CONTENTS The markets Employer Forum Administration update Reduction in contribution caps Keep us up to date Investment returns Quarterly Superannuation Guarantee (SG) Contributions Would you like to see more of us? Office locations Are you sending your communications to the right place?

February 2010 Welcome In this edition of the Employer Newsletter, we update you on the latest investment trends and we review the main topics raised at the Employer Forum, held on 20 November last year.

We also provide you with several administration updates and reminders, and as usual, we update you on the Energy Industries Superannuation Scheme's investment performance and our forthcoming seminar schedule.

We value your feedback, so please feel free to send us your comments or any suggestions on what articles you'd like to see in future newsletters by emailing: employerservices@eisuper.com.au

The markets

In September 2008, the bankruptcy of Lehman Brothers transformed the financial world. Panic ensued, triggering a run on money-market funds and financial institutions. The global financial crisis has been widely analysed and I won't revisit it here but it is worth remembering how dramatic and severe the crisis was and how close the world financial system came to breaking down.

More than twelve months on from that shock, a number of closely watched indicators have returned to more normal levels: credit markets have started to flow; commodity prices have risen; goods and capital are both flowing more freely once again through the global economy. All this as a result of a globally coordinated government response using all the necessary monetary (interest rates) and fiscal means (essentially government spending or tax cuts) they could muster.

Share markets here and overseas have also recovered from the lows they reached in March 2009. For example, the Dow was up 60% from its March low as at the end of November 2009. The gains we have seen so far can be split into two phases. The initial gain in share markets was the result of the market coming to the view that the world economy was more likely to suffer a recession rather than the expected global depression. From there, a combination of government spending, tax cuts and falling interest rates along with corporate cost-cutting led to an improvement in the prospects for company earnings and this spurred the second leg of the rally. In Australia, the unemployment rate has stabilised at a much lower rate of 5.8% than the 8.5% first anticipated and our resource exports to Asia, as well as commodity prices for those exports, have significantly increased. The RBA has raised interest rates for a record three consecutive months from October this year to 3.75% in December on the back of the improved economic outlook.

The recovery so far is welcome but looking ahead into 2010 we see considerable headwinds that may constrain further economic growth. The share market is in essence a forward looking indicator and its value is based on future expectations of corporate earnings. At current share market levels much of the good news seems to have already been allowed for.

In order for the markets to move higher company earnings will need to start growing again. For this to happen consumers will need to start spending again on goods and services. However, there are several factors that are likely to discourage consumers from spending. First, the increase in unemployment around the world or the fear of becoming unemployed has put a dampener on people's willingness to spend. Second, in the US and parts of Europe we have seen a significant fall in residential property prices and the ability of homeowners to use that equity (which contributed to much of the spending in the recent past) has decreased significantly. Third, financial institutions have suffered significant losses from bad loans and as a result they are lending less and have also made their lending standards more stringent. This has led to businesses cutting back on purchases of new plant, equipment and inventory which all contribute to economic growth.

What this all means is that there needs to be further evidence of stabilisation in unemployment and positive economic growth feeding through to corporate revenues. With the unemployment rate and government debt in the US and Europe at elevated levels and consumers still struggling to reduce their own high levels of personal debt most indicators point to subdued consumer spending and lower corporate profits in 2010. Our view is that 2010 will be a tough year with most of the positive sentiment driven by the more favourable economic outlook for the Emerging Markets and in particular Asia.

The annual EISS employer Forum was held on 20 November 2009 and was well attended. As well as an update on the Scheme by the EISS Fund Secretary, Tony Butcher, Michael Block, GM Investments for FuturePlus, gave an entertaining talk about the prospects for investment markets. Aneesa Samuel, Head of Client Services and Advice for FuturePlus, gave an update about the services that can be provided to employers and the presentation by the administration area focussed on OTE and its impact on the Retirement Scheme salary reporting. Finally the Forum ended with a lively Q&A session which covered a wide range of topics. These forums always provide a valuable opportunity for the exchange of ideas and a chance to focus on any areas that are causing problems or concern. Following the Forum, an Action Arising Table was developed and distributed to all attendees. It will be used to track the progress of items raised at the Forum and a progress report will be included in the next event. The next Forum will be held on 13 August this year and will include a session on the Federal Budget, its implications for super generally and any specific impacts for employers.

Administration update

New members

The Scheme's rules prevent us from creating a new member account without having received a contribution for the account. Please advise of new members when providing their initial contribution rather than providing the new member advice prior to sending the contribution.

You can provide new member details in the contribution file or separately, but if you have a separate new member file, please send it at the same time as your contribution file. Please ensure that you include the new employee's full given names and surname, date of birth, address, date they entered your employ and their Tax File Number.

Contributions

Contributions are only allocated to a member's account when we have received both the money for the contribution and the file or paperwork. This means if you send the money today, but don't send the file or paperwork for two weeks, the money will be allocated to the member's account with the effective date as the date the file or paperwork was received, because we require both pieces of information before we can process the contribution.

When remitting a contribution payment, please ensure that the file you send equals the payment. Please do not send multiple payments with one file or one payment with multiple files. We would prefer that a separate payment be made for each file. The likelihood of human error is reduced when there is a single payment and a single file.

Incorrect arrears/unallocated receipts on Retirement Scheme (Division B) bills

There is currently a defect in the system where the pre-tax defined contributions received after a member exits cannot be processed to the member's account. The system fault prevents these contributions flowing through to the "Contribution Due" section of the bill, thus causing incorrect arrears or unallocated receipts. This defect also stops other contributions being processed for that member - these show as unallocated amounts under "Contributions Received" on page 1 of the bill. This defect is currently being investigated and will be corrected.

