30 October 2003
The Hon John Della Bosca, MP Special Minister of State Minister for Commerce Minister for Industrial Relations Assistant Treasurer Minister for the Central Coast Level 30 Governor Macquarie Tower 1 Farrer Place SYDNEY NSW 2000
Dear Minister
This is the fourth annual report of the Superannuation Administration Corporation which now trades as Pillar Administration, and I have pleasure in submitting it to you for presentation to Parliament.
The report has been prepared in accordance with the provisions of the Annual Reports (Statutory Bodies) Act, 1984, the Public Finance and Audit Act, 1983, and relevant Government policies.
The Corporation’s primary business of superannuation administration was conducted profitably within a continuing context of industry change and business improvement as outlined in the report.
The Government initiated relocation of the major part of the organisation to Wollongong has been an outstanding success, as it has led to a reduction in recurrent costs and the Corporation has now established a stable and able workforce.
The first priority of the Board and Management during the year was to ensure quality of service to our clients, and this will continue to be the priority.
Yours sincerely
Prof Bob Walker Chairman Contents
Part A - The Business
Part B – Audited Financial Statements
Part C - Detailed Corporate Information
Part A – The Business
The Business in Brief 4
The Directors 6
The Chairman’s Overview 8
Summary of Goals and Achievements 10
Improving Service Delivery and Efficiency 12
Ensuring Capacity to Meet Client Needs 14
Continuing the Emphasis on Robust Controls 15
The Business in Brief
The Corporation: provides superannuation administration and related services in both the public and private sectors; is a New South Wales state-owned corporation established by the Superannuation Administration Authority Corporatisation Act, 1999; and is governed by a Board of Directors that reports to Shareholding Ministers appointed under the State Owned Corporations Act, 1989, and to a Portfolio Minister.
The statutory objectives under the State Owned Corporations Act 1989 for each such corporation are: to be a successful business; to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates; where its activities affect the environment, to conduct its operations in compliance with the principles of ecologically sustainable development; and to exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates.
The Corporation presently provides services to the trustees of superannuation funds and covers defined benefit schemes and accumulation schemes. This involves: collecting and processing member and employer contributions; maintaining member, accounting and other fund records; processing claims and paying benefits including pensions; answering inquiries through a member contact centre and interview service; providing 24 hour-a-day information on member accounts through fund web sites; issuing member statements and literature; assisting employers; keeping trustees informed of details on administration activities and performance; interacting with custodians, investment managers and other providers; and where required, providing corporate services and fund secretariat services.
As at 30 June 2003 the Corporation was administering 808,000 accounts for 686,000 members and accounting for total scheme assets of nearly $30 billion.
The organisation has approximately 400 employees and operates from the following locations: Sydney – at 83 Clarence Street; Wollongong – at 5 Old Spring Hill Road, Coniston, the Corporation’s National Service Centre opened by the Premier in May 2001.
3 Pillar Annual Report 2002-2003 Part A
The Board of Directors Standing left to right: Noel Davis, Darryl Snow, Glenys Roper, Stan Droder, Pieter Franzen Seated: Eve Crestani, Bob Walker (Chairman).
Pillar Organisation Chart
Board of Directors
Board Committees Audit Committee Company Secretary Board Support Superannuation Compliance Committee Chief Executive Officer HR & Remuneration Committee Audit & Compliance Assessment Marketing & Business Development Legal IT Governance Committee Government Reporting
Business Systems Operations & Information Finance & Marketing & Human Technology Administration Business Resources Development
Administration Business system Corporate tax Business Policy & development & accounting development administration Contact centre Application support Management Marketing Personnel services accounting & reporting Client relations E-business Staff Member Computer service Statutory reporting development communications Compliance & & support & training legislation Business application Corporate services testing
4 Pillar Annual Report 2002-2003 Part A
The Directors
The directors appointed to the Board are listed below along with an outline of their professional background. Detailed information on corporate governance structures and arrangements is contained in Part C.
Bob Walker, Chairman of the Board, is a Professor of Accounting at the University of NSW, and has been the author or joint author of 4 books and over 50 technical articles on accounting, accountability arrangements, and public sector finances. He has served as chairman of the Australian Shareholders’ Association, and has acted as a consultant to major corporations and regulatory bodies on accounting issues.
He has advised various governments and from 1995 to 1999 was chairman of the NSW Council on the Cost of Government, which reviewed management and operational effectiveness and efficiency in the public sector.
Bob is an ex officio member of all Committees of the Board.
Stan Droder, CEO, has held top level positions in industry and in his profession including General Manager of CSR Coal and CSR Bradford Insulation; and Director of CPA Australia. He has served as Chairman of the Australian Accounting Research Foundation; Tax Law Improvement Project Consultative Committee; and the Accounting Standards Review Board.
Stan has been awarded two honorary doctorates by Australian universities for his contributions to the accounting profession. He was expert adviser on the Audit Committee before being appointed to his present position.
Eve Crestani, Chairman of the Marketing & Business Development Committee, is a professional director and business consultant with a background in law and management. She sits on various financial service boards and board committees including Chairman, Australian Unity General Insurance, member of the Business Conduct Committee of the Sydney Futures Exchange and the New Zealand Futures & Options Exchange, and member of the Compliance Committees of Invesco and NavraInvest.
Eve consults on strategically significant projects in Australia and Asia and is a professional mentor to senior executives. In the latter role she helps senior executives learn how to be leaders.
Eve is also a member of Pillar’s Superannuation Compliance Committee.
Noel Davis, Chairman of the Superannuation Compliance Committee, has extensive experience in superannuation administration issues. He is a well known superannuation lawyer who is now a consultant to Mallesons Stephen Jaques. He has been a specialist in superannuation for some 25 years and is the author of legal books on superannuation and of many articles.
He has acted for a number of large superannuation funds and is a former barrister and former lecturer in taxation of superannuation.
Noel is also a member of Pillar’s Audit Committee and the Marketing & Business Development Committee.
5 Pillar Annual Report 2002-2003 Part A
Pieter Franzen, Chairman of the Human Resources & Remuneration Committee, has long experience in the financial services industry. Amongst other things he has headed investment functions, been Chief Executive Officer at Prudential Insurance Company; Managing Director and Chief Executive of MMI (now Allianz); President of the Securities Institute of Australia; and Chairman of the Education Board of the Securities Institute of Australia.
Pieter holds equity in a number of companies including an independent financial planning company called Matrix Planning Solutions of which he is Executive Chairman. Peter is also a member of Pillar’s Marketing & Business Development Committee.
Glenys Roper, Chairman of the Audit Committee, has top level experience in the public and private sectors. She has been Chief Executive of the Office for Government Online (responsible for the federal ‘e government’ agenda); Executive Director in the federal Office of Asset Sales; and Chief Executive of the Australian Mint. In 1996 her work at the Mint won her the Channel Nine/Louis Vuitton award for leadership and achievement.
Glenys is Managing Director of Roex Management, providing advice and business development assistance in IT and government sectors to multi-national, local and developing companies. She is a Director on a number of boards and chairs a range of governance committees in the government sector.
Glenys is also a member of Pillar’s Human Resources & Remuneration Committee.
Darryl Snow, Chairman of the Information Technology Governance Committee (established in early 2003-2004) and nominee on the Board of the NSW Labor Council, is the State President of the New South Wales Fire Brigades Employees Union (FBEU) and a serving firefighter in the Illawarra region. In recent years Darryl has held a variety of posts within the industrial and political wings of the labour movement representing working people at a local, state and national level.
A long time resident of the south coast with a background in community service, Darryl also brings the benefit of particular experience and insight gained from leading a trade union at the front line of superannuation reform.
Darryl is also a member of Pillar’s Audit Committee and the Human Resources & Remuneration Committee.
6 Pillar Annual Report 2002-2003 Part A
The Chairman’s Overview
Superannuation administration requires amongst other things: • high volume complex processing of data relating to financial assets of hundreds of thousands of members of the community - Pillar’s superannuation trustee clients had a total of 686,000 members as at 30 June 2003; • responsiveness to the needs of trustee clients and their fund members; and • competent and caring attention to detail and information.
Pillar’s message throughout the year to staff has been that by demonstrating competence and caring for our clients and their members, they will in turn have confidence in us. This is what Pillar endeavours to achieve in a commercially responsible manner, and this report elaborates on our performance.
Last year I reported that Pillar has been totally refreshed as an organisation and as a commercial business enterprise. Building on that achievement, further improvements were made during 2002-2003 aimed at making Pillar leaner, fitter and more capable for the benefit of all stakeholders and to grow the business.
This was pursued through a focus on: • goals and achievements; • improving service delivery and efficiency - through adjustments and enhancements to structures and processes; • ensuring capacity to meet client needs - through enhancing staff and system capabilities, introducing new processes to satisfy emerging requirements, and enhancing the business continuity plan, • continuing the emphasis on robust controls - including an expanded compliance program.
The resulting improvements in performance were acknowledged by clients. Other initiatives of previous years continued, for example: • Pillar met the target to relocate 300 jobs to Wollongong, and further jobs are being relocated or being established at Wollongong as business growth, office space and circumstances allow; • the development of the customer service culture was further promoted; • provision of information to trustee clients was enhanced through expansion of the client relationship function; • the capabilities of staff have been strengthened through training and development programs including a current emphasis on management development; and • the Board continued to ensure that appropriate corporate governance structures and processes were in place.
A concurrent emphasis was on consolidation of the business base. Pillar settled in a new superannuation administration client and had discussions with existing clients in relation to the future of the business, and those discussions have proven to be fruitful.
In addition Pillar was active in marketing its capabilities, mainly to the superannuation industry, and the feedback was positive in relation to prospects for further expansion. Industry visits to the Coniston Service Centre have been frequent and informative.
7 Pillar Annual Report 2002-2003 Part A
Pillar holds about a ten per cent of the superannuation administration market (based on funds that are externally administered). The Corporation is one of the very few large administrators that offer both accumulation and defined benefit scheme administration. A major differentiator also is that Pillar is a specialist administrator and does not offer investment management, or financial advice.
Following some years of high costs resulting from major system changes and related factors, profitability has improved. The final result for the year was less than budgeted because of higher than expected superannuation expenses made for Pillar’s current and former employees, and former employees of predecessor organisations. The higher expenses reflected the investment performance of the particular Fund and was outside Pillar’s control. On the indications early in 2003-2004 the performance of that fund is improving and in future may have less impact on Pillar’s financial results.
Our staff throughout the organisation very ably assisted in each area of achievement. As reported previously, the relocation to Coniston is providing benefits to Pillar as well as jobs for the Illawarra, including indirectly through suppliers to the business. Staff turnover is low and Pillar has benefited from the availability of skilled people in the Illawarra. Since the relocation Coniston staff have very visibly participated in community events for charity, as well as a variety of staff social events, reflecting a community and a collegiate spirit.
The key foci for 2003-04 are to: • continue to give priority to client needs, emphasising: • quality of service, • compliance, • administrative efficiency, and • system functionality, reliability & capacity to meet current & emerging requirements; • further expand the business; • be an employer of choice for employees; and • be profitable.
8 Pillar Annual Report 2002-2003 Part A
Summary of Goals and Achievements
Goals
The focus for 2002-03 as set out in the Corporation’s Statement of Corporate Intent was on the following interrelated goals: • ensuring quality of service and compliance; • improving the Corporation’s market competitiveness through greater efficiency and improving systems to meet market needs; • ensuring profitability; • retaining existing clients; • expanding the business by winning new clients; and • completing the relocation to Wollongong.
Performance
The following provides brief details of performance against the above listed goals. Elaboration on selected areas is contained in later sections. Financial information is contained in the Audited Financial Statements.
1. Ensuring quality of service and compliance
Pillar provides detailed performance reports each quarter to its clients as part of a rigorous performance-monitoring regime. Performance is itemised against numerous service standards covering the timeliness and content of service delivery. The interests of clients are further safeguarded by independent audits, commissioned by the clients, of Pillar’s reports on performance.
Actual performance against standards has been at high levels for the industry, and service levels were further improved during the year. This was acknowledged by clients.
Compliance with contractual and legislative requirements was enhanced through development of a revised and expanded compliance program and a revised and expanded business continuity plan.
New legislative requirements included the Family Law superannuation information and benefit splitting provisions which took effect from 28 December 2002. The requirements were implemented in a timely manner for all but one Fund for which extended delays occurred. These delays resulted from complications well outside Pillar’s control, and the problem was addressed through close co-operation between Pillar, the client, and other key parties.
2. Improving the Corporation’s market competitiveness through greater efficiency and improving systems to meet market needs
Pillar reduced its costs during the year and improved its performance and capacity: • equivalent full-time staff numbers were reduced from 403 to 384 by year-end and the number of fund accounts administered increased from 738,000 to 808,000; • service delivery performance was enhanced, and numerous improvements were made structurally and in processes and systems, as outlined in later sections;
9 Pillar Annual Report 2002-2003 Part A
• through training and greater experience on the job staff overall have now greater depth of experience and knowledge following the large scale turnover and recruitment that accompanied the relocation to Wollongong; and • functionality was enhanced in various areas such as unitisation processes, contact centre processes, web-sites and ongoing developments for straight-through processing of data.
3. Ensuring profitability
Pillar achieved a pre-tax profit of $1.3 million for the year. This was less than budgeted, and the major factor in not meeting the target was unexpected additional superannuation expenses incurred by Pillar.
Profitability targets are a key part of business planning. Detailed information on planning and risks is provided to shareholding ministers as part of the governance arrangements for state-owned corporations which are outlined in the Corporate Governance section of Part C of this report.
4. Retaining existing clients
No contracts expired during the year. On the basis of Pillar’s understanding of the future requirements and expectations of existing clients, Pillar is confident that they will continue to rely on Pillar for administrative services. At the request of one client, Pillar participated in a detailed and independent benchmarking process to assist the client assess Pillar’s administrative competitiveness.
Keys areas of interest for clients are service delivery performance, the range and nature of functions that can be performed and the contract fees charged. Service and functionality matters are noted above. Contract fees were the subject of commercially confidential discussions with clients during the year.
Client liaison activities were reviewed and expanded during the year to provide a closer link between trustee clients and Pillar’s day-to-day operations and to provide better tailoring of the activities to the needs of each client.
5. Expanding the business by winning new clients
Pillar commenced administrative services for a new client, the Printing Industry Superannuation Fund, from 1 July 2002, which added 70,000 member accounts to those administered by Pillar. During the year several tenders were submitted, and at the time of writing Pillar anticipates securing a further medium size Fund as a client, subject to suitable contract terms being agreed.
Pillar is attracting increasing attention within the Industry as evidenced by requests from representatives of Funds to visit the Coniston office, and by invitations to tender.
In addition during the year Pillar was successful in being one of two bidders awarded the salary packaging business for the NSW public sector. Subsequently, Pillar could not find a sub-contractor capable and willing to undertake the highly specific terms of novated leasing requirements. This led to Pillar withdrawing before salary packaging operations commenced. The work completed has been archived and will facilitate any future activities in salary packaging.
10 Pillar Annual Report 2002-2003 Part A
6. Completing the relocation to Wollongong.
The relocation of the major part of the Corporation was successfully completed with some 300 positions located at Coniston. Ongoing relocations are occurring as accommodation is expanded and otherwise as appropriate in the light of business needs.
The Sydney office is now located on just one floor of 83 Clarence Street compared with five floors at the commencement of the relocation.
Improving Service Delivery and Efficiency
During the year various functions and activities were reviewed including: • member contact arrangements; • staff training; • client relationship activities; • compliance monitoring; • technical services; • business continuity planning; and • information services; • various systems and processes.
The results of these reviews included: • a more comprehensive customer service through expansion of the role of the Contact Centre to (see Contact Centre Box); • improved responsiveness to member queries through eliminating internal structural constraints and streamlining processes - this included merging the then Sydney-based Technical Services functions with the Coniston-based Operations functions; • improved staff competencies through amongst other things ensuring that training covers all pertinent areas. As well, staff continued to be encouraged to undertake courses conducted by the Association of Superannuation Funds of Australia (ASFA). During the year this encouragement included visible acknowledgement of the achievements of staff who completed courses; • system and process improvements to further lift output performance and efficiency; • improved system development through closer ties with information technology suppliers in order to leverage off their product expertise; • realisation of efficiency benefits from completion of the system work of past years - this enabled merging the former Information Services Division with Business Systems Division; • reductions in overheads through downsizing Pillar’s managerial structure; • better costing through improved information on Pillar’s costs and cost drivers; • enhanced disaster recovery arrangements through refreshed and expanded business continuity plans; and • strengthened compliance through refreshed and expanded compliance planning.
11 Pillar Annual Report 2002-2003 Part A
Contact Centre
During the year the role of the Contact Centre was expanded in recognition of its capacity to respond to a wide range of member inquiries. This included introduction of case managers for death and disability claims to ensure communication is sensitive to the circumstances. The Centre integrates telephony skills, e-mail and written functions as well as web-based channels. This ensures greater flexibility in the service that callers receive whilst additionally limiting staff burnout by varying their role. Staff turnover rate is under 5%, well below industry standards of over 30% which means Pillar has great depth in staff experience and skill. The pool of multi-skilled staff also enhances Pillar’s capacity to handle peak loads and to consistently meet contract service standards. Contact Centre staff, who generally have a call centre, banking, or financial services background, initially undergo intensive scheme training and then commence operations sitting with an experienced “buddy”. They then receive ongoing training including regular update briefings on the most current information. The Centre has been recognised nationally by the Australian Teleservices Association for the last two consecutive years as a leading centre within the industry. It is frequently asked by other organisations to provide site tours and advice on operations, and has strong relationships with many centres, which facilitates benchmarking and identifying improvement opportunities.
Ensuring Capacity to Meet Client Needs
Our People
Staff knowledge, skills and loyalty are critical requirements for organisations to meet their obligations. Pillar’s staff throughout the Corporation reflect these qualities as a result of well targeted recruitment, organisation culture, ongoing training, and location.
Pillar benefits from strong competition for vacancies and high staff retention. This is partly because of Pillar’s Wollongong location, with many candidates seeking a large stable organisation without the need for travel to Sydney. As a result Pillar has had few difficulties in finding candidates who match the knowledge and skill requirements sought.
Along with this, high staff retention - and therefore knowledge and skill retention - provides Pillar with a clear competitive advantage. Turnover across the organisation is at around 4% per annum, including the customer service Contact Centre where the industry average for turnover is closer to 30%.
Staff retention has facilitated development of a customer service culture and during the past financial year this was reinforced through a chief executive-led emphasis on the need for staff to complement high levels of competence with a caring approach to their duties.
Training & Development
The enormous changes in the organisation in recent years in infrastructure, including new technology, and in new people as a result of the relocation to Coniston, provided Pillar with a unique opportunity to reshape its knowledge base and human capabilities to better match current and emerging industry needs.
12 Pillar Annual Report 2002-2003 Part A
For the new staff the initial focus for skills development was on the detailed and complex technical requirements of superannuation administration. This was ensured through technical training programs provided by Pillar’s training team, accompanied by close supervision on the job. As well, staff were encouraged to undertake relevant external studies such as are provided by the Association of Superannuation Funds of Australia.
With the accomplishment of the required levels of technical competence in the organisation, increased attention was given during 2002-2003 to management training for team leaders and senior clerks. The aim is to ensure Pillar’s supervisors and middle managers are astute and effective people managers.
An analysis of training needs led to development of training and development programs in communication and performance management which are commencing in 2003-2004. The programs will be delivered by a training firm well experienced in the delivery of management training within the financial services sector.
Our Systems
Pillar has invested in administration systems that are robust, scalable and flexible, and each year has improved their functionality in order to provide clients with services that reflect current needs. For example, Pillar provides daily unit pricing for member account balances and an increasing array of internet services.
Services via Internet
The Internet services provided on behalf of Pillar’s clients are designed to handle the highest capacity expected during peak information periods
Member Internet services vary by scheme according to client needs. The services available to clients include: account details transactions details since last statement address change capability insurance cover information account balances investment choice balances contribution history investment switching capability benefit estimates beneficiary details capability latest statement
Internet services for employers are also well developed, facilitating efficient, secure transfer of contribution data. Employers can send contribution data files or enter contribution information on- line, and pay in several ways (EFT through their own on-line banking system, direct debit or cheque).
Pillar’s backroom systems such as imaging, workflow and call centre technology enable achievement of demanding service levels in a complex and competitive environment. ‘Straight Through Processing’ is being enhanced with Optical Character Recognition (OCR) now in place greatly reducing the need for manual intervention in the contribution allocation process. The contact centre technology is being continually reviewed and planned changes will further improve the services.
During the year Pillar commenced a major strategic review of information technology activities leading to closer ties with information technology suppliers in order for Pillar to derive greater benefits from their expertise. Internally, cross-functional team arrangements were further developed to streamline communication and improve information technology outputs.
13 Pillar Annual Report 2002-2003 Part A
Pillar strengthened its capacity to deal with disasters through a comprehensive update of business continuity planning and comprehensive back-up procedures. The plan identifies: highest priority tasks such as benefit payments for recovery in the shortest period; the staff, system, and other needs to be in place for resuming the priority tasks; and the staff, system, and other needs for full resumption of services.
Key arrangements for data and systems recovery include: back-up arrangements for systems and data - data is backed-up offsite daily and systems are backed-up offsite weekly; an alternative site for recovery of systems; and six-monthly testing of systems recovery at the alternative facility along with testing that administrative operations can be resumed. Telecommunications recovery is a major component of these tests.
Continuing the Emphasis on Robust Controls
Pillar pursues a ‘get it right first time’ philosophy and this requires amongst other things an effective control structure. The latter was an early priority of the Board following the establishment of the Corporation in 1999 and in subsequent years Pillar’s internal controls have been progressively strengthened.
This has been facilitated through close support and oversight by the Board’s Audit Committee and by the engagement of major accounting firms as internal auditors and advisers in this respect.
As part of the audit program the contracted firm provides an assessment of the effectiveness of Pillar’s controls, and this assessment is provided to Pillar’s clients.
In addition Pillar is subject to quality certification audits to confirm that the provision of superannuation administration services complies with the requirements for quality management systems of the International Organisation for Standardisation (ISO).
During 2002-2003 the Board further strengthened its oversight through a full revision of the compliance program under the oversight of the Board’s Superannuation Compliance Committee. Details of that Committee along with other Board Committees are set out in the Corporate Governance section of Part C of this Annual Report.
The aims of the compliance program are: 1. correct and timely performance of all superannuation processes, in accordance with the relevant Commonwealth, State and trustee requirements; 2. promotion of a culture of compliance within the organisation; and 3. to contribute to maintenance of existing business and the winning of new business.
The compliance program incorporates: • promoting the importance of compliance; • the gathering, analysing and timetabling of all compliance requirements; • allocating compliance responsibilities to specific managers; • including compliance requirements in all procedures and processes;
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• disseminating requirements through training, briefings or other relevant means; • reminding responsible persons of upcoming compliance events; • assessing the extent of compliance by means of a regular checklist and questionnaire; • ensuring internal controls are maintained to reduce the possibility of non compliance in risk areas; • system output testing; • the formal reporting of compliance breaches and monitoring of rectification of the breaches; • a formal complaints handling process which includes an evaluation of compliance matters; • independent review and assessment of the extent of Pillar’s compliance with requirements; and • regular review of the Compliance Program.
The importance of compliance is demonstrated from the Board down. For staff, the importance is first emphasised at staff induction courses where staff are made aware of the organisation’s position on compliance with all rules and legislation. It is reinforced by managers, by reminders in training sessions and procedures, and by the regular checks for compliance.
Pillar’s commitment to compliance is a key component of the overall goal of providing members, employers and trustees with excellent administration service.
15 Pillar Annual Report 2002-2003 Part A
Part B – Audited Financial Statements
Contents
Independent audit report overleaf
Directors’ declaration B 2
Financial statements B 3
Notes to the financial statements B 6
1 Pillar Annual Report Part B
SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION)
DIRECTORS’ DECLARATION FOR THE YEAR ENDED 30 JUNE 2003
In the opinion of the Directors of Superannuation Administration Corporation (trading as Pillar Administration): (a) the financial statements: (i) exhibit a true and fair view of Superannuation Administration Corporation’s financial position, financial performance and cashflows; and (ii) have been prepared in accordance with the provisions of the Public Finance and Audit Act, 1983, the Public Finance and Audit Regulation, 2000 and the Treasurer’s Directions.
(b) there are reasonable grounds to believe that the Corporation will be able to pay its debts as and when they fall due.
Signed in accordance with a resolution of the Directors
Stan Droder Prof. Bob Walker Chief Executive Officer Chairman Superannuation Administration Corporation Superannuation Administration Corporation
Eric Lo General Manager Finance and Administration Superannuation Administration Corporation
Date: 14 October 2003
2 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION)
STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2003
NOTE 2003 2002 $’000 $’000
Revenue from ordinary activities 2 51,545 59,314 Depreciation expense 2 (6,444) (6,598) Interest expenses 2 (5) (398) Employee related expenses 2 (33,934) (45,400) Occupancy expenses 2 (2,868) (1,688) Information Technology expenses 2 (2,221) (1,604) Other expenses 2 (4,773) (5,612)
Profit/(loss) from ordinary activities before income tax expense 1,300 (1,986)
Income tax (expense)/benefit relating to ordinary activities 3 (387) 2,478
Net Profit from ordinary activities after income tax 9 913 492
The accompanying notes form an integral part of this Statement of Financial Performance. 3 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION)
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2003
NOTE 2003 2002 $’000 $’000
Current Assets Cash assets 16 6,013 16,172 Receivables 4 4,734 4,230 Other assets 11 325 203 Total Current Assets 11,072 20,605
Non-Current Assets Property, plant and equipment 5 13,321 14,431 Deferred tax assets 2,265 2,345 Total Non-Current Assets 15,586 16,776
Total Assets 26,658 37,381
Current Liabilities Payables 6 2,152 3,516 Interest-bearing liabilities 7 3,000 10,186 Provisions 8 9,969 11,958 Total Current Liabilities 15,121 25,660
Non-Current Liabilities Deferred tax liabilities 88 97 Provisions 8 1,066 2,154 Total Non-Current Liabilities 1,154 2,251
Total Liabilities 16,275 27,911
Net Assets 10,383 9,470
Equity Contributed equity 17 6,000 6,000 Retained profits 9 4,383 3,470 Total Equity 10,383 9,470
The accompanying notes form an integral part of this Statement of Financial Position. 4 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION)
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2003
2003 2002 $’000 $’000 NOTE INFLOWS/ INFLOWS/ (OUTFLOWS) (OUTFLOWS) Cash Flows From Operating Activities: Receipts from clients 49,676 46,907 Relocation grant 735 10,181 Payments to suppliers and employees (47,433) (45,503) Interest received 185 175 Interest paid (5) (432) Net cash provided by operating activities 16(c) 3,158 11,328
Cash Flows From Investing Activities: Proceeds from sale of computers and other plant and equipment 44 20 Payments for property, plant and equipment (6,175) (3,448) Net cash used in investing activities (6,131) (3,428)
Cash Flows From Financing Activities: Repayment of borrowings (10,186) (10,186) Proceeds from borrowings 3,000 10,186 Net cash used in financing activities (7,186) -
Net (Decrease)/Increase In Cash Held (10,159) 7,900
Cash at the beginning of the financial year 16,172 8,272
Cash At The End Of The Financial Year 16(a) 6,013 16,172
The accompanying notes form an integral part of this Statement of Cash Flows. 5 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
1. STATEMENT OF ACCOUNTING POLICIES Superannuation Administration Corporation (SAC), trading as Pillar Administration is a Statutory State Owned Corporation established on 26 July 1999 under the Superannuation Administration Authority Corporatisation Act, 1999 (“the Act”). SAC’s business is to provide superannuation scheme administration services and related services in both the public and private sectors.
(a) General System of Accounting Underlying the Financial Statements The financial statements form a general purpose financial report and are prepared in accordance with the Public Finance and Audit Act, 1983, the Public Finance and Audit Regulation, 2000 and the Treasurer’s Directions. They also comply with applicable Australian Accounting Standards, other authoritative announcements of the Australian Accounting Standards Board and Urgent Issues Group Consensus Views. These financial statements have been prepared on an historical cost basis using the accrual method of accounting and do not reflect current values of assets except where noted. The accounting policies adopted in preparing the financial statements have been consistently applied during the year unless otherwise stated.
(b) Income Tax SAC is subject to notional taxation in accordance with the State Owned Corporations Act 1989. An “equivalent” or “notional income tax” is payable to the NSW Consolidated Fund through the Office of State Revenue. Taxation liability is assessed according to the National Tax Equivalent Regime (NTER) of the NSW Treasury (and any transitional provisions which apply). The NTER proposes as far as practicable the adoption of the Commonwealth Income Tax Assessment Acts 1936 and 1997 (as amended) as the basis for determining taxation liability and, therefore, the adoption of tax-effect accounting. The liability method of tax–effect accounting is adopted. Income tax expense is calculated on the profit/(loss) from ordinary activities adjusted for permanent differences between taxable income and accounting profit. The tax effect of timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, is carried forward in the Statement of Financial Position as either a future income tax benefit or a provision for deferred income tax. Future income tax benefits, where there are tax losses, are only brought to account when their realisation is virtually certain. Realisation shall depend upon:
(a) the ability to derive future assessable income of a nature and of sufficient amount to enable the benefit to be realised; and (b) the ability to continue to comply with the conditions for deductibility imposed under the NTER; and (c) an expectation that legislation as applied under the NTER will not change in a manner which would adversely affect SAC’s ability to realise the benefit.
(c) Property, Plant and Equipment
Acquisitions and Capitalisation All items of software, computers and other plant and equipment acquired are recorded at the cost of acquisition. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to the acquisition. Acquisitions that do not meet the following asset recognition criteria will be expensed.
6 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
1. STATEMENT OF ACCOUNTING POLICIES (continued)
(c) Property, Plant and Equipment (continued) An asset will be recognised in the Statement of Financial Position when and only when: • it is probable that the future economic benefits embodied in the asset will eventuate; and • the asset possesses a cost or other value that can be measured reliably. Intangible assets such as software may be capitalised in accordance with International Accounting Standard (IAS) 38 if the above criteria are satisfied and also the identifiable asset is controlled by the Corporation. The materiality test also applies to the asset recognition criteria. The threshold value for physical assets follows the NSW Treasury Guidelines for Capitalisation of Expenditure in the NSW Public Sector. In general, physical asset costing less than $5,000 is not capitalised unless it is part of a group of assets which exceed $5,000 in total. The recognition threshold for software is $100,000. These threshold values are determined and reviewed by the Audit Committee of the Board.
Expenditure incurred to restore or maintain the future economic benefits that were expected from the original standard of performance of an asset will not be capitalised. Asset Valuations The fair value of computers and other plant and equipment is assessed in accordance with the NSW Treasury Guidelines for Valuation of Physical Non-Current Assets at Fair Value. The book value of software is assessed periodically to ensure their future economic benefits are not materially different from their net book value. Disposals The profit or loss on disposal of assets is calculated as the difference between the net book value of the asset at the time of disposal and the proceeds on disposal and is recorded in the Statement of Financial Performance in the period of disposal. Depreciation and Amortisation Items of software and computers are depreciated/amortised on a straight-line basis over their estimated useful lives, making allowances where appropriate for residual values. The estimates of economic useful lives are reviewed annually, taking into account commercial and technical obsolescence. The expected useful life of software and computers ranges from 2 to 4 years. Other plant and equipment is depreciated over their estimated useful lives using the straight-line method, making allowances where appropriate for residual values. The expected useful life of other plant and equipment ranges from 3 to 8 years.
(d) Employee Entitlements Annual Leave and Redundancy The provisions for employee entitlements to annual leave and redundancy represents the amount which SAC has a present obligation to pay resulting from employees’ service provided up to the balance date. These provisions are expected to be settled within 12 months and are measured at their nominal values using the remuneration rates expected to apply at the time of settlement. Long Service Leave The accrual for long service leave liability is based on remuneration rates expected to be applied in the next 12 months for all employees with five or more years of service at reporting date. This estimate of the long service leave liability is not materially different from estimate determined by the present value of estimated future cash outflows required to pay for long service leave accrued for employees up to the reporting date.
7 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
1. STATEMENT OF ACCOUNTING POLICIES (continued)
(d) Employee Entitlements (continued) Superannuation Any unfunded superannuation liability is recognised as a liability in the Statement of Financial Position and amounts representing prepaid superannuation contributions are recognised as an asset. SAC is meeting in full the total superannuation obligations for its employees arising from past services of its employees, and for the past service of predecessor organisations’ employees. The funding shortfall attributable to past employees of predecessor organisations is estimated and shown separately in Note 2. The estimate is based on the proportion of past employees of predecessor organisations to the total number of SAC members in the defined benefit fund.
(e) Roundings All values reported in the financial statements have been rounded to the nearest thousand dollars, except where otherwise stated.
(f) Interest-Bearing Liabilities Loans are recorded at an amount equal to the net proceeds received. Interest expense is recognised on an accrual basis.
(g) Cash Flows For the purpose of the Statement of Cash Flows, cash includes cash on hand and cash equivalents.
(h) Recognition of Revenues Management fees and other fees are recognised as revenues when the service is provided and it is probable that the economic benefits will transfer to SAC. Interest is recognised on an accrual basis.
(i) Payables Trade payables and other accounts payable are recognised when SAC becomes obliged to make future payments resulting from the receipt of goods and services.
(j) Receivables Trade receivables and other receivables are recorded at amounts due less any provision for doubtful debts.
8 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
1. STATEMENT OF ACCOUNTING POLICIES (continued)
(k) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except: (i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an item or as part of an item of expense; or (ii) for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of the receivables or payables. Cash flows are included in the Statement of Cash Flows on a gross basis.
9 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 2. PROFIT/(LOSS) FROM ORDINARY ACTIVITIES 2003 2002 $’000 $’000 Profit/(loss) from ordinary activities before income tax is stated after crediting the following revenues:
Management Fees 50,596 47,403 Interest 185 175
Other Revenue Re-imbursement from NSW Treasury (refer Note 10) - 10,181 Re-imbursement from related parties for costs incurred - 1,401 Other 735 141 Profit from disposal of computers and other plant and equipment 29 13 Total Other Revenues 764 11,736 Revenues from ordinary activities 51,545 59,314
Profit/(loss) from ordinary activities before income tax is stated after charging the following expenses:
Depreciation Expense 6,444 6,598
Interest Expenses Interest paid or payable to: Related parties – NSW Treasury Corporation 5 398 Total interest expenses 5 398
Employee Related Expenses Personnel costs 23,012 22,870 Payments to contractors for the provision of labour services 4,214 7,508 Redundancy payments (106) 2,174 Provision for employee entitlements 1,853 1,912 Provision for relocation - 6,158 Employer superannuation contributions 1,621 1,892 30,594 42,514 Defined benefits funding shortfall - past employees of predecessor organisations 2,839 2,453 - present and past employees of SAC 501 433 Total employee related expenses 33,934 45,400
Occupancy expenses 2,868 1,688
Information technology 2,221 1,604
Other Expenses Actuarial fees - 12 Fees paid to the Audit Office of NSW and their agent: - auditing of financial report 72 66 - other services 4 18 Member communication 1,878 1,839 Operating lease rentals 173 213 Sundry administration expenses 2,157 3,464 Total Other Expense Items 4,284 5,612 Surplus leased space 489 - 4,773 5,612 Total Expenditure 50,245 61,300
10 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
3. INCOME TAX 2003 2002 $’000 $’000
The prima facie tax payable on profit from ordinary activities before income tax is reconciled to the income tax expense/benefit as follows:
(a) Profit/(Loss) from Ordinary Activities before Income Tax 1,300 (1,986)
Income tax expense calculated at 30% of operating profit 390 (596)
Permanent Differences: Non-deductible expenses 5 3,024 Non-assessable income - (2,232) Future income tax benefit not previously recognised now brought to account (8) (2,550) (3) (1,758) (Over)/under provision of income tax in previous year - (124)
Income tax expense/(benefit) relating to ordinary activities 387 (2,478)
Income tax expense attributable to operating profit from ordinary activities comprises: Provision attributable to current year 315 - Decrease in provision for deferred income tax (8) (96) Decrease in future income tax benefit 89 292
Prior year adjustments: Increase/(decrease) in provision for deferred income tax - (41) Increase in future income tax benefit (9) (2,633) 387 (2,478)
4. RECEIVABLES 2003 2002 $’000 $’000
Trade debtors 5,140 3,998 Other receivables 96 232 Provision for doubtful debts (502) - 4,734 4,230
11 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
5. PROPERTY, PLANT AND EQUIPMENT 2003 2002 $’000 $’000 Property Deposit on property * 3,168 -
*This amount represents the deposit which was paid on exchange of contracts dated 18/6/2003 for purchase of a property in Coniston. The remaining amount of $350,000 will be paid on settlement of the property. Settlement of the property is dependent upon the Council’s approval of the sub-division application.
Software: At fair value Opening balance 19,732 19,707 Less accumulated amortisation 15,262 11,024 4,470 8,683 Computers: At fair value Opening balance 11,231 12,422 Less accumulated depreciation 8,503 8,773 2,728 3,649 Other Plant & Equipment: At fair value Opening balance 4,036 5,266 Less accumulated depreciation 1,081 3,167 2,955 2,099 Total Net Book Value Of Software, Computers and Other Plant and Equipment 10,153 14,431
(a) Movements in Carrying Amounts
Software: Cost Balance at beginning of the year 8,683 12,066 Additions 315 975 Amortisaion expense (4,528) (4,358) Carrying amount at the end of the year 4,470 8,683 Computers: At fair value Opening balance 3,649 4,038 Additions 1,457 1,032 Disposals (903) (475) Depreciation expense (1,475) (946) Carrying amount at the end of the year 2,728 3,649 Other Plant & Equipment: At fair value Opening balance 2,099 2,713 Additions 1,298 212 Disposals (1) (7) Depreciation expense (441) (819) Carrying amount at the end of the year 2,955 2,099
6. PAYABLES 2003 2002 $’000 $’000
Trade payables 1,461 2,935 GST payable 691 581 2,152 3,516
12 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
7. INTEREST-BEARING LIABILITIES 2003 2002 $’000 $’000
Current Loans from NSW Treasury Corporation (T-Corp) 3,000 10,186
Interest rates on loans from T-Corp are fixed monthly. The effective yield for June 2003 was 4.87% (June 2002 was 4.87%). The loan was unsecured. The carrying amount of the loan are considered to approximate their fair values.
8. PROVISIONS 2003 2002 $’000 $’000 Current Employee entitlements 2,945 2,849 Superannuation (refer Note 8a) 5,346 2,006 Provision for Income Tax 315 - 8,606 4,855
Provision for claims expenses at beginning of period 945 945 Additional provisions recognised during the period 38 - Payments of provisions during the period (502) - Carrying amount at reporting date 481 945
Provision for relocation expenses at beginning of period 6,158 6,158 Payments of provisions during the period (5,765) - Carrying amount at reporting date 393 6,158
Surplus leased space at beginning of period - - Additional provisions recognised during the period 489 - Carrying amount at reporting date 489 -
9,969 11,958
Non-Current Employee entitlements 648 1,839
Tenancy make-good costs at beginning of period 315 315 Additional provisions recognised during the period 103 - Carrying amount at reporting date 418 315
1,066 2,154
13 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
8. PROVISIONS (CONTINUED)
(a) Superannuation Commitments
Superannuation commitments arise in respect of the following defined benefit superannuation funds: State Superannuation Scheme (SSS), State Authorities Superannuation Scheme (SASS) and State Authorities Non-contributory Superannuation Scheme (SANCS). William M Mercer undertook an actuarial valuation of accrued benefits of the membership of each scheme as at 30 June 2003, consistent with the requirements of AAS 25 “Financial Reporting by Superannuation Plans”. AAS 25 requires that a “market-determined risk-adjusted discount rate” be applied as the valuation interest rate in the calculation of the value of the accrued benefits. The following short and long term economic assumptions have been used for these calculations.
2001/2002 2002/2003 2003/2004 30 June 2003 Valuation Assumptions %PA %PA and thereafter %PA
Rate of investment returns 7.0 7.0 7.0 Rate of salary increases 3.0 6.5 4.0 Rate of increase in CPI 2.5 2.5 2.5
The superannuation funding position at 30 June 2003 for present and past employees of SAC and its predecessor organisations was a deficit of $3,027,220 (2002: $761,589) for SSS, a deficit of $1,702,018 (2002: $901,671) for SASS and a deficit of $616,422 (2002: $342,819) for SANCS.
Future Retirement Benefits under the State Superannuation Scheme, the State Authorities Superannuation Scheme and State Authorities Non-Contributory Scheme have been provided as under:
Liability Funding Deficiency Deficiency $ $ 2003 2002 $ $
State Superannuation Scheme (19,991,146) 16,963,926 (3,027,220) (761,589) State Authorities Superannuation Scheme (902,567) (799,451) (1,702,018) (901,671) State Authorities Non-Contributory Superannuation Scheme (601,286) (15,136) (616,422) (342,819)
14 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
9. RETAINED PROFITS 2003 2002 $’000 $’000
Retained Profits Retained profit at the beginning of the financial year 3,470 2,978 Net profit from ordinary activities after related income tax (expense)/benefit 913 492 Retained profits at the end of the financial year 4,383 3,470
10. RE-IMBURSEMENT FROM NSW TREASURY 2003 2002 $’000 $’000
Wollongong relocation costs - 10,181
This represents Wollongong relocation contributions received from NSW Treasury to date. The relocation is part of the Government’s decentralisation strategy and the costs include infrastructure, project management fees, staff transition payments, recruitment and redundancy costs. The contributions from Treasury cover these costs. The costs and reimbursement are not deductible or assessable for the purpose of the National Tax Equivalent Regime.
11. OTHER ASSETS 2003 2002 $’000 $’000
Prepayments 325 203
12. COMMITMENTS FOR EXPENDITURE 2003 2002 $’000 $’000 Lease Commitments Commitments in relation to operating leases contracted for at balance date but not provided for in the accounts (excluding GST):
Payable not later than one year 1,779 2,220 Payable later than one year and not later than five years 2,223 5,190 Payable later than five years - 2,506 4,002 9,916
Capital Commitments Commitments in relation to capital expenditure contracted for at balance date but not provided for in the accounts
Payable not later than one year 783 -
15 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
13. RELATED PARTY INFORMATION
(a) Board Members and Remuneration Received or Due and Receivable
The names of the Board Members of SAC in office during the year ended 30 June 2003 and up to the date of signing these financial statements, are as follows:
Prof. R Walker Ms E Crestani Mr N Davis Mr S Droder CEO Mr P Franzen Ms G Roper Mr D Snow
(b) Remuneration to Directors 2003 2002 $’000 $’000
Income paid or payable to the directors of the corporation 559 845
(c) Numbers of Board Members Included in These Figures are Shown in Their Relevant Income Bands 2003 2002 NUMBERS NUMBERS
Remuneration (including superannuation contributions) of: $10,000 - $19,999 - 1 $20,000 - $29,999 - 3 $30,000 - $39,999 - 2 $40,000 - $49,999 5 - $60,000 - $69,999 - 1 $70,000 - $79,999 1 - $220,000 - $229,999 - 1 $260,000 - $269,999 1 - $390,000 - $399,999 - 1 7 9
The CEO is a Board Member and does not receive a separate fee for serving as a Director.
(d) Transactions with Other Related Parties
All transactions with NSW Treasury Corporation are disclosed as related party transactions as it falls within the functional responsibilities of the NSW Treasurer, who along with the Premier of NSW, is a Shareholding Minister of Superannuation Administration Corporation in terms of the State Owned Corporations Act.
16 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
14. EXECUTIVES’ REMUNERATION 2003 2002 $’000 $’000
(a) Executives’ Remuneration
Remuneration paid to SAC executive officers and technical specialists whose remuneration was $100,000 or more 5,407 3,629
(b) Numbers of Executive Officers in Their Relevant Income Bands: 2003 2002 NUMBERS NUMBERS
The number of executive officers and technical specialists whose remuneration was $100,000 or more are shown below in their relevant income bands:
Total remuneration (including where appropriate retention, redundancy and termination payments)* : $100,000 - $109,999 7 9 $110,000 - $119,999 4 2 $120,000 - $129,999 1 4 $130,000 - $139,999 5 2 $140,000 - $149,999 1 1 $150,000 - $159,999 3 - $170,000 - $179,999 3 - $180,000 - $189,999 - 2 $190,000 - $199,999 4 - $200,000 - $209,999 1 2 $210,000 - $219,999 1 - $220,000 - $229,999 - 1 $240,000 - $249,999 1 - $250,000 - $259,999 1 - $260,000 - $269,999 1 - $300,000 - $309,999 1 - $390,000 - $399,999^ - 1 34 24
* The Corporation completed the relocation in 30 June 2003 and a number of technical specialists left the corporation under voluntary redundancy. ^ This includes redundancy and other termination payments.
15. ECONOMIC DEPENDENCY The majority of SAC’s business revenue comes from its 2 major clients.
17 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
16. CASH FLOW INFORMATION
(a) Reconciliation of Cash 2003 2002 $’000 $’000
Cash at Bank 6,013 16,172
Call deposits with banks are paying interest at current bank deposit rates. The effective interest rate for the year was constant at 4.25% (2002: 3.10% to 4.65%).
(b) Financing Facilities
Details of loan facilities are included in Note 7. SAC has no credit standby arrangements as at 30 June 2003.
(c) Reconciliation of Cash Flows from Operations with Profit from ordinary activities after Income Tax: 2003 2002 $’000 $’000 INFLOWS/ INFLOWS/ (OUTFLOWS) (OUTFLOWS)
Net Profit from ordinary activities after related Income Tax (Expense)/Benefit 914 492 Adjusted for the following: Depreciation expense 6,444 6,598 Profit on sale of computers and other plant and equipment (29) (13) 7,329 7,077
Changes in Assets and Liabilities: (Increase)/decrease in assets: Receivables (1,006) 241 Other assets (121) 1,071 Deferred tax assets 79 (2,342)
Increase/(decrease) in liabilities: Trade payables (649) (1,336) GST payable 110 216 Provision for employee entitlements (1,095) (530) Provision for relocation (5,765) 6,158 Provision for superannuation 3,340 1,745 Provision for surplus lease property 489 (1,329) Provision for tenancy make-good costs 103 (451) Provisions for claims 38 945 Provision for Income Tax 315 - Deferred tax liabilities (9) (137) (4,171) 4,251
Net Cash Provided by Operating Activities 3,158 11,328
18 SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
17. CONTRIBUTED EQUITY 2003 2002 $’000 $’000 Equity Total equity at the beginning of the financial year 6,000 6,000 Total equity at the end of the financial year 6,000 6,000
18. SEGMENT REPORTING SAC operates in the financial services industry in Australia.
19. CONTINGENT LIABILITIES/ASSETS The directors are not aware of the existence of any contingent liabilities/assets.
20. SUBSEQUENT EVENTS The directors are not aware of any of the following events that have occurred prior to the signing of the financial report:
a) events providing additional evidence of conditions that existed at the reporting date, or events that reveal for the first time conditions that existed at the reporting date, or b) other events occurring after the reporting date that are to be disclosed in compliance with Australian Accounting Standard AAS 8 (AASB 1002) 'Events Occurring After the Reporting Date’.
— End of Audited Financial Statements —
19
Part C - Detailed Corporate Information (Information in accordance with the Annual Reports (Statutory Bodies) Regulation 2000 and Government requirements)
Contents
Corporate Governance C2 Freedom of Information C13 • Enabling Legislation • Statement of Affairs • Oversight by Government • Freedom of Information Procedures • The Portfolio Minister • Charges for FOI Applications • The Shareholding Ministers • Documents Held • The Board • Freedom of Information Statistics • The Chief Executive Officer • Addition Information • Frequency of Board Meetings and • Other Publications Attendance of Directors • Board Committees Compliance with Specific Policies C15
• Management C7 Ethnic Affairs Priorities Statement • Electronic Service Delivery • The Executive Structure • Disability Action Plan • The Executive Committee • NSW Government’s Action Plan for • The Joint Consultative Committee Women • Other Committees • Occupational Health and Safety • Code of Conduct Executive Remuneration C8 • Waste Reduction
• Officers Paid Above $182,000 Additional Financial Related Data C16 • Number of Executive Officers • Major Works in Progress Human Resources C11 • Expenditure on Consultants • New Contractors > $100,000 • EEO Achievements • Ongoing Contractors • Staff Numbers by Categories • Grants to Non-Government
Organisations Changes in Legislation C12 • Overseas Visits • Payment Performance Indicators Consumer Response C12 • Guarantee of Service Risk Management and Insurance C17 • Complaints • Disputes and Appeals Index of Legislative Compliance C18
1 Pillar Annual Report 2002-2003 Part C
Corporate Governance
Enabling Legislation The State Owned Corporations (SOC) Act 1989 provides for the establishment and operation of Government enterprises as State-owned corporations. It sets out amongst many other matters, the objectives of State-owned corporations, the powers of Ministers and provisions for reporting. The Superannuation Administration Authority Corporatisation Act 1999 established the Corporation, defines the business of the corporation, and sets out special provisions for the management of the Corporation which supersede provisions in the SOC Act. A Memorandum of Association for the Corporation with effect from 26 July 1999, the date of establishment of the corporation, was executed by the Premier and by the Treasurer as Shareholding Ministers.
Oversight of the Corporation by the NSW Government
Oversight by the NSW Government is through a Portfolio Minister in terms of clause 20I of the SOC Act and two Voting Shareholders of the Corporation in terms of clause 20H of the same Act Legislatively required reporting, in addition to this Annual Report, includes providing a draft Statement of Corporate Intent each year to the Shareholding Ministers supported by a confidential business plan, risk analysis and financial projections. This is complemented by quarterly reports on performance. The Corporation also provides this material to the Portfolio Minister. The Corporation is subject to external audit by the Auditor-General, and is also subject to the powers of a number of other Government entities, such as the Ombudsman and the Independent Commission Against Corruption.
The Portfolio Minister
The Portfolio Minister in terms of clause 20I of the State Owned Corporations Act 1989 is The Hon John Della Bosca, MP, Special Minister of State, Minister for Commerce, Minister for Industrial Relations, Assistant Treasurer, and Minister for the Central Coast.
The Shareholding Ministers
The Voting Shareholders of the Corporation in terms of clause 20H of the State Owned Corporations Act 1989 are: • The Hon Bob Carr, MP, Premier, Minister for the Arts, and Minister for Citizenship; and • The Hon Michael Egan, MLC, Treasurer, Minister for State Development, and Vice-President of the Executive Council.
The Board
The Board has statutory authority under the above-mentioned legislation to manage the corporation and is the entity that reports to Shareholding Ministers and to which directions may be issued by the Portfolio Minister. The Board consists of at least three and no more than six non-executive directors and the Chief Executive Officer. The Chairman is a non-executive director. The Board meets at least monthly and monitors corporate performance and key issues through formal processes such as monthly reports from management and discussion at board meetings, through discussions with stakeholders, and through various informal means open to the directors. Each of the Non-Executive Directors of the Corporation was appointed by the Voting Shareholders pursuant to clause 15.2 of the Articles of Association of the Corporation. The names of the Non- Executive Directors and the dates and terms of their appointments are:
• Professor Bob Walker, BCom (UNSW), MEc (Syd), PhD (Syd), CA, Chairman, appointed on 21 July 1999 for the term 26 July 1999 to 25 July 2004;
2 Pillar Annual Report 2002-2003 Part C
• Mr Darryl Snow, Nominee of the NSW Labor Council, appointed for three years from 16 October, 2001 to 15 October 2004; • Ms Eve Crestani, Dip Law (BAB), DPM, FACID, appointed for three years from 16 October, 2001 to 15 October 2004; • Mr Noel Davis, LLB, AAII, appointed for three years from 16 October, 2001 to 15 October 2004; • Mr Pieter Franzen, BEc (Syd), FSIA, AIIA, initially appointed in July 1999 and re-appointed in 2001 until 19 October 2004; and • Ms Glenys Roper, BA, LittB, FAICD, appointed for three years from 16 October, 2001 to 15 October 2004. In combination the Non-Executive Directors brought to the Board qualifications, skills and experience in, or relevant to, the superannuation and finance industries, private and public sector management, and employee and industrial relations.
The Chief Executive Officer
The Chief Executive Officer (CEO) is appointed by the Non-Executive Directors after consultation with the Voting Shareholders.
Mr Stan Droder, FCA, FCPA, Hon DBus (CSU), Hon DEc (UNE) was appointed by the Board as CEO in early 2002-2003 following consultation with the Voting Shareholders, and following his earlier appointment as Acting CEO from September 2001.
Frequency of Meetings of Directors and Attendance at Meetings
The Board met twelve times during 2002-2003. The number of meetings attended by each Director is set out below.
Director Possible number Number attended Prof Walker 12 12 Mr Franzen 12 12 Mr Droder 12 11 Ms Crestani 12 12 Mr Davis 12 12 Ms Roper 12 12 Mr Snow 12 12
Board Committees
During the year the Board was assisted by the following four committees composed of non-executive directors: • the Audit Committee which focuses on the adequacy of the administrative, operating, risk and accounting controls and accounting policies, and to which the contracted internal audit firm reports; • the Human Resources and Remuneration Committee which provides high level oversight of human resources policies, strategies and remuneration; • the Marketing and Business Development Committee which provides high level oversight of marketing and business development strategies and activities; and • the Superannuation Compliance Committee which oversees the Corporation’s compliance program in relation to superannuation administration.
Details of the membership, activities and charter of each of the above committees are provided below.
Early in 2003-2004 the Board established the Information Technology Governance Committee in recognition of the critical importance of information technology to the Corporation and to the Corporation’s clients. Details of this new committee will be reported in the 2003-2004 Annual report.
3 Pillar Annual Report 2002-2003 Part C
The Audit Committee
During 2002-2003 the members of the Audit Committee were: Ms Glenys Roper, Chairman; Mr Noel Davis; Mr Darryl Snow; and Professor Bob Walker.
The meetings are attended by representatives of management, external auditors, and internal auditors. On occasions the Audit Committee has met with external and internal auditors without management being present.
The Committee met seven times during the financial year. The activities of the Committee included: approving the audit plan and oversighting its implementation; assurance reporting to clients audit committees; monitoring implementation of audit recommendations; matters related to the statutory accounts such as policy issues and matters raised by external audit; review of delegations; review of the scope of internal audit and development of a brief for internal audit services; and assessment of proposals from firms to provide internal audit services for three years from July 2003.
Charter of the Audit Committee
The primary objectives of the Audit Committee are to: (a) assist the Board in relation to internal controls generally, and accounting & financial reporting policies & practices; (b) provide a forum for communication between directors, auditors and senior management on these matters; and (c) ensure the integrity of the internal audit function.
The Board determines the membership of the Audit Committee. It may include persons who are not members of the Board but does not include executives or executive directors of the Corporation. The Committee may invite persons to attend its meetings including: (a) internal auditors and other persons providing reports or information for the Committee; (b) executives of the Corporation as appropriate; (c) internal auditors and other persons providing reports or information for the Committee; (d) representatives of the Auditor General including contractors, but excluding persons engaged in auditing the Corporation’s clients.
The Committee may consider any matters relating to its objectives that it wishes, and any matters referred by the Board.
Specific duties are: Oversight of review programs dealing with the adequacy of administrative, operating, risk and accounting controls and advising the Board regarding matters arising. Recommending the appointment of internal auditors, the terms of reference of internal auditors and the level of fees payable to the internal and external auditors; Liaising with the internal auditors regarding planning and implementation of all internal audit activity and agreeing the audit plan and any changes to that plan that may occur during the period of the agreed plan; Liaising with the Auditor-General or his representative regarding external audit and accounting policy issues; Liaising with the Audit Committees of major clients on internal control issues; Initiating post-implementation reviews as warranted of past investments in information technology and any other areas of major capital expenditure;
4 Pillar Annual Report 2002-2003 Part C
Considering the correspondence and reports of the internal and external auditors, and other sources of advice; Considering the response of management to audit and other reports and intended management’s actions to implement and/or modify the recommendations. Monitoring the progress of the implementation of agreed corrective actions and improvements. Review of the form and content of financial reports to the Board in respect of operational activity and capital expenditures. Review of the Corporations annual accounts and, when satisfied, recommend the accounts to the Board for approval. Determination of and then review of at least annually the accounting policies of the Corporation and any subsidiaries, and as appropriate determination or co-determination of accounting policies of joint ventures. Review of and, if considered appropriate, approval of proposals involving transactions with related parties (including directors and staff of the Corporation, and interests associated with those individuals). Advice to the Board regarding delegations of authority within the Corporation and review of the delegations annually and when there is a change in senior management personnel.
The Committee has unlimited access to both the internal and external auditors and to senior management. The Committee may consult independent experts.
The Audit Committee meets at least four times each year. A quorum consists of a majority of members.
The Committee provides copies of the Minutes to the Board, and includes in the Corporation’s annual report a statement describing its responsibilities and activities. The minutes or relevant extracts are provided to the internal auditors and external auditors.
The Human Resources and Remuneration Committee
During 2002-2003 the members of the Human Resources and Remuneration Committee were: • Mr Pieter Franzen, Chairman; • Ms Glenys Roper; • Ms Darryl Snow; and • Professor Bob Walker (ex officio).
The Committee met three times during 2002-2003. In addition, discussions on matters before the Committee were combined with Board meetings, and, as well, the Committee Chairman had a number of working meetings with executives. As a result a range of matters was progressed including: • job evaluations; • salary reviews of non-award staff; • CEO succession processes; • personnel matters related to the relocation to Coniston; • HR policies including the staff training and development policy; and • review of the Committee’s Charter.
Charter of the Human Resources and Remuneration Committee
The Human Resources and Remuneration Committee encourages management to build and sustain the effectiveness of Pillar’s staff having regard to the fact that Pillar is a customer service organisation where staff effectiveness is critical to Pillar being able to deliver the services for which it is currently and potentially contracted so as to achieve its goals, both financial and in other areas.
The Committee will ensure that the appointment and remuneration of the Chief Executive and senior executive managers reporting to the Chief Executive is aligned with the needs and goals of the organisation.
The Committee will encourage management to have in place appropriate programs to:
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(a) secure maximum leverage from leadership, teamwork, change management, interpersonal relations and communications; (b) create rapid assimilation of new employees and those transferring to new roles or reporting relationships; (c) retain the talent necessary for the Corporation to function effectively and in accordance with the goals set by the Board agree appropriate remuneration strategies; (d) focus staff to the business goals of Pillar through sophisticated recruitment and personal development strategies and quality succession planning and job performance analysis; and (e) recognise the employees’ industrial affiliations and where appropriate work with the appropriate unions to maximise employee and employer welfare.
The Committee will monitor management’s effectiveness in achieving these goals through regular monitoring of the appropriate Key Performance Indicators .
The Committee will assess its own performance and review this charter in light of that assessment annually.
The Marketing and Business Development Committee
During 2002-2003 the members of the Marketing and Business Development Committee were: • Ms Eve Crestani, Chairman; • Mr Noel Davis; • Mr Pieter Franzen; and • Prof Bob Walker (ex officio).
The Committee met eight times during 2002-2003 and its activities included: • reviewing and further developing marketing strategies; • monitoring marketing activities including exploration of business opportunities and marketing events; • meeting with external people involved in the industry in different capacities; • monitoring action on tenders and the resourcing needs for new business; and • monitoring development of the annual report and marketing documents.
Charter of the Marketing and Business Development Committee
The Board has established the Marketing and Business Development Committee to advise the Board in relation to the broad framework within which marketing and business development will be pursued by management.
In particular, the Committee will advise the Board on: 1. the principles to be followed; 2. the relative merits of pursuing different types of business; 3. the requisites for successful marketing and bidding, and any strengthening needed in those respects; and 4. the appropriate indicators for assessing management performance.
The Committee will assess its own performance annually and will review this charter in the light of that assessment, and advise the Board of any recommended changes.
The Superannuation Compliance Committee
During 2002-2003 the members of the Superannuation Compliance Committee were: • Mr Noel Davis, Chairman • Ms Eve Crestani; and • Prof Bob Walker (ex officio).
The Committee met seven times during 2002-2003 and its activities included:
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• closely oversighting the development of an enhanced compliance program and enhanced organisation arrangements for compliance; • monitoring implementation of the program; and • monitoring actual compliance performance.
Charter of the Superannuation Compliance Committee
The Committee is to oversight the Corporation's compliance program and report to the Board in relation to the Corporation's levels of compliance.
The program is to provide a regular check, by regular reporting through to the Board, that the Corporation has complied with relevant legislation and documents on behalf of the clients or that, where a breach has occurred, that it has been appropriately remedied.
• The compliance program is designed to ensure that the Corporation, on behalf of its clients, has complied with: • the State superannuation legislation; • the Superannuation Industry (Supervision) Act; • the Financial Services Reform Act; • the Superannuation (Resolution of Complaints) Act; • the Corporations Act; • the Family Law Act; • other legislation that is relevant to the superannuation administration activities of the Corporation; • contracts and other documentation that the trustees or the Corporation are bound by; and • procedures that the trustee of funds administered by the Corporation is obliged to follow.
Management
The Executive Structure
The organisation chart including the main functions of the organisational divisions is set out in Part A of this Annual Report. The senior management positions and the occupants of those positions during 2002- 2003 are set out below.
Position Occupant Period Chief Executive Officer Mr Stan Droder Whole period General Manager Business Systems Mr Bob Bramston Whole period General Manager Operations Mr Peter Cormack Whole period General Manager Finance & Mr Eric Lo Whole period Administration General Manager Marketing & Mr Mike Turner Whole period Business Development Manager Human Resources Mr Malcolm Saunders Whole period Manager, Client Relations Ms Jane Byrne Whole period Company Secretary Mr Malcolm Richardson Whole period General Manager Information Mr Peter Dowd Until February 2003 Services (position abolished) Group Manager Technical Services Mr Dennis McColl Until March 2003 (position abolished)
The Executive Committee
The Executive Committee is the senior executive committee of Pillar. During the financial year it met at least monthly for information sharing and consideration of key issues facing management. Its members are as listed above under Executive Structure.
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The Joint Consultative Committee
The Joint Consultative Committee provides a forum for discussion between management and the representatives of employees and employee associations. Its meetings are generally held monthly and it draws its membership from amongst Pillar's executive group, employee representatives and representatives of the Public Service Association.
Other Committees
To assist with monitoring, decision-making and organisation functioning, the Corporation has various specific purpose committees. During 2002-2003 these included: the Projects Priority Group composed of the General Managers of Business Systems, Finance & Administration and Operations Divisions; and the Occupational Health and Safety Committee composed mainly of non-managerial staff.
Executive Remuneration
Officers Paid Above $182,000
During the year actual remuneration in excess of $182,000 (equivalent to the minimum of SES level 5) was paid or payable to the following five executives: Mr Stan Droder, Chief Executive Officer, Mr Bob Bramston, General Manager, Business Systems, Mr Peter Cormack, General Manager Operations Division, Mr Eric Lo, General Manager Finance and Administration, and Mr Mike Turner, General Manager Marketing and Business Development.
Performance statements for the first five executives listed above are provided below as required by the Annual Reports (Statutory Bodies) Regulation 2000.
Performance Statements
Name: Stan Droder Position: Chief Executive Officer Remuneration package paid or due and payable for year: $264,999 Performance pay: $37,000, being an accrued payment as part of his performance based remuneration, for meeting agreed performance hurdles established by the Board including: increasing Pillar's client base; enhancing operational performance including compliance; reducing costs; and developing the potential of staff as whole through strategies such as teamwork and individual development. Performance requirements established at CEO level cascade, at greater levels of detail, down the management chain. Managers below CEO level also received performance pay where considered appropriate on the basis of their individual contributions to these and other goals. Period: Full year Results: Tasks set by the Board for the Chief Executive Officer and achieved successfully included: • meeting client performance standards and ensuring harmonious commercial relationships with clients; • providing effective strategic leadership of the organisation
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including further strengthening business disciplines and Pillar’s identity in the market; • strengthening the compliance program and internal controls; • further enhancing human resource management and pursuit of Pillar’s goal to be an employer of choice; and • completing the relocation to Coniston.
Name: Peter Cormack Position: General Manager, Operations Remuneration package paid or due and payable for year: $190,118 Performance pay: $6,000 paid during 2002-2003 for contributing to improved organisation performance during the 2001-2002 financial year. Period: Full year Results: Managed the superannuation administration operations for three Funds with a total of over 600,000 members. This included: • achieving contract performance standards for a division of over 200 staff dealing with high levels of member inquiries, superannuation contributions & benefits and other functions; • implementing administration for a new client well ahead of the originally scheduled time; • improving organisation productivity and performance through implementing the merger of two organisation divisions and other functional adjustments, and further relocations to Coniston; • contributing to retention and expansion of business through presentations to clients and prospective clients; and • contributing to Pillar’s involvement in the Wollongong business community.
Name: Mr Bob Bramston Position: General Manager Business Systems Remuneration package paid or due and payable for year: $200,000 Performance pay: $4,000 paid during 2002-2003 for contributing to improved organisation performance during the second half of the 2001- 2002 financial year. Period: Full year Results: Managed the IT function for Pillar and Pillar’s clients including: • meeting IT availability requirements in a high volume &
complex system environment; • successfully migrating the data for a new client from the former administrator and ensuring system support well ahead of the originally scheduled time; • rationalising IT activities through merging two information technology divisions and relocating positions to Coniston; • developing ties with IT suppliers to leverage off their product-expertise; and • developing the Business Systems Operation Plan for review of policies and processes and rationalisation of systems.
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Name: Eric Lo Position: General Manager Finance and Administration Remuneration package paid or due and payable for year: $204,254 Performance pay: $5,000 paid during 2002-2003 for contributing to improved organisation performance during the 2001-2002 financial year. Period: Full year Results: Managed the accounting and finance functions for Pillar and accounting of superannuation funds for Pillar's clients. This included: • meeting accounting requirements and deadlines, and implementing accounting for a new client well ahead of the originally scheduled time; • successful implementation of unitisation of fund-member accounts; • enhancements to costing and profitability reporting; • relocation of accounting functions and improved service & productivity; and • contributing to further development of accounting policy.
Name: Mike Turner Position: General Manager, Marketing and Business Development Remuneration package paid or due and payable for year: $197,680 Performance pay: $5,000 paid during 2002-2003 for contributing to improved organisation performance during the 2001-2002 financial year. Period: Full year Results: Managed the marketing and member communications functions. This included: • keeping Pillar’s capabilities and business interests widely known within the superannuation industry through further developing and implementing the marketing plan, arranging industry events, visiting prospective clients and revitalising publications and advertising; • playing a key role in Pillar’s success in retaining and attracting business by leading & coordinating tendering activities and other presentations of Pillar’s capabilities; • meeting performance standards for issue of statements to Fund members; • maintaining Pillar’s interests in the broader community through charity and sponsorship arrangements.
Number of Executive Officers
The following figures disclose the number executive officers employed at the close of the year with an annual remuneration package equal to or exceeding the value of remuneration for Senior Executive Service Officers, level 1. The figures include information technology managers.
Date Female Male 30 June 2003 2 9 30 June 2002 3 11
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Human Resources
EEO Achievements
The Corporation is an equal opportunity employer that has integrated EEO practices into all areas of the workplace, thereby creating an environment where staff are valued and have the opportunity to contribute and develop to their fullest potential. The merit principle is applied to all recruitment, selection, promotion, training and other employment-related opportunities. Ongoing activities include the encouragement of target groups to access personal development opportunities, grievance resolution and confidential counselling services.
Statistical information for EEO Groups -
Table A - Trends in the Representation of EEO Groups
% of Total Staff EEO GROUP Benchmark or 2000 2001 2002 2003 Target Women 50% 65% 63% 59% 60% Aboriginal people and Torres Strait 2% 1% 1% 1% 1% Islanders People whose first language was 19% 23% 21% 19% 18% not English People with a disability 12% 3% 4% 3% 2% People with a disability requiring 7% 0% 0% 0% 0% work-related adjustment
Table B - Trends in the Distribution of EEO Groups
Distribution Index (See notes 1 and 2 below) EEO GROUP Benchmark or 2000 2001 2002 2003 Target Women 100 n/a n/a n/a 75 Aboriginal people and Torres Strait 100 n/a n/a n/a n/a Islanders People whose first language was 100 n/a n/a n/a 103 not English People with a disability 100 n/a n/a n/a n/a People with a disability requiring 100 n/a n/a n/a n/a work-related adjustment
Note 1. A Distribution Index of 100 indicates that the centre of the distribution of the EEO group across salary levels is equivalent to that of other staff. Values less than 100 mean that the EEO group tends to be more concentrated at lower salary levels than is the case for other staff. The more pronounced this tendency is, the lower the index will be. In some cases the index may be more than 100, indicating that the EEO group is less concentrated at lower salary levels. The Distribution Index is automatically calculated by the software provided by ODEOPE. Note 2. The Distribution Index is not calculated where EEO group or non-EEO group numbers are less than 20.
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Changes in Legislation
Changes in legislation related to superannuation administration are reported in the Annual Reports of the Corporation’s clients, in particular the Annual Reports of the FSS Trustee Corporation and the SAS Trustee Corporation.
There were no changes in the Superannuation Administration Authority Corporation Act 1999.
Consumer Response
Guarantee of Service
Service standards are specified within service provision contracts with the Corporation’s clients.
Complaints
The Corporation reports to its trustee clients each quarter on the complaints received from the members of the schemes the Corporation administers.
Public Sector Funds
By arrangement with its public sector trustee clients, Pillar’s annual report includes statistics on complaints received for those funds. There were 300 individual complaints about particular situations recorded for the year ended 30 June 2003 applicable to Public Sector Funds. A statistical breakdown by category is shown below. This results in a total greater than 300 because some individual complaints cover more than one category.
The definition of a complaint for reporting purposes is ‘a written or oral expression of dissatisfaction which requires a response’.
Category of Complaint Number of Complaints Application of a scheme provision 43 Delayed or incorrect employer advice 10 Delay in the provision of a service 51 Quality of service including accuracy of information 158 Other causes 53 Total 315
Number of fund members as at 30 June 2003 618,434
Managers review the handling of complaints on a sample basis and this includes follow-up contact with the person who complained. All complaints are analysed to determine if there is a systemic cause, and if that is the case, corrective and preventive action is implemented.
Staff and managers are encouraged to recognise and highlight complaints that show the need for changes to scheme literature, standard letters, systems, procedures and practices. Where appropriate, changes to legislation or policy are proposed to clients for their consideration.
Disputes and Appeals
Disputes and appeal provisions for Public Sector Funds are administered by the public sector Trustee clients of the Corporation and are covered in their Annual Reports.
The Superannuation Complaints Tribunal (SCT) administers disputes and appeals for Private Sector Funds.
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Freedom of Information
Statement of Affairs
Every agency covered by the Freedom of Information Act 1989 is required by the Act to publish an annual Statement of Affairs.
The Superannuation Administration Corporation (SAC), trading as Pillar Administration, was created with effect from 26 July 1999 by the Superannuation Administration Authority Corporatisation Act 1999.
The organisation’s structure, functions and charter are set out in Part A of this annual report. The financial summary is in the audited financial statements, which is Part B of this annual report.
Freedom of Information Procedures
Arrangements can be made to inspect or obtain copies of accessible documents by contacting the Freedom of Information Coordinator, telephone phone (02) 4253 1662 or fax (02) 4253 1688 or by writing to the Freedom of Information Coordinator, Pillar Administration, Locked Bag 1229, Wollongong DC, NSW, 2500.
When prior arrangements have been made documents may be inspected between the hours of 10am and 4pm at Pillar Administration, Old Springhill Road, Coniston, or at level 18, 83 Clarence Street, Sydney.
Charges for FOI Applications
Nature of Application Application Fee Processing Charge Access to personal records $30* First 20 hours free, then $30 per hour All other requests $30* $30 per hour Amendment of records Nil Nil *50% reduction for financial hardship and public interest reasons
Documents held by Pillar
Pillar holds the following policy documents that are available free of charge, many on behalf of the SAS Trustee Corporation (STC), and the FSS Trustee Corporation (FTC). Documents that relate to superannuation include a reference to the governing legislation:
1. All STC Schemes Policy Register. This contains policies covering various matters affecting STC Schemes. 2. State Authorities Superannuation Scheme (SASS) Policy Register. This contains policies arising from the State Authorities Superannuation Act 1987. 3. State Superannuation Scheme (SSS) Policy Register. This contains policies arising from the Superannuation Act 1916. 4. Police Superannuation Scheme (PSS) Policy Register. This contains policies arising from the Police Regulation (Superannuation) Act 1906. 5. State Authorities Non-contributory Superannuation Scheme (SANCS – Basic Benefit) Policy Register. This contains policy arising from the State Authorities Non-contributory Superannuation Act 1987. 6. First State Super (FSS) Policy Register. This contains policies arising from the First State Superannuation Act 1992 and the First State Superannuation Scheme Trust Deed and Rules.
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Freedom of Information Statistics 1 July 2002 to 30 June 2003
Assessment of information (based on Appendix B of the FOI Procedure Manual published by the New South Wales Premier’s Department).
Freedom of Information (FOI) Requests New (including transferred in) 506 Brought forward 21 Total to be processed 527 Completed 503 Withdrawn 2 Total processed 525 Unfinished (Carried forward) 22
Result of FOI Requests Granted in full 267 Granted in part 247 No documents found 13 527 Ministerial Certificates Issued 0 Number of requests requiring formal consultations 2 Amendment of Personal Records 1 Notation of personal records 0
FOI requests granted in part or refused Basis of disallowing or restricting access Section 25(1)(a) - exempt 247 Section 31(4) - released to medical practitioner 3
All completed requests - FOI fees received $ 15,765
Type of discount Financial hardship pensioner 3
Days to Process - Elapsed Time 0-21 days 364 22-35 days 139 over 35 days 0 503
Additional Information as required by clause 9(3), FOI (General) Regulation 1995
(A) Comparison of information with the same period in the previous year – key elements: The number of FOI requests increased from 315 to 506 (B) Impact assessment: The Summaries and Statement of Affairs have been produced in terms of the legislative requirements. (C) Particular of major issues that have arisen in connection with Pillar compliance with FOI requirements: Nil (D) Particulars of inquiries under the ACT by the Ombudsman or appeals to the Administrative Decisions Tribunal or the Supreme Court: Nil (E) Particular of the outcome of any appeals: Nil
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Other Publications
Other publications of the Corporation available are this third Annual Report of the Corporation, and a limited number of previous Annual Reports.
The Corporation assists its Trustee clients with the publication of many documents for the use of Fund members. These publications belong to the Trustee Corporations and are identified in their Annual Reports.
Compliance with Specific Policies
Ethnic Affairs Priorities Statement (EAPS)
The system of providing language services to scheme members continued to ensure that appropriate languages are available when required. The services of the Ethnic Affairs Commission Language Service are used when Pillar’s multilingual staff are unable speak the language of a particular fund member or are unavailable. Ethnic diversity is reflected within Pillar and is recognised in staff recruitment practices.
Electronic Service Delivery
The Corporation met the Government’s targets for itself and for its major clients ahead of deadlines. That is: 1 all appropriate publications are on the internet; 2 all appropriate high volume transactions are on the internet; and 3 all other appropriate transactions are on the internet.
Disability Action Plan
The Corporation provides flexible communications options to cater for clients and staff with specific needs. When providing customer services any special client needs are met on a case by case basis
NSW Government’s Action Plan for Women
The NSW Government’s Action Plan for Women focuses on a range of issues including: equitable and safe workplaces for women; the interest of women in economic reform; and access for women to education and training. Relevant policies in relation to the schemes administered by the Corporation are the responsibility of the Trustee clients of the Corporation. In relation to internal staff, the Corporation’s policies and practices are intended to ensure equitable and safe workplaces and equality of opportunity.
Occupational Health and Safety
An active occupational health and safety committee meets monthly to assist in resolving any safety issues. Members of the committee provide OH&S advice to staff, conduct regular workplace inspections, and provide reports on any remedial action required. Sixteen workers compensation claims were submitted to Pillar’s insurers during 2002-2003 including seven claims for matters arising from travelling to and from work.
Code of Conduct
The Corporation has a detailed Code of Conduct. In addition, all staff are required to sign an Employee's Covenant annually. This covers the Corporation’s Code of Conduct, Protected Disclosures Policy, Harassment Policy, EEO Policy, Privacy Guidelines, Occupational Health and Safety responsibilities, building security procedures, virus protection, workstation access security, electronic messaging and media guidelines for staff.
Waste Reduction and Purchasing Plan
The Corporation is committed to waste reduction and recycling and has produced a Waste Reduction and Purchasing Plan. Practices consistent with the policy are firmly established in business processes. This
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has reduced paper products used by the Corporation and, through E-Business initiatives, by other organisations as well. The key requirements are that: information technology and other technologies as appropriate are used to the optimum extent to reduce paper needs in the Corporation, bearing in mind cost and quality criteria; office consumables with recycled content are purchased where these are readily available and meet cost and quality criteria; paper and Cardboard waste that meets recycling criteria as advised from time to time are placed in designated containers for recycling; and other suitable materials are recycled as advised from time to time. This includes toner cartridges. Employees are required to comply with the policy, and would be aware that the policy reflects corporate practices that have been in place for some time. New employees are made aware of the practices as part of the standard induction program.
Additional Financial Related Data
Major Works
There were no major works undertaken during the year.
Expenditure on Consultants during July 2002 - June 2003
Various firms provided services which were partly advisory in nature. There were no firms whose services were substantially advisory services and whose costs exceeded $30,000.
A total of $78,611 was paid to firms during the year whose services were substantially advisory and who individually received less than $30,000. The classification of the projects and the respective costs were: • finance and accounting: $22,474 • management services: $16,000 • information technology: $15,950 • organisation review: $24,187
New contracts in excess of $100,000
It is the Corporation’s policy to publish the names of firms who win contracts exceeding $100,000 during the reporting period. There was one award in excess of $100,000, as follows: Firm: Deloitte Touche Tohmatsu Contract: Internal Audit Services for three years commencing July 2003.
Ongoing contracts or business relationships during 2002-2003
In addition to the firms mentioned above, and excluding Pillar’s clients, firms with ongoing contracts or business relationships with the Corporation included: Allens Arthur Robinson, Corporate Software, Cost Effectiveness Measurement Inc, Ernst & Young, Dimension Data, Financial Synergy, Hewlett Packard, IBM, IBM Global, NTT, Red Flame Design, Evolution Media, Recall, Synchronised Software, Telstra, 3D Networks, Tower Technology, and Unisys.
Grants to Non-Government Organisations
No grants to non-government organisations were made during 2002-2003.
Overseas Visits
There were no costs related to overseas visits by representatives of the Corporation, and there were no such visits.
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Payment Performance Indicators
Accounts paid on time within each quarter:
Total Accounts Paid On Time Quarter Target Actual Target Actual % % $ $ September 2002 100 100 6,927,006.43 6,927,006.43 December 2002 100 100 7,143,670.21 7,143,670.21 March 2003 100 100 5,896,776.84 5,896,776.84 June 2003 100 100 5,120,120.15 5,120,120.15 Total 25,087,573.63 25,087,573.63
Risk Management and Insurance
The risks facing the Corporation have been identified and assessed, and an analysis has been provided in the Statement of Corporate Intent prepared in accordance with the State Owned Corporations Act 1989.
There is a variety of risks inherent in the operations undertaken by the Corporation. These include breach of professional duties, compliance with contractual, regulatory and statutory requirements, and various commercial risks. Key risks have been identified for annual and quarterly reporting to the Board and Shareholding Ministers.
Insurance cover is maintained through premiums paid to the Treasury Managed Fund, and includes professional indemnity cover for all staff, property, workers compensation, and miscellaneous matters.
The Corporation has a comprehensive Business Continuity Plan (BCP) which is regularly tested and includes arrangements for an alternative computer systems and processing site for maintenance of the main business functions in the event of a disaster.
Insurance premiums paid to Treasury Managed Funds for 2002/2003 amounted to $457,314 (GST incl.)
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Index of Legislative Compliance
Access Front cover Audit Opinion Part B Charter A4 Code of Conduct C15 Committees C3, C7 Complaints C12 Consultants C16 Contractors C16 Disability Plan C15 Electronic Service Delivery C15 Employees’ Leave Entitlements Part B Equal Employment Opportunity C11 Ethnic Affairs C15 Executive Numbers C10 Executive Remuneration C8 Executive Performance C8 Discussion of Issues and Performance Part A Financial statements Part B Freedom of Information C13 Grants to Non-Government Organisations C16 Guarantee of Service C12 Human Resources C11 Legislation C12 Major Works C16 Payment of Accounts C17 Oversight and Management A5, A6,C2, C7 Objectives A4, A6, A8 Occupational Health and Safety C15 Organisation Chart A5 Overseas Visits C16 Publications C13, C15 Risk Management and Insurance C17 Waste Reduction C15 Women’s Action Plan C15
Report Production Details
The estimated external costs of this report are estimated to be no greater than $1,500, made up of: printing an initial 20 copies at $180, followed by a further print run of 150 copies with photographs at an estimated maximum cost of $1,300.
This report will be available on the internet from January 2004. The Internet address is http//:www.Pillar.com.au
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