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ASL NM Super Board Papers - November 2017 -AMP Strategy Towards 2022
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- Cootlnue lo - Alr:1'oe.. te ermvtll -.conl1nueto - Organic growt~ C"uatet r,.rt Jp.iU<111 - 111-to 1~1th<1 -l>tCt'ldMAG - Grow and extend - Accelerate -Conlnue n El••opc Nor1h ma11age tor yield m.=ir.agefo• Vta integrated n ,adv1• e val1ff· 011in enh.1n.te pl.stfcrm capab Focus on customer, cost, capital and cUlture AMP.6000.0128.7876 ASL NM Super Board Papers - November 2017 - AMP Owning Our Culture Anchored in the Anchored in the AMP Performance AMP Code of Conduct Promises & Leadership Behaviours We will... Respect and value differences and create a safe working environment Act in the best interests of AMP, its customers. business partners and shareholders Identify and manage any conflicts of interest Respect privacy and confidentiality Comply with our code. AM P's policies and the law and report any breaches immediately 2 AMP.6000.0128.7877 ASL NM Super Board Papers · November 2017 - Agenda AGENDA Concurrent Meeting of the Boards of AMP Superannuation Limited and N.M. Superannuation Proprietary Limited ABN 31 008 414 104 ABN 31 008 428 322 (ASL) (NM Super) To be held on Thursday 9 November 2017 from 8.30 am -10.00 am (Sydney time) 167 Flinders Street, Adelaide and via teleconference Noting= • I Approval = + I Trustee Services Cover= * ~ Item Presenter Entity Paper Est. Time 1. Material Personal Interests & Conflicts of Interest Chairman Alf Attached 8.30 am • (5 mins) 2. Administration 8.35am (5 mins) 2.1 M.i n_ute:u>Lt.!le_EloJK.d.l!leJ!Jlng_sJJ.e&.2LSJlp_~nibfilOJ1 Chairman All + Attached 2.2 Business Arising Chairman A ll • Attached 3. Trustee Services 8.40 am (20 mins) 3.1 GPR Funding Reguest - rustee Insurance Review Sansom ASL • Attached 4. Business Initiatives 9.00 am (60 mins) 4 .1 ~us.trajian l;.quitie~~u!k.J!ans fgr§. ;;indJ.n.¥.~strntill) Clark ASL Attact1ed ~nu URQ~§l *• 4.2 8.e spSJ.n~ bl~e§t~o.tl,.ftad_e.i:;; Al! fill:£1liao.§bare Suan, Chee ASL Attached Fund - Governance Process for Performance Based • ~ lntroducJ.i.Qn 4.3 ~~<:1.$.b..D..w_ofill_Agre_e.in.ent Clark ASL *• Attached 5. Chairman's Session Chairman All • Verbal 10.00 am (10 mins) 6. Other Business All Alf • Verbal 10.1oam (5 mins) Close 10.15am 3 AMP.6000.0128.7878 ASL NM Super Board Papers - November 2017 - Agenda Directors: Also Attending: ltem(s) Rick Aller! (Chairman) Full meeting Lionel Mateo Full meeting Michele Dolin Full meeting Rachel Sansom Items 1 - 4 Darryl Mackay Full meeting Natalie Sultana Items 1 -4 Louise Dudley Full meeting Lucinda Mccann Items 1 -4 Brian Salter Full meeting David Clark ltem4 Mel Jose ltem4 Sharon Suan ltem4 Jeffrey Chee Item 4 4 AMP.6000.0128.7879 ASL NM Super Board Papers • November 2017 - Agenda '';_ AMP~ ASU NM SUPER BOARD PRESENTERS NOVEMBER MEETING David Clark Head of Product Management > 4.1 Australian Equities - Bulk Transfers and Investment Menu Update ~ 4.3 AMP Super Cash Deposit Agreement Mel Jose Senior Product Portfolio Manager, Product Management )'> 4.1 Australian Equities - Bulk Transfers and Investment Menu Update ).- 4.3 AMP Super Cash Deposit Agreement Jeffrey Chee Senior Manager Investment Regulatory Governance > 4.2 Responsible Investment Leaders Australian Share Fund - Governance Process for Performance Based Fee Introduction Sharon Suan Senior Manager Investment Regulatory Governance }:>- 4.2 Responsible Investment Leaders Australian Share Fund - Governance Process for Performance Based Fee Introduction 5 AMP.6000.0128. 7880 ASL NM Super Board Papers - November 2017 - Material Personal Interests & Conflicts of Interest Please note: The register of relevant duties Is published on a quarterly basis on the AMP website pursuant to s29QB SIS Act. Changes shown below havl!' been made since previous publish date. Relevant Duties ,oa~- - ..1 '.fu11~or · -; ~ ·Ftcilit 1111eor Ress)Orisible-.-,. fEiitnv (ASL. - - ·Ro1e~ Dvty , :-- -~; !li!i.i ~eofrole'/ iliit~ -1 'entered In, 11 Responsible• . ti Pem•n . . . - . - l ~ndlor. NM s,ui>er)' f - . 1 !~91~1~ ·• · ':~~rfon .' .l . - " • l ' ..... ~ Trustee Directors 04·Dec-15, Richard Hugh Allert Non-executive Oireclor ASL and NM Super 1. Chairman and Non-executive Director ASL - Has a fiduciary duly 10 beneficiaries wilhin the ASL 2, Chaim1an and Non-executive Olreclor of NM Super RS Es 3. Member ol the ASL I NM Super Audi I Commlllee • Has a fiduciary duly to beneficiaries wilhin lhe NM Super RSEs - Responsible lor t11e stralegio direction and operalions ot A~l ~nri NM SUN>r. 04-Dec-15 Richard Hugh Allert Non-executive Dlreclor ASL and NM super Directoc or Genesee & Wyoming Inc and Genesee & Wyoming Aus1rafla Prv Lid ()4-Dec-15 Richatd l-lu911 Alfert Non-execulfVe Director ASL and NM Super Chairman of Weslern Deseft Resources Llmiled (in liquidation) 04-Dec-15 Richard Hugh Allefl No11-execo1rve Dlreclor ASL and NM Super Directo1 of RH Allert Ply Lid. 04-Dec·15 Richard Hugh Allert Non.,executlve Director ASL and NM Super Deputy Chairman of Cavill Power Products Pty ltd 04· Dec·1 5 Richard Hugh Allert Non·executive Director ASL and NM Super Chairman ol James Morrison Academy ol Music Ply Lid 04-Dec-15 Richard Hugh AllerJ Non-exectJtive Drrector ASL and NM Super Cha11man of KaJ 12-Apr-13 Michele treM Dolfn Non-executi\/e Director ASL arid NM Supel 1. Director of St Andrew's Auslralla Services Pty L11.n·11ed 2. Director of SI Andrew's Insurance (Australia) Pty Limited 3. Director of SI Andlew's Ufe Insurance Ptv Llmlled 13·NOV·14 Michele Irene Dolin Non.,executive Oireator ASL and NM Super Director of E!ectriclty Generation and Relail Corporallon. AMP.6000.0128.7881 ASL NM Super Board Papers - November 2017 - Material Personal Interests & Conflicts of Interest Please note: The register of relevant duties Is published on a quarterly basis on the AMP w ebsite pursuant tos29QB SlS Act. Changes shown below have been made rince previous publish date. '.OiiTe ·;. -, fulf .,ame i>t : 'f101e fille of Flespofis;bte • ', ~111v (ASL;, . rc.1-;; :ouiy·• -~ "Nafure of role/ duly I 1 ;entered frq ~asponslble • Per!!on - ' · · ·" · and10~ N,!A s.u'r>e\'), - • ·' , •- - • ' " I :regist~r 1~1 Pe~On :_ _ '1·~ _ ~ _,- ·~- -~1 · _ ~ ·--~ __ 1 ..... _- __ 12·Apr• 13 · Brian Edward Salter E 7 AMP.6000.0128.7B82 ASL NM Super Board Papers - November 2017 - Material Personal Interests & Conflicts of Interest Please note: The register of relevant interests is published on a quarterly l>asis on t he AMP website pursua11t to s29QB SIS Act. Changes shown below have been made slnu: previous publlsl> date. Relevant Interests A relevant /nte1es1 refers to any l11terest, g/fl, emoltimenr 01 benefit d/1ect1Y or 111d1recl/y held by the Tmstee. an Associate or ll1a Trustee or a Responsible Person Trustee Dltac:lors Receives remuneration as Chairman of ASL ASL and NM Non·eJ(eculive 04·De<:-15 Richard Hugh Allert Non-Execull\/e DireclOf Direct and NM Super and as member cf the ASL and 04·Dec-15 Yes Super Director NM Su er Audit Committees ASL and NM Customer& 04·Dec·15 Richard Hugh AIJert fllon·Execullve Direc1or Direct Owner of a Nonh lnves1ment acoounl 04--Dec-15 Yes Su r Beneficia tnteresl in AMP Limiled shares t~rough ASLat1dNM 04·Dec·15 Richard Hugh Allert Non-Executive Director Direct Beneficiary superannuation fund, Kanjo Pty Lid (trustee of 04·0ec-15 Yes Super the R H Allert Su erannua1ion Fund . Receives remuneration as Direc1or ol Genesee ASL and NM 04·Dee·15 Richard Hugh Alleri Non-Executive Director Di reel Beneficiary & Wyoming Inc and Gcnosoo & Wyqmlng 04·Dec-•5 Yes Super Austraria Pt Lid ASL and NM Receives remuneration as Deputy Chairman of 04·Dec·15 Richard Hugh Aller1 Non·Execufive Director Direct Beneficiary 04--Dec·15 Yes Su Cavill Power Products pt Ltd ' Receives remuneration as Chairman of t 8 AMP.6000.0128.7883 ASL NM Super Board Papers - November 2017 - Material Personal Interests & Conflicts of Interest please note; The register of relevant i"terests is pub(lshed <:>n a q1.1arterly basts on the AMP website pursuarit to s29QB SIS Act. Changes shown b~ow have been made slnte previous publish date. Interest in Argo lnvestmenl$ Limited shares ASL and NM through superannuation fund, Ka11jo Pty ltd 04-Dec•15 Richard Hogh Allert Nor\·Execulive Direclor Direcl Beneficla,ry 04-Dec-15 Yes Super (trustee of the R H Allet1 Superannuation Fund). Interest In BHP Billiton Limited shares through ASL and NM superannuation fund. Kanjo Pty lid (lrustee ol 04·Dec·l5 RicllarCI Hugti Allen Non·ExeotJtive Director Direct Beneliciary 04--DeC·l5 Yes Super the R H Allert &Jperannuallon Fund). ASL and NM Ownership Interest In lnlersecl f'\y Limited. 04·DeC·15 Richard HUQh Allen Non·Execullve Director Direct Beneficiary 04-0ec·1 5 Yes Su er ASL and NM Ownership Interest In Kanfo Pty lid. 04-Dec-15 Richard Hugh Allert Non-Executive Director Direct Beneliclary 04-Dec-15 Yes Su er Receives remuneration as a Director of ASL ASL and NM Non-execu1ive 12·Apr-13 Mic~el e Irene Dolin Non·e11ecutive Director Direct and NM Super and as Chair or ltle l\Sl and NM 12·Apr·13 Yes Super Director · Su er Audi! Commiltees Receives remuneration as Director ol SI Andrew's Australia Services Pty Limited, ASL and NM Noo·executive 12-Apr-13 Michele Irene Dolin Non-executive Director Direct Director of St Andrew's lnswance (Ausllalia) Ply 12-Apr-13 Yes Super Director Limited and Dlreclo1 of Sl Andrew's life Insurance Pt Llmiled 1~-Nov·14 Michele Irene Dolin Non-executive Director ASL and NM Non-exec.utive Receives remuneralion as Director of Electricity 13-Nov-14' Super Dlrecl Director · Generation and Retail Corporation. Yes ASL and NM Member I interest in AMP Employee 12·Apr·13 Brian Edward Salter Executive OhectOI' Direct Beneficiary t2-Apr·1 3 Yes Super Superannuation Fund (pan of Signature Superj ln1eres1s In AMP Lliniled shares through; . 1. Superannuatio11 lurid. the Saner FamOy Ply Limited (trustee of the Salter Family ASL and NM 12-Apr-13 Bria11 Edward Salter Executive Dire~tor Direct Trustee Superannuaiion Fund) 12-Apr-13 Yes Super 2.. As part of remuneration arrangements with AMP 3. BE Salter Famll Trust 9 AMP.6000.0128.7884 ASL NM Super Board Papers - November 2017 - Material Personal Interests & Conflicts of Interest please note; The register of relevant Interests is pub(lshed <:>n a q1.1arterly basts on the AMP website pursuarit to s29QB SIS Act. Changes shown b~ow have been made sinte previous publish date. Unvested perlormance rjghls and Short Term General Counsel, Incentive delerral righlS lor AMP Limited 12•Apr·13 Brian Edward, Salter Executive Direclor Direcl 12-Apr-1 3 Yes Svper AMP securities ~$ part of an AMP equity incan\lva Ian. ASL and NM General cou11Set, 12·Apr-13 Brian Edward Salter Executive Director Direct Employee of AMP 12-Apr-13 Yes Super AMP Receives remunera1ion as a Director of ASL ASL and NM Non·e~ecutiVe 15·0cl-13 Darryl John Mackay Non·execullve Director Olrecl ano NM Super and as member 01 !he ASL ana 19·Aug· l3 Yes Super Direclor NM Su er Audit Committees ASL and NM 12-Apr-13 Darryl Jotin Mackay Non·Execu1lve Director Direct Sharel1older lntereslS In AMP Umite lnteresl in AMP Superannuation Saving Tnist - /\SL and NM Customer & Australia Post Superan111Ja1lor1 Plan (pail or 14-JU(1·16 Louise Mary Dudley Non·E.xecu!ive Director lncflrect 14.Jun-16 No Super Beneficiary SignatureSuper). 10 AMP.6000.0128.7885 ASL NM Super, Board Papers· November2017 - Admihistration CONFIDENTIAL MINUTES OF THE CONCURRENT BOARD MEETING OF AMP SUPERANNUATION LIMITED (ASL) ABN 31 008 414 104 AND N. M. SUPERANNUATION PROPRIETARY LIMITED (NM SUPER) ABN 31 008 428 322 (together the " Boards") HELD ON WEDNESDAY 27 SEPTEMBER 2017 AT 11 :15AM AT BOARDROOM, LEVEL25, 33 ALFRED STREET, SYDNEY NSW 2000 PRESENT: Richard Allert (Chairman) Michele Doltn Darryl Mackay• Louise Dudley APOLOGY: Brian Salter ltem(s) IN ATTENDANCE: Lionel Mateo, Company Secretary 1-10.1 Rachel Sansom, Director, Regul<:ltory Governance 1-9, 12 Lucinda McCann. Head ol Legal, Financial Products 1-9, 12 Natalie Sultana, Senior Manager, Trustee Governance 1-9. 12 Melanie Conroy, Senior Mana9er, Re9ulalory Governance 5.2 Lisa Phyland, Head of Product Governance 5.3 Jen Mitchell, Director, Claims 5.4. Lunch Guest Megan Beer, Group Executive, Insurance Lunch Guest Greg Johnson, Insurance Proposition Lunch Guest Jeffrey Chee, Senior Manager. Investment Regulatory Governance 6.1 David Clark. Head of Product Management 6.4 Rod Finch, Director, Strategic Marketing & Customer Experience 7.1 Fotine Kotsilas, Senior Manager. Risk, Insurance & Trustee Services 8.1-8.3 Amanda Hughes, Director, Performance & Reward 10.1 ~via teleconference QUORUM The Chairman noted that all Directors had been given due notice of the meetings ASUNM Super and that a quorum was present in accordance with clause 23.7 of the Companies" Constitutions. 1. MATERIAL PERSONAL The Boards noted the Register of Relevant D1,1ties and Interests. INTERESTS AND CONFLICTS Of Louise Dudley noted that she had been appointed as State Advisory Council INTEREST Member (Queensland) of the Committee-for Economic Development of Australia ASUNM Super (CEDA). The Chairman noted that no Director had been disqual1fied by APRA from holding a prudentially significant role or had any material personal interest or conflicts of interest in the matters to be considered at the meetings which the members would be required to disclose or which would disqualify the members from voting or forming part of the quorum of the meetings, unless otherwise noted or previously declared as a standing notice of interest in accordance with section 192(2) of the Corporations Act. Page 1 o f 9 11 AMP.6000.0128. 7886 ASL NM Super Board Papers - November 2017 -Administration Minutes of concurrent Directors' meetings of AMP Superannuation Limited and N.M. Superannuation Proprietary Limited held on 27 September 2017 2. ADMINISTRATION 2.1 Approval of Minutes 33/201 7 (ASL), 30/201 7 (NM Super) ASUNMSuper The Boards RESOLVED to approve the minutes of the concurrent meetings of ASL and NM Super Boards held on 14 June 2017. 2.2 Business Arising The Boards noted the business arising from previous meetings and Rachel ASUNMSuper Sansom provided a verbal update on open and ongoing items, noting that: • in respect of item 10 Conglomerate Standards: o Management confirmed that AMP would extend the letter of support to NM Super until 30 September 2018; and o While splitting the existing letter of support was not deemed viable at the time, Management would continue to investigate a longer term alternative to documenting AMP's support. • in respect of item 8 Securities Lending Program, Management would communicate the comments from the Chairman regarding careful management of risk and the practica li ty of the program given the relatively low level of return at a future GIC meeting. Additionally, it was noted that the BMM would keep track of this program. Action The Boards requested that renewal of support for NM Super by AMP be added as an item of discussion for the June 2018 meeting. 2.3 Secretariat Report The Boards noted the memorandum from Lionel Mateo titled 'Secretariat Report', ASUNM Super dated 18 September 2017, and it appendices. 3. TRUSTEE SERVICES 3.1 Management Report The Boards noted the memorandum from Rachel Sansom titled 'Management ASUNMSuper Report', dated 19 September 2017. Rachel Sansom provided an overview of the report and a verbal update on key items of interest, including: • the resignation of the Chief Risk Officer of AMP Group, noting Management was confident in the support provided by the ERM team to the Trustees despite the upcoming change of leadership; • agenda item 6.3 regarding "GPR Funding Request - Insurance Governance Support" was tabled for the Directors to consider the allocation of funds in order to better position the Trustees to assess and respond to the changing insurance environment. Action The Directors agreed to postpone the discussion and approval of agenda item 6.3 and requested that Management provide a new memorandum to be tabled at a future meeting of the Boards. 3.2 Policies Review The Boards noted and discussed the memorandum from Natalie Sultana titled ASUNMSuper 'Policies Review', dated 11 September 2017. 34/2017 (ASL), 31/2017 (NM Super) The Boards RESOLVED to approve the updates to the Operational Risk Financial Requirement Strategy, which reflected the removal of detailed financial data, Page 2 of 9 12 AMP.6000.0128.7887 ASL NM Super Board Papers - November 2017 -Administration Minutes of concurrent Directors' meetings of AMP Superannuation Limited and N.M. Superannuation Proprietary Limited held on 27 September 2017 changes to role titles and the Part 9 transfer of NMLA into AMP Life. 4. BOARD AUDIT The Boards noted the memorandum from Michele Dolin titled 'Chairpersons COMMITTEE UPDATE Report - ASL and NM Super Board Audit Committees', dated 27 September 2017. ASUNMSuper Michele Dolin provided an update as Audit Committee Chair, noting that all Directors present were in attendance for the relevant Audit Committee discussions. 4.1 ASL POFs The Board noted: ASL • ASL Fund Financials Overview; • ASL Management's Representation Letter to Directors dated 15 September 2017; • the financials for the following ASL Funds: o AMP Retirement Trust financial report; o AMP Eligible Rollover Fund financial report; and o AMP Superannuation Savings Trust financial report. 35/2017 (ASL) Subject to the requested amendments and clarifications being included, the ASL Board RESOLVED to approve: 1. Each Statement by Trustee for the year ended 30 June 2017 and authorise any two Directors to sign the Statement by Trustee on behalf of ASL; 2. Approve the Financial Reports for the year ended 30 June 2017 for the ASL Funds, comprising the Statement of Financial Position, Operating Statement, Statement of Cash Flows and Notes to the Financial Statements; 3. Declare that; i. the accompanying financial statements of the ASL Funds are properly drawn up so as to present fairy their financial positions as at 30 June 2017 and the results of their operations and cash flows for the year ended on that date are in accordance with Australian Accounting Standards and other mandatory professional reporting requirements in Australia; and ii. the ASL Funds have been conducted in accordance with their constituent Trust Deeds and the requirements of the Superannuation Industry (Supervision) Act 1993 and Regulations and the Corporations Act 2001 and Regulations and Guidelines during the year; and 4. Should any comments by the Board Audit Committee result in changes to the financials, authorise the Director, Regulatory Governance to do all things necessary to ensure the changes are incorporated; and 5. Authorise the Company Secretary to do all things necessary to give fu ll effect to these resolutions. 4.2 NM Super POFs The Board noted: NM Super • NM Super Fund Financials Overview; Page 3of 9 13 AMP.6000.0128. 7888 ASL NM Super Board Papers - November 2017 -Administration Minutes of concurrent Directors' meetings of AMP Superannuation Limited and N.M. Superannuation Proprietary Limited held on 27 September 2017 • NM Super Management's Representation Letter to Directors, dated 15 September 2017. • letter of Representation to NM Super from Asgard Capital Management regarding The Retirement Plan financial statements; • the financials for the following NM Super Funds: o Super Directors Fund financial report; o National Mutual Retirement Fund financial report; o National Mutual Pro-Super Fund financial report; o Wealth Personal Superannuation and Pension Fund financial report; and o The Retirement Plan financial report. 32/2017 (NM Super) Subject to the requested amendments and clarifications being included, the NM Super Board RESOLVED to approve: 1. Each Statement by Trustee for the year ended 30 June 2017 and authorise any two Directors to sign the Statement by Trustee on behalf of NM Super; 2. Approve the Financial Reports for the year ended 30 June 2017 for the NM Super Funds, comprising the Statement of Financial Position, Operating Statement, Statement of Cash Flows and Notes to the Financial Statements; 3. Declare that; i. the accompanying financial statements of the NM Super Funds are properly drawn up so as to present fairy their financial positions as at 30 June 2017 and the results of their operations and cash flows for the year ended on that date are in accordance with Australian Accounting Standards and other mandatory professional reporting requirements in Australia; and ii. the NM Super Funds have been conducted in accordance with their constituent Trust Deeds and the requirements of the Superannuation Industry (Supervision) Act 1993 and Regulations and the Corporations Acct 2001 and Regulations and Guidelines during the year; and 4. Should any comments by the Board Audit Committee result in changes to the financials, authorise the Director, Regulatory Governance to do all things necessary to ensure the changes are incorporated; and 5. Authorise the Company Secretary to do all things necessary to give fu ll effect to these resolutions 5. BUSINESS MONITORING MODEL 5.1 Business Monitoring The Boards noted and discussed the memorandum from Natalie Sultana titled Model - Q2 2017 'Business Monitoring Model - Q2 2017', dated 11 September 2017. ASUNMSuper The Boards moved forward to item 6. 2 of the agenda 6.2 GPR Funding Request - The Board noted and discussed the memorandum from Natalie Sultana titled Page 4 of9 14 AMP.6000.0128. 7889 ASL NM Super Board Papers - November 2017 -Administration Minutes of concurrent Directors' meetings of AMP Superannuation Limited and N.M. Superannuation Proprietary Limited held on 27 September 2017 SST Trust Deed 'GPR funding request - SST Trust Deed consolidation'. dated 22 September Consolidation 2017. ASL 36/2017 (ASL) The ASL Board RESOLVED to approve the release of up to $13,200 (including GST) from the General Purpose Reserve to engage external legal counsel to consolidate the Superannuation Savings Trust Trust Deed. The Boards moved back to item 5.2 of the agenda Melanie Conroy joined the meetings 5.2 Exceptions Report: The Boards noted the memorandum from Melanie Conroy titled 'Exceptions Disclosing relevant Report for Disclosing relevant interests', dated 6 September 2017. interests Melanie Conroy provided an overview of the report and the causes that ASUNMSuper triggered the exception report. It was noted that the process failure had no detrimental impact on the members and that Management was working to strengthen the process to avoid reoccurrence. Action The Boards requested that an update on improvements made to strengthen the process be provided at the December meeting. Melanie Conroy left the meetings The Boards moved forward to item 9 of the agenda ?-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-··-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-i 9. LITIGATION REPORT ASUNMSuper i i i Redaction for Legal Privilege i i"-·- ·-·-·-·-·-···-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-···-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-···-·-·-·-·-·-·-·-·-·-·-·-·-·-·· The Boards moved back to item 5. 3 of the agenda Lisa Phy/and joined the meetings 5.3 Exceptions Report: The Boards noted the memorandum from Lisa Phyland titled 'Exception Report for Super, Retirement & Superannuation Products Report for the Quarter ended 30 June 2017', dated 13 Investments (SRI ) September 2017. ASUNMSuper Lisa Phyland provided an overview of the report, noting that the continued reporting of incidents evidenced a strong culture that encouraged issues to be raised. The Boards discussed incident 4925, which occurred due to arbitrage, whereby some members engaged in excessive switching and were able to take advantage of timing differences in pricing between two products. It was noted that the breach had been reported to the regulators and the control environment had been improved to prevent this situation from reoccurring. It was further noted that all parties affected would be compensated by AMP. Lisa Phy/and left the meetings Jen Mitchell joined the meetings 5.4 Exceptions Report: The Boards noted the memorandum from Jen Mitchell titled 'Exception Report for Claims ASL and NM Super Claims service report Q2, 2017', dated 8 September 2017. ASUNMSuper Page 5of9 15 AMP.6000.0128. 7890 ASL NM Super Board Papers - November 2017 -Administration Minutes of concurrent Directors' meetings of AMP Superannuation Limited and N.M. Superannuation Proprietary Limited held on 27 September 2017 Jen Mitchell provided an overview of the report, including that: • the report was based on previous metrics and that all future reports would be based on the new metrics approved by the Boards; and • while exceptions had been triggered, the team was focussed on member outcomes by helping members in a timely way, resulting in a decrease in volume of complaints and positive Net Promoter Scores. Jen Mitchell left the meetings The meetings were adjourned at 12. 25pm and the Boards attended a working lunch WORKING The Boards attended a working lunch with Megan Beer, Greg Johnson, and Jen LUNCH Mitchell where they discussed various life insurance related topics, including: • a general update on the life insurance industry; • an update on the life insurance business in AMP and the second tranche of re-insurance concluded with Munich and Gen Re; and • an update on the regulatory environment and the future impact of the FSC Life Insurance Code of Practice. The meetings were reconvened at 13.40pm Jeffrey Chee joined the meetings 6. BUSINESS INITIATIVES 6.1 Investment Policy and The Boards noted: Liquidity Management • the memorandum from Natalie Sultana titled 'Annual Policies Review - Plan Investment Policies & Liquidity Management Plan', dated 8 September ASUNMSuper 2017;and • the memorandum from Jeffrey Chee titled 'Superannuation Investment Policies and Liquidity Management Plan Annual Policy Review', dated 6 September 2017. 37/2017 (ASL), 33/201 7 (NM Super) The Boards RESOLVED to approve the 2017 administrative updates. effective 1 November 2017, to the following governing documents: • Superannuation Life-Backed Investment Policy; • Superannuation Platforms Investment Policy; and • Liquidity Management Plan. Jeffrey Chee left the meetings OTHER BUSINESS The Boards noted that an additional meeting would be required prior to the ASUNMSuper December meetings, however no date had been defined yet. It was noted that Group Secretariat would be contacting the Directors to organise the additional meeting. Action Additionally, the Directors requested that Management prepare a regulatory update memorandum consolidating year-to-date interactions and outstanding material actions with ASIC and APRA. Page 6 of9 16 AMP.6000.0128. 7891 ASL NM Super Board Papers - November 2017 -Administration Minutes of concurrent Directors' meetings of AMP Superannuation Limited and N.M. Superannuation Proprietary Limited held on 27 September 2017 David Clark joined the meetings The Boards noted that item 6.3 of the agenda had already been discussed and moved to item 6.4. 6.4 Responsible The Board of ASL noted the memorandum from David Clark titled 'Responsible Investment Leaders Investment Leaders Australian Share Fund - Performance Based Fee Australian Share Fund Introduction', dated 19 September 2017. - Performance Based Fee Introduction David Clark provided an overview of the report, noting that: ASL • AMP Capital was likely to introduce a Performance Based Fee (PBF) for one of the underlying managers for Responsible Investment Leaders Australian Share Fund (RIL Fund), which would affect approximately 6000 members. It was further noted that the members of the Anglican MySuper Plan invested in this fund; • the PBF would change how the RIL Fund was managed, aiming to overcome the underperformance issues encountered in the past; • the Group Investment Committee would consider the impact of the PBF and ongoing suitability of RIL Fund for members of the Anglican MySuper Plan. This assessment would be presented to the Board of ASL at the November meeting; • the members would receive communication once the PBF was implemented, to explain the rationale behind the fee increase; and • implementation of the PBF was planned for 1 December 2017. David Clark left the meetings Rod Finch joined the meetings 7. PRESENTATION 7.1 AMP Customer Strategy The Boards noted the memorandum from Rod Finch titled 'AMP Customer Update Strategy Update', dated 18 September 2017. ASUNMSuper Rod Finch presented a demonstration of the Customer Master Data Management platform, a web-based database tool used to meet customer needs consistent with AMP's goals-based approach. He also demonstrated how campaigns were used to gather critical information on customer behaviours and how this tool would be used to support AMP customer strategy. Action The Boards requested that information of data analytics and campaigns be incorporated into future ongoing reporting through the BMM, starting Q1 2018. Rod Finch left the meetings Fotine Kotsilas joined the meetings 8. ENTERPRISE RISK MANAGEMENT 8.1 Quarterly Risk & The Boards noted the memorandum from David Barry and Fotine Kotsilas titled Compliance Report 'ERM Risk Report and Compliance Certificate', dated 5 September 2017. ASUNMSuper Fotine Kotsilas provided an overview of the key points of the report, including that: Page 7 of9 17 AMP.6000.0128.7892 ASL NM Super Board Papers - November 2017 -Administration Minutes of concurrent Directors' meetings of AMP Superannuation Limited and N.M. Superannuation Proprietary Limited held on 27 September 2017 • regulatory scrutiny remained high; • the 2017 ERM Operational Plan had been developed to incorporate APRA's recommendation following the regulator's review of the BMM; • the AMP Capital ERM team had been involved in reviewing the Securities Lending Program; • in relation to amber rated Key Risk Indicators (KRls): o four new significant breaches had been reported to ASIC and APRA, o an exception regarding Claims Administration had been triggered for two consecutive quarters due to failing to meet service standards; and • following the 'e-rollover' fraud incident, two KRls were operating outside the Trustees' approved risk appetite. Action The Boards discussed the control framework against fraudulent activities and requested that further information be provided to the Boards regarding proactive fraud assessment. 8.2 Trustee Risk Discussion The Boards noted the memorandum from David Barry and Fotine Kotsilas titled ASUNMSuper 'ERM Risk Session - Pre-read', dated 18 September 2017. The Boards participated to a scenario-based exercise regarding the reputation risk for the Trustees. It was noted that reputation risk was considered material for the Trustees and should be treated as a standalone material risk. The Boards considered a range of different scenarios, which would lead to an assessment by the Trustees, potentiall y resulting in the termination of their relationship with AMP in extreme cases. The Boards discussed the rating of reputation risk for the Trustees, noting that the risk would be rated high if no controls were in place. Action The Boards requested that: • ERM provide further information on the controls in place to mitigate reputation risk, in order to assign a residual risk-rating specific to the Trustees; and • Management and ERM prepare the list of events that could trigger the termination of relationship with AMP, for discussion at the December meeting of the Boards. Fotine Kotsilas, Rachel Sansom, Lucinda McCann and Natalie Sultana left the meetings Amanda Hughes joined the meetings 10. REMUNERATION 10.1 Proposed APRA The Boards noted: Specified Individuals • the memorandum from Rachel Sansom titled 'APRA specified individuals', for 2017 dated 7 September 2017; ASUNMSuper • the memorandum from Amanda Hughes titled '2017 and 2018 APRA specified individuals', dated 7 September 2017; Page 8of9 18 AMP.6000.0128. 7893 ASL NM Super Board Papers - November 2017 -Administration Minutes of concurrent Directors' meetings of AMP Superannuation Limited and N.M. Superannuation Proprietary Limited held on 27 September 2017 • the performance goals for the additional APRA specified individuals that the Trustees were the noting board for; and • the proposed APRA specified individuals for 2017. Action The Boards requested that 'product consolidation', specifically regarding legacy products, be added to the Wealth Platform Strategy item (2) in Vicki Doyle's goals list. 38/2017 (ASL), 34/2017 (NM Super) Subject to the requested amendment being included, the Boards RESOLVED to approve the 2017 performance goals for the additional Trustees' APRA specified individuals. Amanda Hughes and Lionel Mateo left the meetings 11. CHAIRMAN'S SESSION The Directors held a closed session. There being no further business the meetings closed at 3:35pm. Signed as a correct record. Chairman Date Page 9 of 9 19 AMP.6000.0128.7894 ASL NM Super Board Papers - November 2017 - Administration Business Arising from AMP SUPERANNUATION LIMITED I N.M. SUPERANNUATION PROPRIETARY LIMITED Board meetings held 27 September 2017 Item Date Action Task Responsibility Status Due Date Status Update Arose 1. SRJ Vick.i Doyle 27 March 2017 Closed 27 September This information will continue to be a. Include commentary on live issues and challenges Rachel Sansom 2017 enhanced and refined in future tn the next report; and Management Reports. b. Include a scorecard-based report in BMM regarding the retention management strategy, specifically addressing the progress made and what remains to be ac'hieved. 2. U12date from AMP Life Chief Actua!Y Greg Bird 27 March 2017 Open March 2018 Highltght the matters of concern or the lack thereof in the next report. 3. Trustee Services - Claims DoA Natalie Sultana 14 June 2017 Open 6 December Provide update on the tracking of claims processed by 2017 the AMP Claims Operation team under the new OoA threshold of $1 m. 4. Securities Lending Program Jeff Brunton 16 August In progress 27 September Existing BMM reporting on Review the existing reporting on securities lending Rachel Sansom 2017 2017 securities lending is currently being contained tn the BMM and assess if the existing reviewed. reporting needs to be enhanced. 5. GPR Funding Request - Insurance Governance Rachel Sansom 27 September Open 9 November Refer Item 3.1 Provide updated memorandum to the Boards that 2017 2017 includes more information on the use of funds. 6. Disclosing of relevant Interests Melanie Conroy 27 September Open 6 December Provide update on the improvement made to strengthen 2017 2017 the process relatlve to disclosure of relevant interests. 20 AMP.6000.0128. 7895 ASL NM Super Board Papers - November 2017 -Administration Business Arising (Continued) Item Date Action Task Responsibility Status Due Date Status Update Arose 7. Trustee Services Natalie Sultana 27 September Opeh 6 December Prepare a regulatory update memorandum consolidating Rachel Sansom 2017 2017 year-to-date interactions and outstanding material actions with ASIC and APRA. 8. Customer Strategy Rod Finch 27 September Open Q1 2018 Include information from data analytics and campalgns Natalie Sultana 2017 into fUlure ongoing reporting through the BMM, starting 01 2018. 9. ERM - Control Framework Fotine Kotsilas 27 September Open 6 December Provide information regarding controls in place for David Barry 2017 2017 proactive fraud assessment within AMP. 10. ERM - Trustee Risk discussion Fotine Kotsilas 27 September Open 6 December 1. ERM to provide key controls in place to manage David Barry 2017 2017 reputation risk; 2. Management and ERM to prepare a list of events that could trigger the termination of refatlonship with AMP. 11. Performance and Reward Amanda Hlighes 27 September Open 6 December Include ·product consolidation', particularly regarding 2017 2017 legacy product. under "Wealltl Platform Strategy" (item 2) in Vicki Doyle1s goals list. 12. Performance and Reward Amanda Hughes 27 September Open 6 December Board queried whether APRA would revlew the SI goals 2017 2017 approved by the Boards and whether consideration had been given to including Paul Sainsbury as person of significant influence. ' 2 21 AMP.6000.0128.7896 ASL NM Super Board Papers - November 2017 - Twstee Services CONFIDENTIAL MEMORANDUM' FOR: The Directors, AMP Superannuation Limited (ASL) FROM: Rachel Sansom, Director Regulatory Governance SUBJECT: General Purpose Reserve (GPR) Request for Funding - Trustee Insurance Review DATE: 31 October 2017 Recommendation It is recommended that the Board ofASL resolve to APPROVE the release of all remaining funds (c. $400k) witf1in the GPR of the AMP Superannuation Savings Trust (SST) to fund a review of the Trustee's insurance arrangements. It is further proposed that any tax credits, investment earnings, or similar that are applicable to the GPR be allocated to this project to enable to full exhaustion and closure of the GPR. Background In 1997, ASL established ''Demutualisation Resetves". The purpose of the reserves was to meet expenses incurred by ASL and compensate members for certain errors in connection with AMP'S demutualisation. Subsequently ASL merged several of the demutualisation reserves into a single "General Purpose Reserve" that it continues lo maintain in the SST. In 200912010 ASL established a framework for the use of GP/:( funds. A proposal to use GPR funds needs to benefit SST members generally through member education, enhanced services to members and/or improved trustee governance practices. There is currently c.$400,000 available wff.hin the GPR and the amount fluctuates due to investment performance as well as the application of investment ec;Jrnings and tax credits. Rationale for the Review Insurance in super and its appropriateness is an area of focus for the government and regulators, as well as being the subject of media attention and community debate, This focus is evidenced through the establishment of the Financial Services Code tor Insurers and the development of a separate code for trustees that is yet to be finalised. Change to superannuation more broadly, such as contribution caps and the cap on the funds that can be transferred Into retirement products, provide further Impetus to review insurance arrangements and the value they deliver in return for the cost fo superannuation balances. While there is a high likelihood of regulatory change, it is prudent for trustees to look beyond the current shorter-term unce1tainty to establish a clear posftion on their own insurance arrangements, beyond what would occur in the normal course of business. The focus of the review will be SST as it represents the majority of AMP Trustees' insurance arrangements and, while GPR funding is only permitted to be used tor SST, the review will also benefit the Trustees more broadly at no additional cost. Consistent with the purpose of the GPR, Trustee Services seeks funding to review insurance in superannuation, with the main aim pelng to inform the Trustees' future Insurance phllosophy and strategy. These are the key mechanisms by which ASL (and NM Super) instruct ff.s service providers on the delivery and design of insurance for its members. Page 1of3 22 AMP.6000.0128.7897 ASL NM Super Board Papers - November 2017 - Trustee Services Proposed Approach for the Review The intended approach for this review is to run a 12 to 18-month program of work, with distinct stages that deliver actionable outputs, and to commence as soon as practicable. The work will be led by a suitably skilled project resource who will report to Trustee Services and have a close relationship with Product management: The refreshed insurance philosophy and strategy will be informed by: • a staged. methodical analysis of the external environment • an understanding of ASL ·s current insurance position and planned initiatives, including those of our external insurers • a clear hypothesis on a potential future state and the identification -and assessment of any potential gaps between this and where the Trustees are likely to be based on current plans. The work will leverage the information available within AMP as a key provider of insurance within superannuation. To maximise the value of the project expenditure, existing data will be leveraged as much as possible. An overview of the current thinking on the project deliverables is set out below. However, this may change as each step is undertaken and broader views are taken into account. • Current obligations • Recent insurance • Assess the • Delivery of refreshed • Key issues identified plan changes outcomes of insurance by Regulators (eg • Results of 5-year Phases 1 and 2 philosophy and member outcomes) reviews of insurance to develop strategy. • Draft trustee code and • Outcomes from views on a • Required change FSC UfeCode annual insurer future state management to • Competitor questionnaire • Gap analysis operationa/ise assessment • Litigation, AMP comparrng • Group insurer offers complaints and SCT potential future and activities thematics state and what • Public comments by • Incidents and is currently Govemment breaches planned • International • Operation of FSC perspective (if relevant) Code by insurers • Management of insurance definitions by insurers • Current plans for change from insurers and Product Page 2 of 3 23 AMP.6000.0128. 7898 ASL NM Super Board Papers - November 2017 - Trustee Services Risk Appetite and Material Risks The proposal will assist the Trustee to manage an area of significance for members and is directly related to the Trustee material risk on "Product design - product/insurance offer is not appropriate''. This proposal meets the 2009110 guidelines for GPR usage within the categories of enhanced services to members and enhanced governance practices. Members' Best Interests I consider that the application of the remaining funds within the GPR to this strategic review is in the best interests of members of the SST, and more broadly across the funds for which ASL and NM Super are trustee. Insurance is a significant benefit to members, and must be managed prudently. A robust position will benefit members in relation to future insurance design and also assist the Trustee to manage risk. Page 3 of 3 24 AMP.6000.0128.7899 ASL NM Super Board Papers - November2017 - Business Initiatives CONFIDENTIAL MEMORANDUM FOR: The Directors. AMP Superannuation Limited (ASL) and NM Superannuation Pty Limited FROM: Natalie Sultana, Senior Manager Trustee Governance SUBJECT: Australian Equities - Bulk Transfers and Investment Menu Update DATE: 2 November 2017 Recommendation The Boards of ASL and NM Super NOTE this recommendation endorsing the resolution to approve the bulk transfer of members .as set out in the memorandum dated 31 October 2017 from David Clark, Head of Product Management, (Business Paper). Background Following a decision by AMP Capital (AMPC) to restructure its Australian Equities business. a number of funds for which it acts as Responsible Entity have been terminated or restructured. The impact of the changes is broad as these funds are offered as investment options across ASL and NM Super's mastertrusts (via the AMP Retirement Trust and AMP .Superannuation Savings Trust) and NM Super's platform offer (via the Wealth Persona/ Superannuation Plan and The Retirement Plan). Consistent with its mandate, fhe Group Investment Committee (GIG) has considered the changes as outlined in the Business Paper. While the GIG has broad delegations, the Trustees have reserved the power to approve the /Julk transfer of members. Due diligence review by Trustee Services To assist the Board, the following points are relevant. • The GIG met on 26 October to consider the impacts of the change. Which included an endorsement of the recommendations to bulk transfer superannuation members to replacement options. • The process to assess replacement investment options was robust and conducted at arm-length. I am satisfied that conflicts of interest were appropriately managed. • The bulk transfers will result in a reduction in fees for the majority of members, however there will be some one-off costs associated with giving effect to the transfer. On balance, and despite the transactjon costs, it is appropriate to form the view that the changes are in the best interests of members because the new investment offer is considered to offer greater opportunity for outperformance for the reasons outlined in the Business Paper. • Members have previously been advised via Product Disclosure Statements that investment options may be terminated from time to time. Members Best Interests The bLJ/k transfer of members as set out in the Business Paper is in the best interests of members. The replacement investment options are considered to offer greater opportunity for outperformance and the majority of members will have reduced fees. Page 1of1 25 AMP.6000.0128.7900 ASL NM Super Board Papers - November 2017 - Business Initiatives MEMORANDUM FOR: The Directors, AMP Superannuation Limited (ASL) and NM Superannuation Proprietary Ltd (NM Super) FROM: David Clark - Head of Product Management, AMP Superannuation Retirement and Investment SUBJECT: Australian Equities - Bulk Transfers and Investment Menu Update DATE: 31 October 2017 Recommendation It is recommended that the Boards of AMP Superannuation Limited (ASL) and N.M. Superannuation Propriety Limited (NM Super). together the Trustees: (1) Approve the bulk transfer of members' investments from the AMP Capital Australian Equities Concentrated investment option to the DNR Australian Equities High Conviction investment option as offered on products issued through the AMP Retirement Trust (ART) and AMP Superannuation Savings Trust (SST); and (2) Note that the Group Investment Committee (GIC), in accordance with its terms of reference, has approved changes to the Trustees' investment options following its assessment of the member impacts resulting from the AMP Capital Australian equity capability changes. Background On 11 October 2017, AMP Capital announced changes to its Australian equities capabilities following a strategic review of its business which resulted in changes to their Australian equities offers includ!ng the termination or restructure of several of their managed investment schemes in which the Trustees' members are invested. On 26 October 2017, the GIC assessed the changes from AMP Capital and the product impacts as presented by AMP Product and resolved to endorse the recommendation to bulk transfer members' investments from the AMP Capital Australian Equities Concentrated ihvestment optioh to the DNR Australian Equities High Conviction investment option following AMP Capital's termination of its managed investment scheme. The bulk transfer of members' investment is a reserved decision of the Trustees. In accordance with the outsourcing arrangements between the Trustees and AMP Life Limited and NMMT Limited (Service Providers) and the GIC Terms of Reference, the GIC also approved or noted several other matters as described below. These matters do not require Trustee approval and are included for information: • Approved changes to the Trustees' Life-Backed Australian equities investment options for ART and SST, including the manager replacement of the AMP Capital Australian Equities Opportunities investment option with Ausbil 130/30 Focus and the closure of AMP Capital Equity investment option to new members following its restructure from Active to Enhanced Index management. • Approved the closure of several AMP Capital managed investment options on products issued under the Wealth Personal Superannuation Plan (WPSP.F) and The Retirement Plan (TRP) to new members following its restructure from Active to Enhanced Index management. Pllge 1ot3 26 AMP.6000.0128.7901 ASL NM Super Board Papers - November 2017 - Business Initiatives CONFIDENTIAL • Noted the termination of AMP Capital managed Australian equities investment options as offered on Platforms products issued under the WPSPF and TRP. The GIC was provided with information on impacts to the costs of transactions and fees and, with respect to the target investments for those recommended for a bulk transfer or manager replacement, the potential performance and management uplift of the target investments. For those investments with a change in the investment strategy from Active to Enhanced Index management, the GIC noted that there were no changes to the investment objectives to members and that a fee reduction would be passed on to members. With respect to the AMP suite of Diversified options offered under ART and SST, the Australian equity investment strategy was recommended to change to a mix of 95% Enhanced Index and 5% Active (Small Caps) management. The GIC noted that the fee saving from the Australian equities changes would be reallocated to Alternative Asset strategies to ensure that there were adequate sources of performance to continue to meet the objectives of the Diversified options. Therefore, there were no fee changes proposed between AMP Capital and AMP Life, and therefore no fee changes would be passed on to members. ART and SST Bulk Transfer - AMP Capital Australian Equity Concentrated investment option to DNR Australian Equities High Conviction Following the manager-led termination of the underlying AMP Capital managed investment scheme, it is recommended the investment option be bulk transferred to the DNR Australian Equity High Conviction investment option. The replacement investment option is currently open on the product menu. Following the switch members will retain exposure to the Australian equity market in an active strategy seeking to outperform the market by greater than 4% p.a. The tables below compare the strategies and investment performance ending June 2017. Underlying Fund AMP Capital Equity Concentrated DNR Australian Equities High Conviction Asset class Australian Equities Australian Equities Benchmark ASX200 ASX200 Alpha target 3-5% p.a. rolling 3 years >4% p.a. rolling 3 years Stocks held 25-40 15-30 Highly Recommend (Lonsec) Research Rating Not rated Recommended (Zenith) AMP Capital Equity Concentrated DNR Australian Equities High Conviction ASX200 1 year(%) 9.6 19.4 13.8 2 year(% p.a.) 4.0 12.2 7.2 3 year(% p.a.) 5.1 11 .7 6.6 Note: perfoITTlance is for the period ending June 2017 Risks and Mitigants The following risks have been identified in relation to the bulk transfer: • Out-of-market risk during the transition period. This will be limited through operations by managing the way assets will be transferred to minimise any cash drag on the performance of the transitioning funds. • Member transactions on impacted investments. Operational procedures and IT changes have been put in place to reduce the risk of members' transacting on the impacted investment options as the incumbent underlying AMP Capital managed investment scheme was suspended pending its wind up and return of capital to investors. Page .2 of 3 27 AMP.6000.0128.7902 ASL NM Super Board Papers - November 2017 - Business Initiatives CONFIDENTIAL • Portability Risk. Portability relief from APRA is being assessed, as the proceeds from the underlying AMP Capital managed investment schemes have been suspended and it is not expected the proceeds will be received within 45 days. Policy Impacts The changes outlined in this paper meets the appropriate investment requirements including the Trustees' Superannuation Investment Policies. Member Impacts The bulk transfer of members from the AMP Capital Australian Equities Concentrated investment option to the DNR Australian Equities High Conviction investment option impacts approximately 446 members ($6.?M) across ART and SST. For the Trustees' noting, the GIC approved changes included: • For ART and SST - the manager replacement impacting 5,554 members ($64.?M) and restructuring of investment options from Active to Enhanced Index management impacting 12,689 members ($167M); and • ForWPSPF and TRP-the investment option terminations impacting 3,593 members ($17.3M), in which assets are transferred to members' working cash account in accordance with the product design and disclosures. Fees and costs For members of ART and SST, there will be a reduction to the Investment Management Fee following the bulk transfer of members from the AMP Capital Australian Equities Concentrated investment option to the DNR Australian Equities High Conviction investment option impacts. This reduction represents a 5bps to 1Obps reduction depending on the product. Other member impacts include a one-off transition cost of approximately 25bps from crossing the buy/sell spread and an opportunity cost estimated at 5.2 bps p.a. from the crystallisation of capital gains tax. For the Trustees' noting, other impacts from the GIC delegated approved items will see no change or a reduction to the Investment Management Fee paid by members. Where a performance fee is currently payable this will continue. Disclosures Subject to the Trustees approving the recommendation, AMP Product will implement the proposed product and member changes as required. This will include: • relevant member notifications in accordance with internal legal advice sought by AMP Product; and • updates via the Annual Product Updates and Investment Reports; and • other updates and changes to the Product Disclosure Statements (via PDS Updates), forms, websites, and Trustee Annual Reports. Page 3 of 3 28 AMP.6000.0128.7903 ASL NM Super Board Papers - November 2017 - Business Initiatives CONFIDENTIAL MEMORANDUM FOR: The Directors, AMP Superannuation Limited (ASL) FROM: Sharon Suan - Head of Investment Regulatory Governance SUBJECT: Responsible Investment leaders Australian Share Fund - Governance Process for Performance Based Fee Introduction DATE: 2 November 2017 Recommendation It is recommended that the Board of ASL NOTE this update on the governance process for assessing the introduction of a performance based fee by AMP Capital to their Responsible Investment Leaders Australian Share Fund. Purpose of the paper At the 27 September 2017 Board meeting, David Clark - Head of AMP Superannuation, Retirement and Investments Product (AMP Product) provided notice to the Trustees that AMP Capital was considering the introduction of a Performance Based Fee (PBF) for the Responsible Investment Leaders (RIL) Australian Share Fund, which is an underlying investment for several of the Trustees' investment options. The purpose of this paper is to update the Trustees on the timing of the PBF introduction and related governance processes to consider its impacts on the Trustee's superannuation members. Update On 27 October 2017, AMP Capital in its capacity as the Responsible Entity of the RIL, announced that it will introduce an allocation to an Australian equities manager in its RIL Australian Share Fund that will have a PBF effective 27 November 2017, that will flow through to members. The RIL Australian Share Fund is an AMP Capital managed investment scheme and is not a mandate with AMP. The Trustees' members are not the sole investors exposed to the RIL Australian Share Fund and do not have a contractual arrangement to instruct AMP Capital to invest in a particular way. AMP Capital has the authority to lntroduce the PBF. Governance Process The Trustees have members that will be affected by the flow through of the underlying PBF through: (i) the RIL Australian Share investment option being offered as a choice single sector offer; (ii) the range of RIL diversified options - Conservative, Balanced, Growth and High Growth - offered as choice investment options; and (iii) the same RIL diversffled options as above - Conservative, Balanced, Growth and High Growth - offered to Anglican National Super (a corporate super plan) as their Tailored MySuper default offer. RIL has previously been chosen by AMP Product as an appropriate investment option (including for MySuper) for members who are seeking to invest in line with ESG principles. On 22 November 2017, the Group Investment Committee (GIC) will be requested to consider whether the ongoing offer of the RIL investment options, specificalty the MySuper RIL investment options to Anglican National Super, is in members' best interests. Product and disclosure impacts will be considered at this meeting, including legal advice on the classification of the underlying PBF flow through to members in the context of the new RG97 Fees and Costs Disclosure regime. AMP Product is expected to provide the Trustees with an update detailing the GIC's considerations at their 6 December 2017 Board meeting. Pagel of 1 29 AMP.6000.0128. 7904 ASL NM Super Board Papers - Novernber 2017 - Business lnltiatlves CONFIDENTIAL MEMORANDUM FOR: The Directors, AMP Superannuation Limited (ASL) FROM: Natalie SUitana, Senior Manager, Trustee Governance SUBJECT: Super Cash Deposit Agreement DATE: 2 November 2017 Recommendation The Board of ASL to NOTE this recommendation to approve the resolution as set out in the memorandum dated 1 November 2017 from David Clark - Head of Product Superannuation, Retirement and Investments (SR&/) to endorse amendments to the Deposit Agreement (DA) between AMP Bank and AMP Life. Background On behalf of ASL, AMP Life has a DA in place With AMP Bank to provide a cash investment option. This has been in operation since 2007 and is based on an agreement reached by AMP Life with AMP Bank for a competitive interest rate and streamlined processes, with AMP Life maintaining flexibility lo switch to another provider should AMP Bank not prove competitive. The arrangement has operated effectively since its introduction. The cash rate offered by AMP Bank remains competitive and is monitored quarterly through the Business Monitoring Model (BMM). In response to feedback from APRA to AMP Bank, the DA has been amended a number of times In recent years, to address concerns regarding the extent of AMP Life's ability to promptly terminate the DA. At all times, individual members have retained the ability to move funds within 31 days. APRA's concern has been AMP Life's termination powers at an institutional level. Proposal The Business Paper seeks ASL's endorsement of further amendments to the DA which deal with AMP Life's termination rights. The proposed changes are in light of new APRA Prudential standards on liquidity requirements applying to AMP Bank from 1 January 201·8. These are outlined in more detall in tne Business Paper, but in essence seek to fimit AMP Life's ability to terminate within 31 days to a breach by AMP Bank of its financial obligations under the DA (including the payment of required funds to member accounts) as opposed to AMP Bank's circumstances including a downgrade of its credit rating. Due diligence review by Trustee Services I have met with Jason Bounassif (Treasurer for AMP Bank) and have had the opportunity to review various papers relating to proposal. To assist the Board in considering whether to approve the resolution, the fol/owing points are relevant: • While it would be preferable for AMP Ufe to retain as much flexibility as possible to terminate the DA, the changes proposed will not impact the financial interests of members. If the DA is not changed, the effective interest rates for members would likely fall in order to compensate for the additional capital requirements AMP Bank would need to meet from 1 January 2018. • Despite the amendment, the DA continues to have ample termination provisions to safeguard members' interests. These are operable within 31 days for matters relating to a breach by AMP Bank of a financial term. and also more generally by 12 months' notice from AMPUfe. Page 1 of 2 30 AMP.6000.0128.7905 ASL NM Super Board Papers - November 2017 - Business Initiatives • The most significant element of the DA is the cash rate offered by AMP Bank, any change to which must be advised 12 months in advance. Should there be any concerns regarding the rate and its competitiveness, AMP Life is able to terminate the agreement by giving 12 months' notice, thereby minimising the time period of a sub optimal cash rate being applied. • Individual members retain the ability to move their money within 31 days. Legal Advice [ _:~~~~~~~~~ : !~~ : ~~:~:~- !~~~~~i~~~~~~-~ :1 Members' best interests In relation to members' best interests, the key consideration is whether on balance, the advantage of maintaining the current margin on superannuation cash deposits for members outweighs any potential risk of amending the DA as proposed. I consider that given the continued competitiveness of the AMP Bank Cash rate, and that AMP Life continues to have ample termination rights (at an institutional level) it is in members' best interests to approve the proposed changes. Page 2 of 2 31 AMP.6 000.0128.7906 ASL NM Super Board Papers - November 2017 - Business Initiatives ~, )'} CONFIDENTIAL AMP~0 MEMORANDUM FOR: The Directors, AMP Superannuation Limited (ASL} FROM: David Clark, Head of Product Management SUBJECT: Super Cash Deposits DATE: 1 November2017 Recommendation That the ASL Board: • ENDORSES proposed amendments by AMP Bank to the Deposit Agreement between AMP Bank and AMP Life. • APPROVES amendments, if required, to the relevant insurance policies held by ASL and AMP Life to reflect the changes. AMP Life is expected to agree to the changes on the basis they do not impact key financial terms and in such case will execute an amendment te the Deposit Agreement, pending ASl's endorsement. Bcecutlve sultltnary To support the Super Cash investment option offered by ASL, AMP Life has a Deposit Agreement (DA) with AMP Bank for ASL members' cash deposits (currently c$2.05bn) in various superannuation funds and products. It is not unusual for depositors to take advantage of their size and negotiate good rates in the best interests of super fund members. The arrangement with AMP Bank is not unique, but each depositor will consider their own unlque circumstances. The DA is predicated on AMP Bank providing a competitive interest rate for ASL members and streamlined integration with AMP Life ,processes. AMP B~mk guarantees the margin it will pay above RBA interest rates for 13 months for at-call funds and 14 days for term deposits. AMP Life can switch providers on 12 months' notice without cause (eg if the 13 month at call interest rate was considered unattractive) or immediately, with cause. The DA has been amended several times in recent years, largely in response to changing APRA Prudential Standards governing Approved Deposit Taking Institutions (ADls) and !he capital required to be held by AMP Bank. Due to revised ADI Prudential Standards and following discussions with APRA. AMP Bank seeks to: Limit AMP Life's rights to terminate (with cause) to AMP Bank's failure to meet its financial obligations only (such as the daily-flow of funds and payment of interest), as opposed to some non-financial obligations per today. • Increase the time AMP Bank has to respond to such breaches from 10 business days to 15. • Align the notice period for terminating term deposits wlthout cause (currently 31 days) with that for at call funds (12 months). Remove AMP Life's tight to terminate if AMP Bank is downgraded to BB+ or below (5 notches down from the current A rating). We do not consider these amendments to be detrimental to ASL members who can continue to withdraw their Individual balances at any time. While AMP Life has a reduced set oftetmlnatlon rights, we recommend the changes be endorsed as: (a) AMP Life still retains significant termination rights, including the ability to terminate on 12 months' notice withGut cause. (b) Whil e AMP Life had a right to terminate the term deposit component on 31 days' notioe, practically it would be impossible to find a replacement provider in that time (usually taking several months). (c) Critically, they enable AMP Bank to continue to offer a competitive interest rate to members into the future. The proposed amendments satisfy APRA's requirements. Pa,ge 1 or 3 32 AMP.6000.0128.7907 ASL NM Super Board Papers - November 2017 - Business Initiatives CONFIDENTIAL Background The DA started in 2007 to support ASL's new cash investment option (Super Cash) for the Flexible Lifetime range (and has since been rolled out to options on CustomSuper, SignatureSuper and Flexible Super). The terms of the DA are reflected in policies between AMP Life and ASL. At no point do any of the current proposals or previous changes impact an individual members' right to withdraw at any time. In early 2009, several enhancements were made, including increasing the interest paid over and above the RBA Overnight Cash Rate from 1Obps to 20bps. In return, AMP Bank required AMP Life to extend the notice period to withdraw from 6 to 12 months. ASL endorsed these changes, subject to ensuring the DA included some trigger events to enable withdrawal in less than 12 months' notice, such as AMP Bank's credit rating falling below investment grade. In 2015, the DA was again varied to enable AMP Life to terminate 'immediately' on certain trigger events. However, following revised APRA ADI Prudential Standards, which would have required greater capital to be held by AMP Bank and decrease interest rates payable to members, this right of immediate termination was extended to 31 days. AMP Bank now seeks changes to help it meet APRA's Net Stable Funding Ratio (NSFR) requirement (effective 1 January 2018) over a 12-month horizon. APRA has verbally raised a concern that some of the DA's termination provisions mean its deposits cannot be considered "stable funding", hence requiring AMP Bank to hold more capital and consequently reduce interest payments. The proposed changes satisfy APRA's requirements without materiall y impacting ASL or its members. Key issues and considerations Existing termination rights As well as the ability to terminate the agreement with respect to at-call funds on 12 months' notice without cause (currently 31 days for term deposits), to safeguard members' funds against severe credit or other events that may occur at AMP Bank, AMP Life can withdraw immediately if: a) A receiver or administrator is appointed to AMP Bank. b) AMP Bank goes into liquidation or ceases to carry on business in relation to its activities as a bank. c) AMP Bank ceases to be licensed. AMP Life can also terminate the DA on 31 days' notice if: d) AMP Bank breaches the DA. In this case AMP Life may terminate on 31 days' notice if AMP Bank doesn't rectify the breach within 10 business days. e) There is a sale of AMP Bank. f) AMP Bank's credit rating falls below BB+ (this is a 5 notch downgrade from the current rating of A). These termination rights do not exist in AMP Bank's ordinary retail deposit terms and were negotiated by AMP Life for ASL. Proposed amendments APRA has indicated to AMP Bank that AMP Life's right to terminate for breach of the DA or due to a ratings downgrade (see (d) and (f) above) is too broad to enable AMP Bank to treat the deposits as 'stable funding'. Without amendment, APRA would require AMP Bank to hold additional capital against ASL's deposits and result in reduced interest offered to ASL members. Consequently, AMP Bank seeks to: g) Amend paragraph (d) to (1) limit AMP Life's right to terminate to breaches related to AMP Bank's ability to meet its financial obligations and (2) extend AMP Bank's time period for rectification to 15 days. Page 2 of 3 33 AMP .6000.0128.7908 ASL NM Super Board Papers - Novernber2017 - Business Initiatives CONFIDENTI AL h) Remove paragraph (f). i) Align the notice period for terminating term deposits without cause (currently 31 .days) with that for al-call funds (12 months). In endorsing the proposed changes, ASL continues to provide members with access to a cornpetitive cash rate and AMP LJfe can terminate the DA in the event AMP Bank defaults on its financial obligations. In this way, ASL continues to safeguard the security of members' funds while remaining conscious of delivering on member outcomes. There is limited probability that a 5 notch downgrade on AMP Bank's credit rating would occur in a 12 month period (exercisable by AMP Life without cause) in the absence of paragraphs (a)- (c) above being tr1ggered at the same time. Member impact The amendments support the continued provision of competitive interest rates and do not impact a members' rights to withdraw funds. No changes to disclosure or notification to members is required. The interest rates offered by AMP Bank continue to be competitive, and the proposed changes help maintain this outcome. This in turn enables ASL to offer the Super Easy Cash option at a competitive rate to peers as evidenced by the following table from the 'Trustee Quarterly Investment BMM Report' for Q2 2017. As at 30 June 2017 (before fees and taxes) AMP AMP Life Wholesale Super Cash Rate Comparisons (%pa) AMP AMP Life AMP AMP Bank 0 p 3 tn 0 A BT Super for CFS FirstRate CBA SMSF INGSMSF -Super Easy SMSF Super Edge ne ne nswer AMP Life Super Cash''' Cash Pension Frontier'" Cas-;; Saver - W'sale Direct Inv! Acct<~ 1.70 2.30 1.80 1.30 1..50 1.50 2.40 >'l OpePath as at 24 July 2017. '"CBA lo• balaflCBS $10.000 ano oveJ. '"' ING SMSF S uper Bus Opt offers 2.40'¥.pa 'welcome rates· tor ll\e first 6 monttis up 10 :Si m. Conflicts of interest Appropriate information barriers and separate legal representation and review from members of the Legal and Governance team have been Implemented to manage the potential for intra-group conflicts of interest. While the changes are triggered as a result of AMP Bank's prudential requirements, the recommendations in this paper consider the likely member impact if the changes were not made. Next Steps Subject to endorsement by ASL and agreement by AMP Life, (a) AMP Ufe and AMP Bank will execute an amendment to the DA and (b) if requited, the corresponding AMP Life Policy between AMP Life and ASL will be amended. When updating the contracts, we will also update (as relevant) contact person information to reflect recent organizational changes. Page3ol3 34