Credit and debit arrears for exited members on Division B bills

When an employee ceases employment, contributions are not due for the month the member ceases employment, unless they exit on the last day of the month.

Please review your monthly bill and if there are credits on your bill for employee, employer or basic benefit contributions in respect of exited members you should take these contributions up if you are not already doing so. You can take up credits by adding the exited member to your next contribution file with negative values equal to the credits on the bill.

If you have already done this and the contributions have not been processed due to the defect advised above, please do not resubmit as once the defect is corrected all adjustments will be processed.

We are currently reviewing the employee arrears on the bills, but if there are employer or basic benefit arrears on your bill in respect of exited members you should remit these contributions as they were outstanding at the time the member ceased employment.

If you have already done this and the contributions have not been processed due to the defect advised above, please do not resubmit as once the defect is corrected all adjustments will be processed.

Division B annual salary review spreadsheets are due

In early December, we sent you the "2009 Salary Listing" in an Excel file format, together with explanatory documentation, and asked you to update it as part of the Retirement Scheme's 2009 Annual Salary Review process.

This information is needed to enable us to process the new salaries, combine them with members' newly elected percentage rates and calculate all member contribution rates in time for the new superannuation year commencing 1 April 2010.

If you haven't already done so, please return the salary listing to us as soon as possible.

Reduction in contribution caps

Employers should be aware that employees salary sacrificing may be at risk of exceeding the new contribution caps and of incurring excess contributions tax.

In the May 2009 Federal Budget, the Government halved its cap on the amount of concessional (or pre-tax) contributions members can make to super to $25,000 a year (indexed). This change came into effect on 1 July 2009.

Income that is salary sacrificed as additional superannuation contributions is counted towards the concessional contributions cap, as is the 9% Superannuation Guarantee.

The transitional concessional contributions cap (for members aged 50 and over or who turn 50 before the end of the 2011/12 financial year) has also been reduced from $100,000 to $50,000 per year.

The annual cap on non-concessional or after-tax contributions remains at $150,000 per annum for the 2009/10 financial year. It will in future be calculated as six times the level of the (indexed) concessional contributions cap.

Excess concessional contributions are currently taxed at 31.5% in addition to the standard 15% contributions tax. So, to help your employees avoid any nasty surprises, it's important to review any salary sacrifice arrangements you make on their behalf. Remember that our team is on hand to help you through this process and in communicating these changes to your employees. Just call 1800 636 441 for assistance.

Keep us up to date

Please keep us informed about any changes to your employer contact details or about any changes in personnel. We need to keep our contact information up to date (especially for payroll, HR/Finance Managers, and General Managers) so that we can communicate any important information regarding the Scheme or administrative changes efficiently and to the right people. Any updates can be emailed to: employerservices@eisuper.com.au

Investment returns

December 2009 quarter returns for the Contributor Financed Benefit - Retirement Scheme

Strategy	Quarterly Returns
High Growth	3.7%
Trustee Selection*	2.1%
Diversified	3.1%
Balanced	2.7%
Capital Guarded	2.0%
Cash	0.8%

All figures are shown to one decimal place. Returns may vary slightly between Divisions of the Scheme.
* Available to Retirement Scheme members only.

December 2009 quarter returns for the Accumulation Scheme

Strategy	Quarterly Returns
High Growth	3.3%
Diversified	2.9%
Balanced	2.7%
Capital Guarded	2.0%
Cash	0.8%

All figures are shown to one decimal place. Returns may vary slightly between Divisions of the Scheme.

Quarterly Superannuation Guarantee (SG) Contributions

Under the SG requirements all employers must contribute the minimum level of 9% of each eligible employee's earning base in super support for each financial year. The Superannuation Guarantee contribution is required to be contributed on at least a quarterly basis. From 1 July 2008, your employees' earning base is their ordinary times earnings (OTE).

The following describes the ATO deadlines for employer contributions and the penalties that may apply if employers do not meet them. Energy Industries employers who make monthly contributions in accordance with the Scheme rules will more than satisfy these minimum requirements and will therefore avoid any of the penalties listed.

The ATO imposes penalties if SG contributions are not made by the quarterly cut-off date by applying an SG Charge (SGC)* which is made up of three parts:

• SG shortfall amounts based on OTE
• Interest on that amount (currently 10% per annum)
• Administration fee of $20 per employee per quarter.

If the SGC and the SGC statement are not submitted by the due date for lodgement additional penalties may apply and these are:

• General Interest Charge (GIC) from the SGC due date will be incurred. GIC compounds daily until SGC and accrued GIC are paid in full. The ATO can reduce the penalty. GIC is tax deductible in the year it is incurred.



• An amendment in the SG legislation, from 24 June 2008, means that if an employer makes an SG contribution to a superannuation fund which is late, the employer can elect to have this contribution used to offset against the amount of SG charge they have to pay to the ATO for not meeting their superannuation obligations. Please refer to the ATO website for further information at www.ato.gov.au.



• Penalties may also apply for false or misleading statements, avoidance, failure to provide information or failure to keep SG records.

The following table obtained from the ATO lists the standard cut-off and lodgement dates.

Superannuation Guarantee quarter ended	Cut-off date for Superannuation Guarantee Contributions	Due date for lodgement of a SG statement and payment of the SG charge if contributions are not made on time
1 July - 30 Sept	28 October	28 November
1 Oct - 31 Dec	28 January	28 February
1 Jan - 31 March	28 April	28 May
1 April - 30 June	28 July	28 August

Would you like to see more of us?

As part of our service to you we offer free pre-retirement seminars to your employees, either on your site or at a venue close to you. If you'd like to organise a free seminar for employees, please call 1800 636 441.

Free pre-retirement planning seminars

Pre-retirement seminars are targeted at people who are over 50 years of age and provide information on the following: