investments and insurance arrangements is available. Refer to your Product Disclosure Statement or Member Booklet. A number of Fund documents, including the Trust Deed and various Trustee policies, are also available on the website.

These documents are available by contacting the Fund Administrator or by visiting https://super.towerswatson.com/super/twsf.


A summary of the Fund’s audited financial accounts for the year to 30 June 2019 is set out below. The full audited financial accounts and auditor’s report are available on request from the Fund Administrator on 1800 127 953.

Financial summary

All contributions due at 30 June 2019 have now been paid to the Fund.

STATEMENT OF FINANCIAL POSITION 2019 $

2018 $

Assets

Cash and cash equivalents 3,809,090 435,921

Receivables and other assets 404,642 845,785

Investments 33,478,021 38,044,281

Deferred tax assets 4,323 4,841

Total assets 37,696,076 39,330,828

Liabilities

Payables (61,788) (47,490)

Income tax payable (54,126) (231,475)

Deferred tax liabilities (214,560) (59,898)

Total liabilities excluding member benefits (330,474) (338,863)

Net assets available for member benefits 37,365,602 38,991,965

Member benefits

Defined contribution member liabilities (11,567,499) (11,001,482)

Defined benefit member liabilities (19,507,218) (22,118,284)

Total member liabilities (31,074,717) (33,119,766)

Financial position (net assets less member liabilities) 6,290,885 5,872,199

CHANGE IN FINANCIAL POSITION DURING THE YEAR 2019 $

2018 $

Interest revenue 22,558 5,408

Investment income 2,461,154 2,481,379

Other income – –

Total expenses (185,850) (203,026)

Net change in member liabilities (1,694,242) (1,305,811)

Income tax (expense)/benefit (184,934) (142,628)

Total change in financial position 418,686 835,322


How you can contact usFor enquiries or any complaints:

Fund AdministratorAustralian Administration Services Pty. LimitedPO Box 1442, Parramatta, NSW 2124

Phone 1800 127 953Email [email protected] https://super.towerswatson.com/super/twsf

Copyright © 2019 Willis Towers Watson. All rights reserved.

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About Willis Towers WatsonWillis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 40,000 employees in more than 140 countries. We design and deliver solutions that manage risk, optimise benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

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