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Contact details

Mail ARIA GPO Box 1907 Canberra City ACT 2601

Phone 02 6263 6999

Fax 02 6263 6900

Email [email protected]

Web www.aria.gov.au www.css.gov.au www.pss.gov.au www.pssap.gov.au

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ARIACSS

PSS

PSSap

ISSN: 1442 6692 ISBN: 978 1 921246 38 8

© Commonwealth of Australia 2009

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Attorney General’s Department, Robert Garran Offices, National Circuit, Barton ACT 2600 or posted at http://www.ag.gov.au/cca

Street address Level 10 12 Moore Street Canberra City ACT 2601

Postal address GPO Box 1907 Canberra City ACT 2601

Phone 02 6263 6999

Fax 02 6263 6900

ARIA ABN: 48 882 817 243 RSEL: L0001397 Website: www.aria.gov.au Annual report: www.aria.gov.au/about_us/annual_reports.htm

CSS ABN: 19 415 776 361 RSE: R1004649 SPIN: CMS0100AU Website: www.css.gov.au Annual report: www.css.gov.au/documents/annual_reports.shtml

PSS ABN: 74 172 177 893 RSE: R1004595 SPIN: CMS0101AU Website: www.pss.gov.au Annual report: www.pss.gov.au/documents/annual_reports.shtml

PSSap ABN: 65 127 917 725 RSE: R1004601 SPIN: PSS0001AU Website: www.pssap.gov.au Annual report: www.pssap.gov.au/about_us/annual_reports.htm

Note: All statistics are derived solely from records available to ARIA and ComSuper (Commissioner for Superannuation – scheme administrator) as they stood at the time these statistics were compiled. Where statistics for earlier financial years are quoted, these may vary from those previously published due to the application of retrospective adjustments that are now reflected in this report. For similar reasons statistical information in this report may also vary from that presented by other agencies.

1. Letter of transmittal

ARIA annual report 2008-09

v

Letter of transmittal

The Hon Lindsay Tanner MP

Minister for Finance and Deregulation

Parliament House

Canberra ACT 2600

Dear Minister

In accordance with section 161 of the Superannuation Act 1976 (the CSS Act), section 28 of the Superannuation Act 1990 (the PSS Act) and section 26 of the Superannuation Act 2005 (the PSSap Act), Australian Reward Investment Alliance (ARIA) is pleased to present to you the Annual Report on its operations during 2008/09. The report details the performance of ARIA functions and the administration of the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme and the Public Sector Superannuation accumulation plan and includes audited financial statements in respect of the management of those Funds during the year ended 30 June 2009.

Subsection 162(2) of the CSS Act, subsection 28(3) of the PSS Act and subsection 26(3) of the PSSap Act require you to cause a copy of the report to be laid before each House of Parliament within 15 sitting days after you receive it.

Yours sincerely

Winsome Hall Trustee ARIA

24 September 2009

2. Contents


viii

Contents

1 Letter of transmittal iii

2 Contents vii

3 Trustee’s report xi

4 Executive summary xv Investment results xvi Merger and reforms to superannuation administration xvii Major events and developments xvii Investment governance xviii Service to members xviii Administration xviii Regulatory and policy environment xix Future directions xix

5 Trustees 1 ARIA trustees 2 Trustee members 2 Trustee and trustee committee meetings 5 ARIA employees 6 Trustee resources 6 ARIA’s financial management 7 Ecologically sustainable development and environmental performance 8 Internal governance 9 Outcomes and outputs 10

6 Overview 11 Overview 12 Description of the schemes 12 SIS compliance 14 Actuarial review 14

7 Investments 17 Investment structure 18 Investment arrangements 18 Custodian services 18 Investment managers 18 Investment objectives 19 Events during the year 23 Fund performance 24

Investment information 29 Allocating earnings 30 ARIA’s approach to corporate governance 31

8 Scheme administration 33 Membership data 34 Member communication and services 36 Scheme administrator 37

9 CSS financial statements 43

10 PSS financial statements 87

11 PSSap financial statements 149

12 ARIA financial statements 183

13 Appendices 219 Appendix A: Changes to legislation 220 Appendix B: Organisation chart 221 Appendix C: Functional chart 222 Appendix D: Access to information 223 Appendix E: Publications 225 Appendix F: Contact officer 230 Appendix G: Compliance 231 Appendix H: New consultancies 234 Appendix I: Advertising and market research 236 Appendix J: Commonwealth Disability Strategy 237 Appendix K: Summary resource table by outcomes 238 Appendix L: Glossary 239

Index 241


ix

Contents

Tables

Table 1: Trustee and trustee committee meeting attendance 2008/09 5 Table 2: Employee numbers at 30 June 2009 6 Table 3: Outcomes and outputs 10 Table 4: Overview of the schemes 12 Table 5: PSSap retirement benefit components 13 Table 6: Results of actuarial reviews 14 Table 7: Actuarial projections 15 Table 8: Investment managers at 30 June 2009 19 Table 9: CSS Default Fund asset allocation 22 Table 10: PSS Default Fund asset allocation 22 Table 11: PSSap pre-mixed investment options asset allocation 22 Table 12: CSS Default Fund investments 2008/09 27 Table 13: CSS Default Fund performance 2008/09 27 Table 14: CSS Cash Investment Option performance 2008/09 27 Table 15: PSS Default Fund investments 2008/09 28 Table 16: PSS Default Fund performance 2008/09 28 Table 17: PSS Cash Investment Option performance 2008/09 28 Table 18: PSSap performance 2008/09 29 Table 19: Membership summary 30 June 2009 34 Table 20: Member and employer contributions received 2007/08 – 2008/09 34 Table 21: Total number of benefit payments (by type) 38 Table 22: Pensions summary 38 Table 23: Reconsideration applications received and outcomes 2008/09 40 Table 24: Complaints lodged, all schemes 2008/09 41 Table 25: Complaints and representations 42 Table A1: Freedom of information requests 2008/09 224 Table A2: New consultancies 2008/09 234 Table A3: Advertising and market research expenditure 2008/09 236

Charts Chart 1: Membership by type 35 Chart 2: Membership by scheme 35 Chart 3: Membership trend by type 35 Chart 4: Membership trend by scheme 35 Chart 5: Member enquiries trend (last five years) 35 Chart 6: Benefit payments by type 2008/09 37 Chart 7: Pensioner population trend 39 Chart 8: Average pension trend 39

Illustrations Illustration 1: Organisation chart 221 Illustration 2: Functional chart 222

3. Trustee’s report


xiii

Trustee’s report

In an investment environment unparalleled in recent history, ARIA continued its core business focus on investment returns and the provision on information and advice to members.

While negative, over the recent period, the funds’ longer-term performance remains competitive.

The CSS Default Fund recorded a return of -15.4% (after fees and taxes) and the PSS Default Fund recorded a return of -15.3% (after fees and taxes). Both the CSS and PSS Cash Investment Options achieved a net return of 4.6%.

The PSSap’s Default Option, Trustee Choice, in which the majority of PSSap members invest, recorded a return of -14.9% (after fees and taxes).

A focus of trustees’ attention during the year was the merger of the military superannuation boards with ARIA to start on 1 July 2010. This project will entail a change to the structure of the existing ARIA board, and an integration of the assets of military superannuation schemes into the ARIA Investments Trust. Much of the detailed implementation project work is yet to start, pending the introduction and passage of the relevant legislation to effect the merger.

The government announced in October 2008 the termination of the ComSuper IT modernisation program and a review of future scheme administration arrangements. ARIA trustees are vitally concerned that decisions made by the government in relation to scheme administration have a direct impact on the delivery of services to members. Trustees are also mindful of the ongoing risks associated with legacy computer systems and operating the defined benefit schemes, including the payment of fortnightly pensions.

ARIA’s Chairman, Susan Doyle, did not seek reappointment after finishing her term with the Trustee in late July 2009. Susan is very highly regarded within ARIA and the investment industry as a whole. We thank Susan for her leadership, support and valuable contribution and we wish her the very best for the future.

Joy Palmer, a former long-standing trustee of ARIA and its predecessor organisations, passed away in November 2008. She was a person highly regarded by all her colleagues at ARIA and in the wider superannuation industry and will be sadly missed.

David Connolly was a valued trustee with more than six years of dedicated service to ARIA. David completed his term as a trustee in late 2008 and was replaced by Brian Daley.

We thank our key partners: ComSuper, JPMorgan, our advisors, all of our investment managers and other service providers for their work and commitment throughout the year.

Finally, we acknowledge the efforts of Lochiel Crafter and the employees of ARIA and their commitment through a volatile and challenging year. It is their ongoing dedication that drives ARIA’s continued success.

4. Executive summaryInvestment results

Merger and reforms to superannuation administration

Major events and developments

Investment governance

Service to members

Administration

Regulatory and policy environment

Future directions


xvi

Investment resultsARIA finished the 2008/09 year with more than $15.9b funds under management and over 484 870 members in the CSS, PSS and PSSap.

The PSSap continued to grow strongly in 2008/09, with 85 202 members at the end of the year. Membership of the closed CSS and PSS schemes continued to decline in line with forecasts.

Our investment options’ returns remain in the Top 2 quartiles (SuperRatings survey) and our average annual returns since inception remain positive over the long term.

CSS and PSS Default Funds

The CSS Default Fund posted a net return of -15.4% and the PSS Default Fund posted a net return of -15.3%. Despite the decline in 2008/09, the CSS and PSS Default Funds’ longer-term performance remains competitive.

The CSS Default Fund achieved an average net return (after fees and tax) of -1.1% per annum in the three years to 30 June 2009. This compared with a five-year average net return of 4.5% per annum and seven-year average net return of 5.6% per annum.

The PSS Default Fund achieved an average net return of -0.8% per annum in the three years to 30 June 2009. This compared with a five-year average net return of 4.7% per annum and seven-year average net return of 5.7% per annum.

CSS and PSS Cash Investment Option

The CSS and PSS Cash Investment Options both posted a net return of 4.6% for the year ending 30 June 2009, which is in line with their objectives once the impact of tax on returns is taken into account.

The inflows to the Cash Option continue to indicate that members use this to achieve a higher degree of certainty as they approach retirement.

PSSap

Over the financial year to 30 June 2009, the PSSap’s default fund (Trustee Choice) fell by 14.9%, with the decline in Australian and international share markets being the major contributor.

Over the four years since inception, PSSap’s Trustee Choice achieved a net return of 2.8% per annum.

Executive summary


xvii

Executive summary

Merger and reforms to superannuation administrationIn October 2008, the government announced a package of reforms to improve and consolidate governance and administration of Australian Government superannuation schemes including the PSSap, PSS and CSS.

On 1 July 2010, the boards of ARIA, the Military Superannuation and Benefits Scheme (MSBS) and the Defence Force Retirement and Death Benefits Scheme (DFRDB) will merge to form a single trustee board. The legal entity ARIA will be trustee of the main civilian and military super schemes post 1 July 2010.

The Department of Finance and Deregulation undertook a comprehensive review of the current administration arrangements relating to the main civilian and military schemes.

The study incorporated specialist advice and identified scope for improvements to deliver sustainable and effective administration services for the government’s superannuation schemes in the future.

At the time of writing, an announcement on government decisions on future scheme administration arrangements is awaited. ARIA remains concerned about the ongoing risks associated with the legacy systems operating the defined benefit schemes, but has been pleased that appropriate mitigation strategies continue to be implemented.

Major events and developmentsA full custodian review that ARIA had programmed for 2008/09 did not proceed because of the severe investment market conditions late in 2008. This major project will be rescheduled to a future date. ARIA did undertake a review of JPMorgan (our current global master custodian) in both the United Kingdom and Australia and continues to be satisfied with the high level of service provided.

In 2008, legislation was passed to remove same-sex discrimination from a wide range of Commonwealth laws, including those relating to superannuation. The Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 also came into effect on 1 March 2009. The new legislation updated the Family Law Act 1975 to provide for opposite-sex and same-sex de facto couples to access the family law courts on property and maintenance matters.

The changes also included recognition of financial agreements between de facto couples and superannuation splitting where determined by court proceedings. This was previously only available to legally married couples of the opposite sex.

There were a number of new government superannuation proposals announced in the 2009 Budget:

The concessional > contributions cap will reduce from $50,000 to $25,000 p.a. (indexed) from the 2009/10 financial year.

The super co-contribution >matching rate and the maximum amount payable will both temporarily reduce from 1 July 2009.


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Executive summary

Investment governanceIn 2007/08 the ARIA trustees adopted a world best practice investment governance structure following a review undertaken by Watson Wyatt. In 2008/09 ARIA continued to improve critical components of that structure, which is aimed at improving and sustaining high levels of investment governance to enhance our capabilities in one of our core areas of activity – investment.

Service to membersARIA aims to give members information, education and advice to help them make the right super decisions. ARIA does this by giving members clear, concise and targeted communications throughout the year and works with the scheme administrator to deliver first-class websites, contact centres and comprehensive employer support.

Following the market downturn in 2008/09, ARIA also created tailored information for its members to help them better understand the economic environment and how it affected their super.

ARIA’s member education program, At Work for You, continued to be a valuable tool for members. In 2008/09, ARIA held workshops at more than 38 locations around Australia. There were 293 At Work for You workshops throughout the year with 8 744 members attending.

ARIA’s websites and targeted campaigns are another way that ARIA helps members to improve their super knowledge and confidence. The scheme websites have a range of online tools and members can find information specific to their super. ARIA conducts research with its members to identify areas of improvement for its online services.

The scheme administrator offers members information through its CSS, PSS and PSSap contact centres. The contact centre was again nominated for the Australian Teleservices Association Awards and became a state finalist in the NSW/ACT division.

AdministrationARIA works closely with the scheme administrator to provide effective and efficient superannuation services to its members.

In 2008/09 the scheme administrator focused on four key priorities:

paying correct and timely > benefits

sending correct and timely statements >

improving on the overall service >delivery both internally and externally

improving data quality. >

Scheme administration remains an area of focus for ARIA.


xix

Executive summary

Regulatory and policy environmentA number of regulatory and policy initiatives occurred throughout the year. Legislative amendments include:

The > Same-Sex Relationships (Equal Treatment in Commonwealth Laws-Superannuation) Act 2008 amended the CSS Act to broaden the scope and definition of marital and couple relationships to include same-sex relationships, and to recognise these partners, and children of these partnerships, as dependents eligible for superannuation benefits. Previously the only legally recognised relationships were marriage, or marriage-like relationships between people of different genders. These amendments had effect from 1 January 2009.

There have been no amendments to the >PSS Act. The Thirty-Third Amending Deed to the PSS Trust Deed made a number of minor amendments and changes, including consequential amendments as a result of the Fair Work Act 2009 and changes to the Superannuation Industry (Supervision) Regulations 1994, relating to payments to temporary residents departing Australia and contributions that must be paid by employers during a member’s period of leave without pay. The amendments also include allowing co-contributions for preserved benefit members, but only in relation to periods where the person was a contributing member.

There have been no amendments >to the PSSap Act. There was a Fourth Amending Deed made to the PSSap Trust Deed similar to the PSS Thirty-Third Amending Deed (above).

Future directionsOur business planning in 2009/10 will focus on implementing major policy decisions on merging the military boards with ARIA, and on implementing decisions associated with future scheme administration arrangements.

The focus of our activities will remain on achieving competitive investment returns and in providing members with adequate information and advice to enable them to maximise their superannuation benefits.

Lochiel Crafter

Chief Executive Officer

5. TrusteesARIA Trustees

Trustee members

Trustee and trustee committee meetings

ARIA employees

Trustee resources

ARIA’s financial management

Ecologically sustainable development and environmental performance

Internal governance

Outcomes and outputs


2

Trustees

ARIA trusteesARIA was established under the Superannuation Act 1990 and is licensed under the Corporations Act 2001 and the Superannuation Industry (Supervision) Act 1993 (SIS Act). ARIA manages the CSS, PSS and PSSap in accordance with the provisions of the CSS, PSS and PSSap Acts, and is responsible for the management and investment of the three superannuation schemes. See the functional chart in Appendix C.

Trustee members The Minister for Finance and Deregulation appoints the seven trustees of ARIA. Three are nominated by the government as employer, three by the Australian Council of Trade Unions (ACTU) and the Chairman is independent.

The Chairman and the ACTU nominees are appointed for periods not exceeding three years (but are eligible for reappointment) and the other members hold office for such period as the Minister determines. Members holding office between 1 July 2008 and 30 June 2009 are:

Ms Susan Doyle Chairman First appointed 28 July 2003 Term expired 27 July 2009

Ms Susan Doyle was appointed Chairman of ARIA on 28 July 2003. Ms Doyle has many years experience in the area of superannuation and investments. Ms Doyle has worked for Commonwealth Funds Management, Suncorp Insurance and Finance and IAG Ltd. Ms Doyle holds several non-executive board positions including Guardian of the Future Fund.

Mr Steven Crane First appointed 1 October 2007 Term expires 30 September 2010

Mr Crane is a Member of the RBS Advisory Council, Chairman Global Valve Technology Limited, a Director of Transfield Services, the Sunnyfield Association, APA Ethane Limited, Taronga Conservation Society Australia and the Bank of Queensland. He started his career in the financial markets with AMP and has held various positions including Chief Executive of BZW Australia and ABN AMRO. He has also been a non-executive director of listed companies Investa Property Group (Chairman 2006-2007), Foodland Associates (2003-2005) and Adelaide Bank (2006-2007).


3

Trustees

Mr Brian Daley First appointed 19 March 2009 Term expires 12 March 2012

Mr Daley has extensive experience in the superannuation industry having been an advocate for award superannuation in the 1980s and a trustee of a number of industry funds since that time. He is a trustee of AustralianSuper and HOSTPLUS as well as having been a representative on the Australian Institute of Superannuation Trustees, Industry Fund Services and state and federal committees of the Association of Superannuation Funds of Australia. He is also a director of the Industry Super Property Trust (ISPT).

Mr Daley is also National President of the Liquor, Hospitality and Miscellaneous Union (LHMU).

Mr Peter Feltham First appointed 1 July 2005 Term expires 17 July 2012

Mr Feltham is also a member of the Audit and Risk Management Committee. Mr Feltham is an Industrial Officer with the CPSU, the Community and Public Sector Union. He has worked for the CPSU and its predecessor organisations for more than 20 years in a range of capacities at the state and national level as both an employee and official. Before this Mr Feltham worked for 10 years in the federal public service.

Ms Margaret Gillespie First appointed 1 October 2007 Term expires 30 September 2010

Ms Gillespie is a former Assistant National Secretary of the Community and Public Sector Union (2003-2008). She served two terms as a Vice President of the ACTU (2003-2007). Ms Gillespie is also a member of the ACT Ministerial Advisory Council on Women, the Council of the University of Canberra and the ACT Land Development Agency.


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Trustees

Ms Winsome Hall First appointed 1 July 1996 Term expires 30 September 2010

Ms Hall is Chair of the ARIA Audit and Risk Management Committee. Ms Hall is a non-executive director of various entities including State Super Financial Services, appointed by ARIA, Zurich Australian Superannuation Limited and various commercialisation funds as a nominee of Westscheme. Ms Hall has provided best practice advice to the Association of Superannuation Funds Australia and was previously a Senior Advisor in the Department of the Prime Minister and Cabinet and Secretary of the ACT Branch of the CPSU from 1989 to 1993.

Mr Dennis Trewin AO First appointed 20 December 2007 Term expires 30 September 2009

Mr Trewin is also a member of the Audit and Risk Management Committee. Mr Trewin is a statistical consultant having undertaken contracts for the United Nations, World Bank, OECD and the governments of Brazil, Korea and New Zealand. He is also Chairman of the Advisory Board of the ARC Centre of Excellence for Coral Reef Studies, and Associate Commissioner for the Productivity Commission Enquiry into the contribution of the not-for-profit sector to Australian society. Past roles have included head of the Australian Bureau of Statistics, Deputy Australian Statistician and Deputy Government Statistician in New Zealand.

Mr Trewin has been awarded an AO for his contribution to Australian and international statistics.


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Trustees

Mr David Connolly AM First appointed 19 September 2002 Term expired 18 September 2008

Mr Connolly was also a member of the ARIA Audit and Risk Management Committee. Mr Connolly is Chairman of Rice Warner Actuaries and serves as a part-time member of the Administrative Appeals Tribunal, the Refugee Review Tribunal and the Migration Review Tribunal. He was a career diplomat for a number of years and held the post of Australia’s High Commissioner to South Africa. Elected to the Australian Parliament (1974–1996), he served as Chair of the Public Accounts Committee and held various shadow portfolios, including superannuation and retirement incomes.

Mr Connolly was awarded an AM for service to the Parliament of Australia, to the development of superannuation policy reform, to international relations, and to the community.

Trustee and trustee committee meetingsARIA has constituted an Audit and Risk Management Committee and may from time to time constitute other trustee committees.

The Audit and Risk Management Committee comprises: Ms Winsome Hall Chairman Mr Peter Feltham Member Mr Dennis Trewin Member Mr David Connolly Member (until his term expired)

Table 1: Trustee and trustee committee meeting attendance 2008/09

Trustee meetings Audit and Risk Management Committee meetings

Attended Eligible to attend Attended Eligible to attend

Susan Doyle 10 10 0 0

Steven Crane 9 10 0 0

Brian Daley 2 2 0 0

Peter Feltham 9 10 5 5

Margaret Gillespie 10 10 0 0

Winsome Hall 8 10 5 5

Dennis Trewin 9 10 3 5

David Connolly 2 2 2 2


6

Trustees

ARIA employeesARIA employees are responsible for providing advice, for implementing trustee decisions and for the ongoing management of ARIA’s functions and responsibilities. Specifically, ARIA employees are responsible for:

advising the Trustee on >investment strategy

implementing corporate strategies >and plans

managing the relationships between >the Trustee and service providers

managing the Trustee’s financial >affairs for the administration of the CSS, PSS and PSSap

ensuring the Trustee meet its >responsibilities to maintain correct records

coordinating advice from external >advisers and overseeing the recommendations which go to the Trustee

ensuring compliance with all >relevant legislation and law

communicating with members and, >in particular, preparing and producing annual member statement packs and parliamentary reports

giving comprehensive administrative >and executive support services to the Trustee.

Trustee resources

Human resources

ARIA’s CEO led a number of workshops with employees to develop and publish a series of values that aligns with the strategic business plan. One outcome of this process was the development and implementation of a new performance management system for all ARIA employees.

During 2008/09, the number of ARIA employees increased from 47 to 55 overall reflecting extra demands in investment, communication and administration functions.

Employee profile

Table 2: Employee numbers at 30 June 2009

Employment category Male Female Total

Full-time employees 22 23 45

Part-time employees 3 7 10

Performance pay

During 2008/09, ARIA paid a total of $798 220 in performance bonuses to 25 employees. The average performance bonus paid was therefore $31 929.

Non-salary benefits

ARIA offers its employees a variety of salary packaging benefits. These are individually negotiated and benefits available for packaging include leased motor vehicles, professional membership fees and extra superannuation.


7

Trustees

Benefits that employees may include in a salary package are those that attract either no fringe benefits tax (FBT) or a concessional rate of FBT.

Professional development

Ongoing employee training and development is an important part of ARIA’s human resource management. In addition, it helps ARIA meet the ‘adequacy of resources’ requirement of its APRA licence (see page 9).

During 2008/09, ARIA employees participated in a range of continuing professional development activities, including specialised courses in investment, finance and business operations.

Occupational health and safety

Under the Occupational Health and Safety (Commonwealth Employment) Act 1991 and the Safety, Rehabilitation and Compensation Act 1988, ARIA has a general duty of care that it must meet by taking all reasonably practicable steps to protect the health and safety of its employees and third parties at work. Workers’ compensation managed by Comcare covers ARIA employees.

During the year there were:

no dangerous occurrences under >section 68 of the Occupational Health and Safety (Commonwealth Employment) Act 1991

no workplace inspections carried out >by Comcare

no remedial provisional improvement >notices issued.

ARIA’s financial management

Financial resources

ARIA is responsible for the management of the CSS, PSS and PSSap and the investment of their funds. Investment costs are met from assets of the funds in accordance with their underlying legislation. Fees paid to the Chairman and a proportion of those paid to the trustees are also met by the funds.

Most other costs incurred by ARIA are met through a user-charging arrangement with employer agencies whereby ARIA receives a share of an administration fee. ARIA is a prescribed agency under the Financial Management and Accountability Act 1997 (FMA Act), in respect of public monies and accordingly the management of the administration monies and any other public monies received by ARIA is carried out in accordance with the requirements of that Act.

For 2008/09, the government provided additional funding for ARIA’s role in the implementation of changes to the schemes to reflect the government policy: ‘removal of differential treatment of same-sex couples and their children – law reform’.

Financial performance

Revenue and expenses were within budget for the year and ARIA recorded a surplus of $1m. ARIA’s business expenses were $15.7m of which $4.0m was met by the administration fee on employer agencies and extra government funding to meet the cost of changes to the schemes. The balance of $11.7m of expenses was met proportionately from the investment assets of the CSS, PSS and PSSap.


8

Trustees

Purchasing

In relation to resources subject to the FMA Act, ARIA complied during the year with the purchasing principles and policies set out in the Commonwealth Procurement Guidelines, in particular the principle of value for money, effected through competitive and non-discriminatory procurement, application of resources efficiently, effectively and ethically, and accountable and transparent decision making.

While investment-related activities are exempt from the mandatory procurement provisions of the Commonwealth Procurement Guidelines, ARIA applies value for money principles in all aspects of its operations including investment management activities.

Consultants

During 2008/09, ARIA entered into two new consultancy contracts (in respect of public moneys) involving total actual expenditure of $0.052m. In addition, 11 ongoing consultancy contracts were active during the year, involving total actual expenditure of $0.368m.

Asset management

ARIA’s assets, not including the investments and other assets of the funds, were recorded and managed in accordance with ARIA’s Chief Executive Instructions.

Ecologically sustainable development and environmental performanceARIA is a signatory to the UN Principles for Responsible Investment. The Principles aim to act as a framework for global best practice in responsible investment and include commitments to address environmental, social and governance issues in the policies and practices of investors. ARIA is a member of the Investor Group on Climate Change Australia/New Zealand and an investor signatory to the Carbon Disclosure Project. These collaborative industry initiatives address the business and shareholder value implications of climate change.

ARIA is a foundation investor in Regnan, which provides governance research and engagement services to ARIA and its other institutional investors. Regnan focuses on an engagement process to address portfolio risk exposure including relating to environmental risk.

Within its own offices, ARIA promotes a culture that requires employees to minimise their impact on the environment. Initiatives include minimising energy use, recycling of paper, plastic and metal waste and, where practical, using recycled paper and other products.

In 2008/09, ARIA worked towards reducing the volume of print material distributed to its 475 000 members. Starting in 2009/10, ARIA will provide scheme annual reports online instead of delivering hard copies to members. ARIA will also continue to encourage its members to source information from its website to reduce their reliance on hard copy materials.


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Trustees

Internal governanceARIA was established under the Superannuation Act 1990. It is accountable to members of the schemes it manages under scheme legislation, the Superannuation Industry Supervision Act and Regulations (SIS) and corporations legislation and is independent of the government of the day and any other constituency. Its principal responsibility is to act in good faith, with prudence and in the members’ best interests in respect of the administration and investment of the funds.

Trustees are required by SIS to meet a ‘fit and proper’ standard. This means that they must satisfy both propriety and competency requirements on appointment and thereafter.

In addition to these requirements on individual trustees, ARIA has a Code of Conduct in the exercise of its wide range of discretions.

In performing its functions and duties, ARIA:

will carry out its duties in good faith, >prudently and in accord with the relevant legislation so that the best interests of members are served

will at all times act ethically >and impartially.

ARIA’s code of conduct is set out in full at www.aria.gov.au/about_us/governance/governance.html.

In conjunction with the governance principles, ARIA’s responsibility for the funds is supported by comprehensive risk management strategies, plans and compliance programs.

Licences

ARIA has both an APRA licence and an Australian Financial Services (AFS) licence (administered by the Australian Securities and Investments Commission). Significant risk management and compliance resources are necessary to meet the ongoing requirements of these licences.

Risk management

As an APRA licensee, ARIA has a comprehensive risk management program in place. This covers a range of business, operational and governance risks and outlines risk minimisation strategies and controls for all identified risks. All strategies and plans are kept under review by ARIA’s Audit and Risk Management Committee. They are also reviewed annually in conjunction with ARIA’s business plan, and updated or amended as required to meet emerging risk or new business requirements.

Compliance

ARIA’s compliance program meets AFS licence requirements and underpins ARIA’s risk management program. Employees and service providers are required to provide positive certification that they have complied, or details of any non-compliance, with legislative requirements, contractual provisions, regulatory policy and service standards, in addition to licensing requirements. This is done regularly – either monthly or quarterly. The Audit and Risk Management Committee oversees compliance reporting, remediation where breaches have occurred and any necessary regulatory reporting. Consistent with ARIA’s breach policy, breach reports are required within a timeframe that enables ARIA to make timely regulatory reports, if required.


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Trustees

Fraud control

ARIA has a current fraud risk assessment and fraud control plan prepared in accordance with the Commonwealth Fraud Control Guidelines and effective fraud risk controls are in place. No instances of fraud have arisen during the reporting period.

Certification of fraud measures

I certify that I am satisfied that ARIA has prepared fraud risk assessments and a fraud control plan, and has in place appropriate fraud prevention, detection, investigation, reporting and data collection procedures and processes that meet its specific needs and comply with the Commonwealth Fraud Control Guidelines.

Lochiel Crafter Chief Executive Officer

Internal audit

Each year the Audit and Risk Management Committee agrees on an audit plan. It takes into account previously identified risks, the results and recommendations of previous internal and external audits, legislative and regulatory change and any anticipated scheme or business changes. The annual internal audit plan is additional to audits that can be required at any time by the Audit and Risk Management Committee to address changed business priorities or risk profile.

Outcomes and outputsEffective and efficient administration of Australian Government superannuation schemes

Table 3: Outcomes and outputs

Key performance indicator 2008/09 target 2008/09 results

Investment performance ARIA has a long term nominal target of at least 7% after tax and fees

Against this core objective, ARIA’s three-year investment performance was -0.8% and its five-year investment performance was 4.7%

Adequate compliance with Superannuation Industry (Supervision) Act 1993, Superannuation Act 1976, Superannuation Act 1990, Superannuation Act 2005 and the Corporations Act 2001

ARIA will seek to comply with all relevant scheme and regulatory requirements

ARIA continued to meet its obligations under relevant legislation

Status of Registrable Superannuation Entity (RSE) and Australian Financial Services (AFS) Licence holder

Fulfil ongoing licence obligations as set out by APRA and ASIC

ARIA has an APRA licence and an AFS licence and complied with all conditions throughout the year

Members’, other beneficiaries’ and employers’ service satisfaction level

Develop and implement industry standard service requirements with ComSuper

Industry standard service requirements with ComSuper implemented 1 July 2009

6. OverviewOverview

Description of the schemes

SIS compliance

Actuarial review


12

Overview

OverviewTable 4: Overview of the schemes

CSS PSS PSSap

Established The CSS was established on 1 July 1976 by the Superannuation Act 1976

The PSS was established on 1 July 1990 by the Superannuation Act 1990

The PSSap was established on 1 July 2005 by the Superannuation Act 2005

Type Combination of accumulation and defined benefit plans

Defined benefit plan Accumulation plan

Funds under management as at 30 June 2009

$4 715 million+ $9 971 million+ $1 240 million+

Members* as at 30 June 2009

146 277 253 394 85 202

Employer agencies as at 30 June 2009

236 236 169

*Includes: contributing, preserved, deferred and pension members.

Description of the schemes

CSS

The CSS is a hybrid superannuation scheme, with benefits generally being made up of two components:

1. A member-financed component This benefit is based on the contributions paid by the member into the fund plus fund earnings.

2. An employer-financed component, which includes two parts: The first part, which in most circumstances is paid as a non-commutable indexed pension out of consolidated revenue, is a defined amount. The amount payable depends on the reason for exit and has regard to several factors including final salary, age and length of contributory membership. The second part of the employer component is

the employer productivity superannuation contribution, which comprises employer contributions and fund earnings.

The CSS closed to new members on 30 June 1990.

PSS

The PSS is a defined benefit superannuation scheme. For contributing members, final benefits are calculated as a multiple of final average salary and an accrued benefit multiple (ABM). A member’s ABM depends on the rate at which contributions are made to the PSS and the length of membership. Members may contribute between 0% and 10% of salary. The employer contribution rate varies with the member contribution rate, subject to a cap in any ten years of total membership.


13

Overview

For preserved benefit members, investment performance has a more direct impact on their final benefit. Any member and productivity components will grow with the performance of the fund, while the employer component moves in line with CPI.

Retirement benefits can be paid as lump sums with the option to exchange the lump sum (or part of it) for an indexed pension. The benefits are generally made up of two components:

1. A member-financed component This part comprises the contributions paid by the member into the fund plus fund earnings.

2. An employer-financed component, which includes two parts: The first part comprises the employer productivity superannuation contribution paid by the employer into the fund plus fund earnings.

The second part of the employer component is the ‘benefit balance’, which is determined at the time the member exits from the PSS. The amount is the balance after the member and productivity components are deducted from the (defined) total lump sum benefit.

The PSS closed to new members on 30 June 2005.

PSSap

The PSSap is an accumulation plan. This means members and their employers pay money into the fund and ARIA credits investment earnings (positive or negative) to the account after deducting fees, taxes and charges.

Employers are required to make a 15.4% p.a. contribution to the PSSap on behalf of each contributing member.

Additionally, members can make before-tax (salary sacrifice) and after-tax (personal) contributions to the PSSap. The retirement benefit is a lump sum amount and generally consists of the following components:

Table 5: PSSap retirement benefit components

Employer contributions

+ Any member contributions (before or after tax)

+ Any super co-contributions and transfers from other funds

+ Investment earnings

- Fees and charges

- Insurance premiums if applicable

- Taxes

= Retirement benefit


14

Overview

SIS complianceThe CSS, PSS and PSSap are complying funds under the Superannuation Industry (Supervision) Act 1993 and accordingly continue to be eligible to have tax payable on their net income assessed at the concessional rate of 15%.

Actuarial reviewThe most recent actuarial review of the CSS and PSS was completed by Mercer (Australia) Pty Ltd during 2008/09. The results were included in the PSS and CSS Long Term Cost Report 2008 tabled

in Parliament on 25 May 2009 (a copy of the actuarial review is available at http://www.finance.gov.au/superannuation/docs/PSS-CSS-TCR-2008.pdf.

The PSSap is an accumulation plan and as such the cost to the government is limited to the contributions made by Australian Government employers and no actuarial review is required.

The results of the 2008 actuarial review and the previous two reviews are summarised below.

Table 6: Results of actuarial reviews

30 June 2008 30 June 2005 30 June 2002

CSS PSS CSS PSS CSS PSS

Net assets $6.1b $11.3b $6.0b $7.6b $5.3b $4.5b

Unfunded liability $59.2b $20.9b $50.6b $13.8b $49.3b $9.1b

Notional Commonwealth employer contribution rate (including 3% productivity contribution) as a percentage of salaries

21.4% 16.3% 28.2% 15.6% 28.3% 15.4%


15

Overview

The notional employer contribution rates are the employer contribution rates necessary to ensure that employer financed benefits payable from the CSS and PSS would remain fully funded in three years time, if they were fully funded at the time of the actuarial review.

The Australian Government’s outlay on the CSS and PSS in any year is equal to the total benefit paid to exiting members in that year, less the accumulated balance of member and productivity contributions of those members plus actual productivity superannuation contributions made by the Australian Government to the funds.

The 2008 review provides an actuarial projection of the Australian Government’s estimated costs for the CSS and PSS over 40 years to 30 June 2048 (adjusted to 2008 dollars using a discount rate of 6%). Table 7 shows the projections for the first three years, to 30 June 2011.

Table 7: Actuarial projections

Year ending 30 June

Estimated Australian Government costs

PSS CSS

2009 $506m $3 059m

2010 $521m $2 969m

2011 $528m $2 909m

Further projections of estimated costs are included in the PSS and CSS Long Term Cost Report 2008.

7. InvestmentsInvestment structure

Investment arrangements

Custodian services

Investment managers

Investment objectives

Events during the year

Fund performance

Investment information

Allocating earnings

ARIA’s approach to corporate governance


18

Investments

Investment structureThe CSS fund, the PSS fund and the PSSap fund are invested jointly. This gives economies of scale, thereby reducing the cost of managing the funds.

The CSS fund, PSS fund and the PSSap fund investment options are divided into asset classes. Professional investment managers manage the funds within each asset class. Each of the funds’ investment options tap into the same asset class pool, thereby achieving the same asset class performance and having their investments managed by the same investment managers.

Investment arrangementsARIA’s investment team gives investment advice, implements trustee investment decisions and monitors, reviews and reports on investment performance. ARIA retains Macquarie Investment Management Ltd for advice on Australian and Asian private equity, Altius Associates for advice on international private equity and Franklin Templeton Real Estate Advisers for international property advice.

Custodian servicesThe master custodian for the three funds is JPMorgan, whose custodial function includes:

settling trades >

physical custody and safekeeping >of securities

collecting > dividends, preparing accounts and disbursing dividends

receiving all monies available >for investment from the scheme administrator and allocating them on the instruction of the investment team to investment managers in accordance with the mandates set down by ARIA

holding (but not owning) the assets >that comprise the funds

> unit pricing

maintaining consolidated accounts >and tax records for the fund

reporting to ARIA on individual >fund manager and aggregated investment returns.

Investment managersUnder its legislation, ARIA is required to invest through investment managers: ARIA appoints investment managers who specialise in investing in particular asset classes. ARIA provides investment guidelines and direction to each of its investment managers.

Investment managers are paid a fee that is generally based on the value of assets that they manage for ARIA. The fee reflects the investment costs applicable to each particular asset class sector and the investment style (for example, passive or active) employed by each manager. In addition, some managers are paid a performance fee for exceeding a pre-determined benchmark or hurdle rate of return, which is generally a share of any excess performance above that agreed benchmark.


19

Investments

Table 8: Investment managers at 30 June 2009

452 Capital Pty Limited

AMP Capital Investors Limited

Arcadia Funds Management Limited

Aurora Investment Management LLC

AXA Rosenberg Investment Management Ltd

Balanced Equity Management Pty Ltd

Barclays Global Investors Australia Limited

BlackRock Financial Management

Bridgewater Associates, Inc

Colonial First State Property Limited

Concord Capital Limited

Dexus Property Group Limited

Eureka Funds Management Company

Fiduciary Trust Company International

GMO Australia Limited

Holowesko Partners Limited

Lend Lease Real Estate Investments Limited

Loomis Sayles & Company LP

Macquarie Investment Management Limited

Marathon Asset Management Limited

Marvin & Palmer Associates Inc

MIR Investment Management Limited

Orbis Investment Management Limited

Perpetual Investments

Platinum Asset Management

Principal Global Investors (Australia) Limited

Rexiter Capital Management Limited

Rogge Global Partners PLC

State Street Global Advisors Limited

Vanguard Investments Australia Limited

Wellington International Management

Note: These are only the investment managers that

hold more than 1% of the fund.

Investment objectives

CSS Default Fund

With the accumulation component of members’ total benefit tied to the investment performance of the fund, ARIA is focused on achieving competitive returns over the long term. This is explicitly recognised in the fund’s objective, which focuses on long-term real returns in an attempt to ensure that the real wealth of members increases over time.

The fund’s investment objectives specify the target, or acceptable levels of portfolio risk and return. ARIA expects to achieve an average real return of 4.5% after tax and fees over the longer-term. Consistent with the mid-point of the Reserve Bank’s inflation target range of 2% to 3%, this equates to an average nominal return of at least 7% per annum over the long term.

In developing an investment strategy to achieve the real return objective of at least 4.5% per annum, and recognising that the average person might have a working life of around 30 years, ARIA has adopted the following constraint in order to manage risk:

on average, nominal fund returns >are expected to be positive in 24 years out of 30.

This constraint defines the tolerable level of risk for the fund. Furthermore, for prudential reasons, the fund’s investments in illiquid assets will be limited to an average of around 25%.


20

Investments

PSS Default Fund

The total benefit payable to members is set by the governing legislation and rules of the PSS. It does not depend on the earning rate of the fund, except for preserved benefit members where investment performance has a more direct impact on the level of final benefits. The difference between the total benefit payable to a member and the accumulated member and productivity contributions (including fund earnings) invested in the fund is paid from consolidated revenue. The call on consolidated revenue will depend upon the investment performance of the fund. The better the investment performance of the fund, the smaller the call on consolidated revenue. In these circumstances, it is the employer who bears the investment risk arising from the investment of the fund.

The fund has a long-term perspective, but managing risk is also imperative. The fund’s investment objectives specify the target, or acceptable, levels of both portfolio risk and return.

They are distilled from the characteristics of the scheme, including benefit design, crediting rate policy and liability position.

ARIA expects to achieve an average real return after tax and fees of no less than 4.5% per annum over the long run.

In developing an investment strategy to achieve this objective, and recognising that the average person might have a working life of around 30 years, ARIA has adopted the following constraint in order to manage the level of risk taken:

on average, nominal fund returns >are expected to be positive in 24 years out of 30.

This criteria defines the ‘tolerable’ level of risk assumed by the fund’s investments. Furthermore, for prudential reasons, the fund’s investments in illiquid assets, are limited to an average of around 25%.

PSS and CSS Cash Investment Options

All CSS members and PSS preserved benefit members may choose to have the taxed components of their accounts (that is, their member and productivity components) invested in a cash investment option.

The key investment objective is, before the payment of tax, to at least match the return from the UBS Warburg Australian Bank Bill Return Index.

PSSap investment options

PSSap members’ total benefits are tied to the investment performance of the investment option(s) within the PSSap fund. Therefore, achieving a good return over the long-term is vital. This is explicitly recognised in the objectives that ARIA has set for the PSSap investment options, which is to maximise the long-term real return of the options within acceptable risk parameters.


21

Investments

Trustee Choice (default option)

The key investment objective is to outperform the Consumer Price Index (CPI) by 4.5% per annum over the medium to long-term.

Conservative

The key investment objective is to outperform the Consumer Price Index (CPI) by 3% per annum over the medium to long-term.

Balanced


Aggressive


Government bonds (previously fixed interest)

The key investment objective is, before the payment of tax, to at least match the return of the hedged World Government Bond Index.

Australian shares

The key investment objective is, before the payment of tax, to at least match the performance of the ASX 300 Index.

International shares (unhedged)

The key investment objective is, before the payment of tax, to at least match the return of the unhedged MSCI All Country World (ex-Australia) Index.

International shares

The key investment objective is, before the payment of tax, to at least match the return of the hedged MSCI All Country World (ex-Australia) Index.

Property

The key investment objective is, before the payment of tax, to at least match the return from the Mercer Direct Property Index.

Sustainable

The key investment objective is, before the payment of tax, to at least match the performance of the ASX 200 Index.

Cash

The key investment objective is, before the payment of tax, to at least match the return from the UBS Warburg Australian Bank Bill Return Index.


22

Investments

Asset allocation

The following tables set out the actual asset allocation for the CSS and PSS default funds as at 30 June 2009.

Table 9: CSS Default Fund asset allocation

Asset classActual asset allocation

2008 2009

Australian Equity 27.2 25.5

International Equity 22.0 23.9

Long/short equity funds 4.6 3.4

Real assets 14.9 16.7

Alternatives 10.5 9.4

Fixed income 9.7 11.3

Cash 11.1 9.8

Total fund 100.0 100.0

Table 10: PSS Default Fund asset allocation

Asset classActual asset allocation

2008 2009

Australian Equity 27.2 25.4

International Equity 22.1 23.9

Long/short equity funds 4.6 3.4

Real assets 14.9 16.7

Alternatives 10.5 9.4

Fixed income 9.7 11.3

Cash 11.0 9.9

Total fund 100.0 100.0

The following table sets out the actual asset allocation for the PSSap diversified, pre-mixed investment options as at 30 June 2009.

Table 11: PSSap pre-mixed investment options asset allocation

Asset class Trustee Choice Conservative Balanced Aggressive

Asset allocation 2008 2009 2008 2009 2008 2009 2008 2009

Australian Equity 27.3 25.5 14.8 13.1 16.7 15.8 39.9 37.7

International Equity 22.0 23.9 9.7 12.0 12.6 15.4 29.5 31.8

Long/short equity funds 4.6 3.4 - - 5.0 4.0 5.0 4.0

Real assets 14.9 16.7 4.8 4.8 15.2 11.6 15.3 14.5

Alternatives 10.5 9.4 - - 10.2 17.1 8.2 6.0

Fixed income 9.6 11.3 49.3 50.1 37.9 31.1 - 4.0

Cash 11.1 9.8 21.4 20.0 2.4 5.0 2.1 2.0

Total fund 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0


23

Investments

Events during the yearHere are the investment related events for 2008/09.

Australian equities

One investment mandate was terminated during the year. The redeemed funds were re-invested with the portfolio’s other managers. The benchmark for the sector was changed from the S&P/ASX 300 ex Listed Property Trust Accumulation Index to the S&P/ASX 300 Accumulation Index.

International equities

The strategic target for emerging market equities was increased. Investments in emerging markets were disaggregated from the international equities sector to form a new asset sector ‘emerging market equities’. The foreign currency hedging policy was revised during the year from a strategic 100% fully hedged position to a strategic hedging range of 45-70%. At the end of 2008/09, 70% of the foreign currency exposure was hedged back into Australian dollars.

Alternative investments

The funds’ exposure to alternative investments increased during the year. A commitment of $25.0m was made to new Australian private equity funds, and $202.5m was committed to new international private equity funds.

Some of the funds previously committed to private equity and opportunistic property were drawn down during the year, while some investments were realised and the proceeds returned. The net result of these flows was that the investments in these assets declined from $1 111.0m at the start of the year (reflecting commitments of $3 043.9m) to $1 020.1m (commitment of $3 271.3m) at 30 June 2009.

Market neutral funds

During the year, some market neutral investments were liquidated to address the strategic objective of diversification out of higher cost fund-of-fund structures in preference for lower-cost direct investing. One manager was terminated, and another’s allocation was reduced. Investments with one globally diversified fund were increased to exploit macro economic opportunities and increase downside protection. Albourne Partners was appointed as international advisor for the market neutral sector.

Long/short equity funds

During the year, some long/short investments were liquidated to address the strategic objective of diversification out of higher cost fund-of-fund structures in preference for lower-cost direct investing, as well as a tactical need to manage liquidity. Albourne Partners was appointed in January 2009 as international advisor for the long/short sector.

Fixed interest

The funds’ allocation to fixed interest was formally split between global investment-grade credit and global government bonds (nominal and inflation-linked government bonds) during the year. The split between global investment grade credit and global government bonds reflected the very different risk profiles of the underlying assets. The introduction of inflation-linked government bonds into the portfolio reflected an excellent pricing opportunity.


24

Investments

Property

While the fall in the value of listed markets meant that our property allocation was slightly above its strategic target during the year, it remained within our rebalancing ranges.

A redemption notice was lodged for one of the funds’ unlisted pooled property trust investments.

Fund performance

CSS and PSS Default Funds

The CSS Default Fund posted a net return of -15.4% and the PSS Default Fund posted a net return of -15.3%, with the distressed global banking sector and collapse in asset markets taking their toll.

Default Fund performance was constrained by the negative returns recorded in listed global equity and credit markets. Australian equities finished the year with a return of -17.4%, largely reflecting a compression in company valuations – particularly in the resources and consumer discretionary industries. International equities fell by -38.4% in hedged terms and -26.9% in unhedged terms over the year. Unhedged returns were improved by the positive translation effect of the fall in the Australian dollar.

Diversification across asset classes helped to limit the decline of the Default Fund, with property investments falling only slightly over the year, while government bonds produced positive returns.

The CSS Default Fund achieved an average net return (after fees and tax) of -1.1% per annum in the three years to 30 June 2009. This compared with a five-year average net return of 4.5% per annum and seven-year average net return of 5.6% per annum. Performance has fallen short of the fund’s target net return over each of these periods.

The PSS Default Fund achieved an average net return of -0.8% per annum in the three-years to 30 June 2009. This compared with a five-year average net return of 4.7% per annum and seven-year average net return of 5.7% per annum. Performance has fallen short of the fund’s target net return over each of these periods.

CSS and PSS Cash Investment Options

The CSS and PSS Cash Investment Options both posted a net return of 4.6% for the year ending 30 June 2009, which is in line with their objectives once the impact of tax on returns is taken into account.

PSSap

Over the financial year to 30 June 2009, the PSSap’s default fund (Trustee Choice) fell by 14.9%, with the decline in Australian and international share markets being the major contributor. Diversification into government bonds, cash, high quality properties with long leases and actively diversified global managers, helped offset the equities impact to some extent.


25

Investments

The other three pre-mixed, diversified options also produced negative returns in 2008/09. The Aggressive option recorded a net return of -17.8%, as it has a larger allocation to listed global equity markets. The Balanced and Conservative options achieved net returns of -9.3% and -4.6%, respectively, reflecting their lower weighting to listed equity markets.

Over the four years since inception, returns have been similar across the pre-mixed investment options. The PSSap default fund (Trustee Choice) achieved a net return of 2.8% per annum. The Aggressive option returned 2.2% per annum, the Balanced option increased by 3.1% per annum and the Conservative option by 3.1% per annum. While since-inception returns are positive, all investment options have fallen behind their long-term return targets.

Single asset class option performance also reflected the financial shock in 2008/09. Significant negative returns were recorded by the Australian shares, Sustainable and International shares options. The non-equity options achieved better performance. The fixed interest option fell by 2.4% as a result of its credit exposure in the first half of the year, and the property option declined by 5.5%.

In the four years since inception, the highest returns were achieved by the Property and Cash options. The Australian shares option has outperformed both the international shares and fixed interest options.

Performance by asset class

Performance figures in the following single asset classes are before tax, but after fees.

The abrupt collapse of Lehman Brothers in September 2008 triggered a collapse in confidence and equity and credit markets everywhere fell precipitously.

Australian equities

After a decline of more than 11% in 2007/08, the Australian equity market (S&P/ASX 300 Accumulation Index) declined by 20% during the year, its third worst year since World War II. ARIA outperformed this benchmark by 3% over the year to deliver a return of -17%. This large fall in price was accompanied by a steep rise in the volatility of the market. While the benchmark index dropped 37% by early March, it had bounced back by more than 27% by the end of financial year. Reversing the trend of previous years, the resources sector was the worst performing during the year, while the defensive sectors (such as Health Care and Consumer Staples) suffered much less.

International equities

Developed-world equity markets fell an average 25.8% over the financial year to June 2009. Emerging market equities were a tale of two halves. Repatriation of capital and the fall in global economic activity led to a significant underperformance by emerging markets in the first half of the financial year. However, as the emerging region’s growth performance began to look stronger than that of the developed world, emerging market equities rallied back strongly in the second half of the year. They finished ahead of Developed World equities in local currency terms (-19.7% for the MSCI Emerging Market index compared with -25.8% for the MSCI World index).


26

Investments

The fall in the value of the Australian dollar over the year, particularly against the US dollar (from 96 cents to 81 cents), meant that investors who unhedged their foreign currency exposures experienced better returns. Our funds were 100% hedged during the first half of the year, and the funds’ international shares returned -38% during the year.

Fixed interest

Fixed interest markets in 2008/09 were dominated by the credit market meltdown, which reached a crisis point in the first half of the financial year. The ongoing viability of the global financial system was questioned. Credit spreads blew out as investors demanded increasingly high premiums to take on credit and liquidity risk.

Nominal government bonds, by comparison, returned around 11% over this period reflecting the collapse in interest rates and global economic growth. Cash returned 5.5% before tax.

While global credit securities suffered during the period of maximum credit market distress, they mounted a strong recovery in the last quarter of the year.

Market neutral funds

2008/09 was a challenging period for absolute return managers. Despite decreased liquidity, dislocated markets and unprecedented levels of volatility for most of the year, ARIA’s investment managers were able to navigate through the biggest financial crisis in decades with only modest losses. This provided ARIA with a much needed source of diversification away from the larger declines in growth assets.

Long/short equity funds

The objective of this asset class is to match the return from international equities in the long run, but with a lower level of return volatility. In 2008/09, long/short equity funds outperformed international equities by a substantial margin, thereby providing ARIA’s funds with another significant source of diversification. At the same time ARIA’s managers were able to exploit medium and long-term opportunities that presented themselves in the dislocated markets.

Property

The Australian unlisted property market, as measured by the Mercer Australian Unlisted Property Index, recorded its first year of negative returns since 1993, returning -12.9%. This was due to a lack of capital availability (debt and equity) for property investment, combined with deteriorating property market fundamentals. Within this environment ARIA’s property portfolio performed relatively well, declining by only 5.5%. This reflects the high quality nature of the portfolio and conservative capital structure employed.

Cash

The return from cash was 5.5% before tax. This was in line with its investment objective, and reflects the path of the Reserve Bank of Australia’s official cash rate, which was cut from 7.25% to 3% over the course of the financial year.


27

Investments

Table 12: CSS Default Fund investments 2008/09

Holdings at 30 June 2008

$m


$m

Proportion at 30 June 2009

%

Total fund investments 5 744.7 4 179.6 100.0

Note: Total fund investments is after tax and fees.

Australian Equity 1 579.1 1 049.8 25.4

International Equity 1 281.9 988.6 23.9

Long/short equity funds 268.5 139.8 3.4

Real assets 865.9 690.3 16.7

Alternatives 609.6 389.6 9.4

Fixed income 561.3 465.7 11.4

Cash 648.0 405.7 9.8

Note: Sectors are before tax and after fees.

Table 13: CSS Default Fund performance 2008/09

One-year performance

Three-year performance

Five-year performance

Seven-year performance

% % % %

Total fund performance -15.4 -1.1 4.5 5.6

Note: Total fund performance is after tax and fees.

Australian shares -17.4 -3.4 6.9 7.7

International shares -38.4 -11.7 -1.5 1.7

Australian private equity -18.7 -1.9 3.6 9.1

International private equity -30.6 -1.8 6.6 2.2

Long/short equity funds -23.5 -3.9 - -

Market neutral fund -7.7 3.5 5.5 7.1

Property -5.9 6.2 9.5 9.7

International fixed interest 2.4 3.5 5.0 6.8

Cash 5.5 6.4 5.8 5.4


Table 14: CSS Cash Investment Option performance 2008/09


$m


$m


%


%

Total fund 320.1 536.0 4.6 5.3

Note: Holdings and performance are after tax and fees.


28

Investments

Table 15: PSS Default Fund investments 2008/09


$m


$m

Proportion at 30 June 2009

%

Total fund investments 11 362.6 9 920.9 100.0

Note: Total fund investments is after tax and fees

Australian Equity 3 118.3 2 478.2 25.4

International Equity 2 524.0 2 333.4 23.9

Long/short equity funds 530.0 327.4 3.4

Real assets 1 704.7 1 633.5 16.7

Alternatives 1 198.3 915.1 9.4

Fixed income 1 106.2 1 101.8 11.3

Cash 1 264.1 967.8 9.9


Table 16: PSS Default Fund performance 2008/09



Five-year performance

Seven-year performance

% % % %

Total fund performance -15.3 -0.8 4.7 5.7

Note: Total fund performance is after tax and fees

Australian shares -17.4 -3.4 6.7 7.5

International shares -38.4 -11.6 -1.5 1.8

Australian private equity -18.7 -1.6 4.5 9.7

International private equity -30.6 0.3 8.1 3.3

Long/short equity funds -23.5 -3.9 - -

Market neutral fund -7.7 3.6 5.6 7.1

Property -5.9 6.1 9.3 9.6

International fixed interest 2.4 3.5 5.0 6.7

Cash 5.5 6.4 6.1 5.8


Table 17: PSS Cash Investment Option performance 2008/09


$m


$m


%


%

Total fund 13.3 50.9 4.6 5.4



29

Investments

Table 18: PSSap performance 2008/09

Investment option Holdings June 2008

$m

Holdings June 2009

$m


%


%

Conservative 3.7 9.7 -4.6 1.6

Balanced (50/50) 6.7 11.1 -9.3 0.8

Trustee Choice 829.1 1 128.4 -14.9 -0.9

Aggressive 28.0 31.9 -17.8 -2.2

Cash 5.4 28.6 4.5 5.2

Government bonds (previously Bonds/Fixed interest)

2.0 3.7 -2.3 1.1

Australian shares 8.3 14.7 -14.6 -2.8

International shares (unhedged) 0.8 1.1 -19.4 -8.4

International shares 1.6 2.0 -30.5 -8.7

Property 2.6 5.4 -5.4 6.8

Sustainable 3.7 3.8 -17.5 -3.4


Investment informationFurther information on investment performance is available from:

Web www.aria.gov.au

Postal address ARIA GPO Box 1907 Canberra City ACT 2601

Phone 02 6263 6999

Fax 02 6263 6900



30

Investments

Allocating earningsOn 13 June 2007, the Trustee adopted a new Earnings Rate Policy which took effect on 28 June 2007. The 2006/07 Annual Report to Parliament outlined this policy, which is summarised below.

CSS and PSS

The applicable earnings rate for the last day of a calendar month is used to apply earnings to member accounts for that month, other than for transactions to and from the member accounts recorded for that month:

transactions that are processed to a >member’s account during a month use the relevant earnings rate for the date of the transaction through to the end of that month, to reflect earnings on such amounts

transactions that are processed from >a member’s account during a month use the relevant earnings rate from the beginning of that month to the date of the transaction, to reflect earnings on such amounts.

Processing transactions to member accounts

Transactions will be processed from and to member accounts after validation, in accordance with the scheme rules and the terms of the agreement between the administrator and ARIA.

Preserved and associate members with account balances in the CSS and PSS fund greater than $1 000 may switch the entire balance of their account between the Default Fund and Cash Investment Option twice yearly. The cut-off for these switch transactions is the last Friday of a month with the transaction processed once per month on the following Wednesday.

PSSap

Members’ interests in the PSSap are valued in units. Contributions and other amounts transferred to the PSSap are used to buy units which are invested in accordance with members’ investment choices. There are 11 investment options to choose from.

The fund’s net earnings are allocated to members’ accounts through changes in the unit price which fluctuate in line with investment markets. The unit price for an investment option reflects the total value of assets in the investment option (net of taxes and expenses) divided by the number of units issued in the investment option.

A buy/sell spread is applied to all the investment options to reflect the costs associated with the purchase or sale of assets. Calculation of the value of assets in each investment option is generally based on the latest available market value at the end of each business day and published daily on the fund’s website at www.pssap.gov.au. Where fees are payable directly from a member’s account (for example, insurance premiums and switching fees), units are sold to the extent required for payment.


31

Investments

ARIA’s approach to corporate governanceARIA’s approach to investment governance reflects the framework laid out by the United Nations Principles of Responsible Investing.

ARIA believes it has a responsibility to ensure that funds are not exposed to undue risk because of poor corporate governance behaviour. Therefore ARIA pursues the principles of good governance in its own operations, and seeks them in service providers and in the companies in which it invests.

ARIA considers corporate governance to be an important element of risk management. It recognises that poor environmental, social and corporate governance can lead to a decline in investment value. ARIA undertakes a number of initiatives and practices in relation to its investments, including:

the casting of proxy votes in the >Australian and international companies in which it invests

> governance research and engagement through Regnan (see following column).

Proxy voting

In keeping with its belief in the value of good governance, ARIA exercises its right to cast proxy votes in the companies in which it invests.

This activity underscores ARIA’s commitment to ensuring long-term shareholder value for members.

It also sends a clear signal to companies that as a shareholder, ARIA will vote on company resolutions in the best interests of its members.

Regnan – Governance Research and Engagement Pty Limited

Regnan was established to protect and enhance shareholder value for members by identifying environmental, social and corporate governance risks in present and future investments and to actively communicate those risks to relevant stakeholders and engage directly with companies as required.

It began in 2001 as a joint venture between the CSS and PSS Boards and Westpac Investment Management, subsequently known as BT GAS.

The boards appointed the service to actively research governance risk in the funds’ Australian equities investments and make recommendations on how to diminish or eliminate such risks. ARIA’s Australian equity investments represent funds under management of around $3.4 billion.


32

Investments

Having created the foundation for a new approach to risk management, in May 2007 ARIA and seven other major institutional investors founded Regnan, a new company evolving from the former BT GAS.

Regnan is Australia’s only investment risk management service which focuses on an engagement process to meet the oversight needs of institutional investors. It addresses portfolio exposure to environmental, social and governance risks by directly engaging with companies and performing specialist research and analysis. Regnan’s research universe includes all companies in the S&P/ASX200.

The United Nations Principles for Responsible Investment

ARIA became a signatory to the United Nations Principles for Responsible Investment (UNPRI) in December 2006 and is actively committed to aligning investment activities with the principles in the best long-term interests of ARIA beneficiaries.

8. Scheme administrationMembership data

Member communication and services

Scheme administrator


34

Scheme administration

Membership dataTable 19: Membership summary 30 June 2009

Contributors

Preserved /deferred

benefit members Pensioners

Total membership

07/08*

Total membership

08/09*Total

change%

change

CSS Male 12 828 7 803 65 340

149 442 146 277 (3 165) (2.12)

Female 6 979 3 054 50 273

Total 19 807 10 857 115 613

PSS Male 52 272 44 629 9 263

252 487 253 394 907 0.36

Female 72 715 64 960 9 555

Total 124 987 109 589 18 818

PSSap Male 25 485 8 875

n/a

73 983 85 202 11 219 15.16

Female 36 322 14 520

Total 61 807 23 395

Total 206 601 143 841 134 431 475 912 484 873 8 961 1.88

Note: CSS pensioners include 1922 Act scheme members.

* Total membership also includes child/student pensions which are not split by gender.

Table 20: Member and employer contributions received 2007/08 – 2008/09

2007/08 2008/09%

changeMember* Employer* Total* Member* Employer* Total* Difference

CSS $119m $41m $160m $109m $39m $147m ($13m) (8.13)

PSS $525m $221m $746m $543m $217m $760m $14m 1.88

PSSap $33m $362m $395m $10m $492m $503m $107m 27.34

Total* $677m $624m $1 301m $662m $748m $1 410m $109m 8.38

Note: The dollar amounts have been rounded up from the first decimal place.

* These figures do not include transfers in, co-contributions or any appropriations from the CRF.


35


Chart 1: Membership by type

contributorpreserver/deferredpensioner

Chart 3: Membership trend by type

contributorpreserved/deferredpensioner

0

50 000

100 000

150 000

200 000

250 000

2005

2006

2007

2008

2009

Chart 5: Membership enquiries trend (last five years)

0

60 000

120 000

180 000

240 000

300 000

2004

2005

2006

2007

2008

2009

telephoneemailwritten

Chart 2: Membership by scheme

CSSPSSPSSap

Chart 4: Membership trend by scheme

0

60 000

120 000

180 000

240 000

300 000

2004

2005

2006

2007

2008

2009

CSSPSSPSSap


36


Member communication and servicesARIA aims to give members information, education and advice to help them make the right super decisions. ARIA does this by giving members clear, concise and tailored communications throughout the year and works with the scheme administrator to deliver websites, contact centres and comprehensive employer support.

At Work for You workshops

ARIA’s member education program, At Work for You continued to be a valuable tool for members. The At Work for You workshops aims to empower members and increase their super confidence through in-house and public workshops.

In 2008/09, ARIA held workshops at more than 38 locations around Australia. There were 293 At Work for You workshops throughout the year with 8 744 members attending a workshop. ARIA also tailors At Work for You workshops for employers to help in times of restructure and redundancies.

Websites and targeted campaigns

ARIA’s websites and targeted campaigns are another way that ARIA helps members to improve their super knowledge and confidence. The scheme websites have a range of online tools and members can find information specific to their super. ARIA conducts research with its members to identify areas of improvement for its online services.

Contact centres

The scheme administrator offers members information through its CSS/PSS and PSSap contact centres. The contact centre was again nominated for the Australian Teleservices Association Awards and was a state finalist in the NSW/ACT division. To further its commitment to high levels of customer service, the scheme administrator introduced enhanced scheme training during the year and continued to focus on employee development through improved quality assurance measures.

Employer support

Employers play an important part in delivering member services and the scheme administrator works closely with 216 participating employers for the CSS, PSS and PSSap. Employers also receive support through phone contact, written advice and a monthly newsletter. The employer service team dealt with more than 36 890 enquiries for the year.


37


Scheme administratorScheme administration for the CSS, PSS and PSSap is undertaken by ComSuper on the basis of a statutory mandate.

The scheme administrator’s major areas of activity and accountability encompass:

receiving and accounting for >contributions from employing agencies in respect of their employees

maintaining records of > contributors, preservers and pensioners

calculating and paying > benefits (including invalidity benefits)

under delegation, reconsidering and >reviewing decisions on entitlements

providing information to members. >

Performance of administrator

Performance standards are set down in the service level agreement between ARIA and ComSuper.

ComSuper provides weekly and monthly reports against the standards in the service level agreement.

ARIA undertakes an annual service provider review of ComSuper, including an assessment of the administrator’s performance during the year against the agreed service standards.

Benefit payments

During 2008/09, the scheme administrator implemented a number of customer service improvements which it identified in focus groups held during the year.

ComSuper restructured its benefit application team to allow members to contact them directly about their benefit application, instead of going through the contact centre. ComSuper also streamlined its benefit application process.This produced the fastest average benefit processing time and the smallest number of applications on hand since 2006/07 for PSSap, PSS and CSS members.

Chart 6: Benefit payments by type 2008/09

Resignation/OtherAge/RetirementInvoluntary retirementEarly releaseInvalidityDeath


38


Table 21: Total number of benefit payments (by type)

Age/retirement

Involuntary retirement Invalidity Death

Resignation/ other

Early release

Total 08/09

Contributor exits 827 571 77 46 1 016 12 2 549

Preserved claims 2 093 0 12 12 2 4 2 123

CSS total 2 920 571 89 58 1 018 16 4 672

Contributor exits 2 294 1 641 280 103 6 267 215 10 800

Preserved claims 1 333 0 34 136 0 496 1 999

PSS total 3 627 1 641 314 239 6 267 711 12 799

PSSap total 500 0 11 22 2 649 42 3 224

Total 7 047 2 212 414 319 9 934 769 20 695

Note: These figures reflect benefits processing and not cases where a member has necessarily taken out all of their funds.

Pensions

Table 22: Pensions summary

Pensions in force at 30 June 2009

Pensions paid

$

Weighted average

yearly pension

$Age retirement/

involuntary retirementInvalidity

retirement Spousechild/other Total

CSS 70 374 16 504 28 674 61 115 613 3 136m 26 058

PSS 15 818 2 169 740 91 18 818 352m 18 616

Total 86 192 18 673 29 414 152 134 431 3 488m 25 050

Note: CSS pensioners include 1922 Act scheme members.


39


Chart 7: Pensioner population trend

100 000

110 000

120 000

130 000

140 000

2004

2005

2006

2007

2008

2009

Pen

sion

er n

um

bers

Chart 8: Average pension trend

$

17 000

19 000

21 000

23 000

25 000

27 000

2004

2005

2006

2007

2008

2009

Note: The PSSap does not offer a pension product.

Dispute resolution

Decisions of ARIA and its delegates are subject to internal review (the reconsideration process) and external review. As required under legislation a formal complaints process is also in place.

Internal review – reconsiderations

A person affected by a decision of ARIA or a delegate may apply in writing to have it reconsidered. The scheme administrator (ComSuper) investigates requests and prepares cases and puts them before the Reconsideration Advisory Committee (RAC). The role of the RAC is to make recommendations to ARIA concerning requests for reconsideration. The RAC may make a recommendation to affirm or vary the decision, substitute another decision or set aside the decision.

Each applicant receives a written statement of reasons for ARIA’s decision on reconsideration.

The RAC comprises four members (two independent and two scheme administrator representatives) with a quorum of three members, one of whom must be an independent member.

Due to other commitments, both longstanding independent members, Ms Ann Forward and Mr Bill Gray AM, resigned from the RAC during the year. ARIA appointed two new members in February 2009. The committees currently comprise:

Ms > Elizabeth d’Abbs and Mr Stevan Matheson, as the independent members

any two of five nominated > scheme administrator representatives.


40


In 2008/09, 30 applications for reconsideration for the CSS and PSS were received, compared with 24 last year.

Of the requests received, five involved spouse eligibility decisions, five involved late elections for preservation of rights and five involved approval of invalidity retirement. The remaining requests involved limited benefits member status, partial release of preserved benefits and decisions made under various other scheme provisions.

There were 30 CSS and PSS cases finalised during the year, compared with 31 for the previous year. Seven requests lapsed or were withdrawn without proceeding to reconsideration. The original decision

was varied in favour of the applicant in four cases, due mainly to additional evidence provided as part of the reconsideration process.

To date there have not been any requests for reconsideration from any PSSap members.

Requests for reconsideration are treated as complaints for the purposes of section 101 of the Superannuation Industry (Supervision) Act 1993 (the SIS Act) and should a person be unhappy with ARIA’s decision, they may request the Superannuation Complaints Tribunal (SCT) to review the decision in accordance with the Superannuation (Resolution of Complaints) Act 1993.

Table 23: Reconsideration applications received and outcomes 2008/09

Decision of the:

Brought forward Received

Withdrawn or lapsed

Decisions affirmed

Decisions set aside Resolved*

Carried forward**

CSSDelegate 9 13 3 12 3 18 4

Trustee 0 1 0 1 0 1 0

PSSDelegate 6 15 4 5 1 10 11

Trustee 0 1 0 0 0 0 1

PSSapDelegate 0 0 0 0 0 0 0

Trustee 0 0 0 0 0 0 0

Total 15 30 7 18 4 29 16

* Resolved = withdrawn or lapsed + decisions set aside

** Carried forward = brought forward + received - resolved


41


External review

Certain ARIA decisions are subject to external review by the Federal Court and other bodies such as the Human Rights and Equal Opportunity Commission, the SCT and the Commonwealth Ombudsman.

Complaints lodged with the SCT

Table 24: Complaints lodged, all schemes 2008/09

Carried over Received Completed

On- hand

Total 34 73 55 52

Federal Court

Decisions of the SCT are reviewable by the Federal Court under section 46 of the Superannuation (Resolution of Complaints) Act 1993 (the SRC Act). Appeals, on the grounds of an error of law only, must be initiated within 28 days of notification of the SCT decision.

ARIA appealed one SCT decision to the Federal Court. This is reported at Australian Reward Investment Alliance v Superannuation Complaints Tribunal [2008] FCA 1548. ARIA’s appeal was upheld.

Administration decisions are subject to review by the Federal Court under the Administrative Decisions (Judicial Review) Act 1977 (the AD(JR) Act).

Decisions which may be reviewed under the AD(JR) Act include decisions made by ARIA and its delegates.

Claims against ARIA

During the year, ARIA received 68 claims for compensation concerning benefit entitlements. A further 29 claims were still outstanding at 30 June 2008. ARIA and its delegates considered 67 claims during the year with 30 cases outstanding at 30 June 2009.

Of the 67 claims considered during 2008/09 liability was accepted in 34 cases, for which total compensation payments (including claimants’ legal costs) amounted to $396 241 in lump sums.

Complaints and representations

There was a decrease in the number of complaints received this year over last. This was mainly due to a number of processes that were automated or issues that were resolved that were previously a cause of complaint.

The most common cause of complaints in the last financial year in order of frequency were:

quality of service >

delays in service and failure to >respond to requests

delays in paying > benefits

incorrect statements >

delays in providing estimates >

> investment switch issues

> earning rate policy and allocation of funds

problems with the payment >of benefits

incorrect information given >

problems with insurance >premiums payable.


42


Table 25: Complaints and representations

Total received

CSS Complaints 400

Ministerials 12

Ombudsman enquiries 9

PSS Complaints 324

Ministerials 7


PSSap Complaints 128

Ministerials 1


Total 887

9. Financial statements

CSS


44

CSS financial statements

Annual Report_text_2009.indd Sec1:64Annual Report_text_2009.indd Sec1:64 29/09/2009 11:37:57 AM29/09/2009 11:37:57 AM


45




46




47


Commonwealth Superannuation Scheme (ABN 19 415 776 361)

The Trustee hereby states that in its opinion:

(a)

(b)

(c)

(d)

(e)

(f)

Winsome Hall Dennis TrewinChairman Trustee

the financial statements have been prepared based on properly maintained financial records; and

the operations of the CSS Fund were conducted in accordance with the Superannuation Act 1976 and the requirements of the Superannuation Industry (Supervision) Act 1993 and Regulations, and the relevant requirements of the Corporations Act 2001 and Regulations (to the extent applicable).

Signed at Sydney this 15th day of September 2009 in accordance with a resolution of trustees of Australian Reward Investment Alliance (ABN 48 882 817 243) as Trustee of the Scheme.

Statement by the Trustee of the Commonwealth Superannuation Scheme ('Scheme')

the attached financial statements of the Scheme show a true and fair view of the matters required by Australian Accounting Standards, including AAS 25 'FinancialReporting by Superannuation Plans' , and Schedule 1 of the CommonwealthAuthorities and Companies Orders (Financial statements for reporting periods ending on or after 1 July 2008) to the extent that the latter is not inconsistent with AAS 25;

the attached financial statements of the Scheme show a true and fair view of the net assets of the Scheme as at 30 June 2009 and the changes in net assets of the Scheme for the year ended 30 June 2009;

at the date of this statement there are reasonable grounds to believe that the Scheme will be able to pay its debts as and when they fall due;

the financial statements are in a form agreed by the Minister for Finance and Deregulation and Australian Reward Investment Alliance in accordance with sub-section 161(1A) of the Superannuation Act 1976 and have been prepared in accordance with Australian Accounting Standards and other mandatory professional reporting requirements;


48


Statement of Changes in Net AssetsFor the Year Ended 30 June 2009

Note 2009 2008$'000 $'000

6 073 474 6 797 174

Net investment revenueInterest 2 298 3 237 Changes in net market value of investments 5c (811 392) (109 647)

(809 094) (106 410)

Contribution revenueMember contributions 6a 108 565 118 621 Employer contributions 6a 38 934 41 252 Co-Contributions 6a 1 858 2 236 Appropriation from Consolidated Revenue Fund 6b 3 070 432 2 876 301

3 219 790 3 038 410

Total revenue 2 410 696 2 932 000

Benefits paid 6b (3 736 589) (3 649 541)

8 - - Total expenses (3 736 589) (3 649 541)

(1 325 893) (717 541)

Income tax expense 7a (6 187) (6 159)

(1 332 081) (723 700)

4 741 393 6 073 474

The attached notes form part of these financial statements.

Net assets available to pay benefits at the beginning of the financial year

Change in net assets before income tax

Change in net assets after income tax

Net assets available to pay benefits at the end of the financial year

Transfers to the Public Sector Superannuation Scheme


49


Statement of Net AssetsAs at 30 June 2009

Note 2009 2008$'000 $'000

InvestmentsPooled Superannuation Trust 4 4 715 568 6 051 960 Total investments 4 715 568 6 051 960

Other assetsCash and cash equivalents 37 644 46 912 Interest receivable 99 295

3 566 Total other assets 37 746 47 773

Total assets 4 753 314 6 099 733

LiabilitiesBenefits payable 4 920 18 921 Sundry payables 9 358 493 Amounts due to other superannuation schemes 412 412 Current tax liabilities 7b 6 216 6 389 Deferred tax liabilities 7c 15 44 Total liabilities 11 921 26 259

Net assets available to pay benefits 4 741 393 6 073 474


Amount to be appropriated from Consolidated Revenue Fund


50


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFor the year ended 30 June 2009

1. DESCRIPTION OF THE SCHEME

2.

(a) Statement of Compliance

The financial report of the Commonwealth Superannuation Scheme ('Scheme') is a general purpose financial report which has been prepared in accordance with Schedule 1 of the Commonwealth Authorities and Companies Orders (Financial statements for reporting periods ending on or after 1 July 2008) , Australian Accounting Standards and Interpretations and the Superannuation Industry (Supervision) Act 1993 . Accounting Standards include Australian equivalents to International Financial Reporting Standards ('AIFRS') to the extent that they are not inconsistent with AAS 25 'Financial Reporting by Superannuation Plans' .

BASIS OF PREPARATION

The Scheme is a defined benefit scheme which provides benefits to its members under the Superannuation Act 1976 (as subsequently amended). The Trustee at reporting date was ARIA.

Moneys paid to ARIA for the purposes of the Scheme are held in the CSS Fund. The CSS Fund comprises contributions made by members and employers, income arising from investments, and accretions to or profits on realisation of investments held within the CSS Fund. ARIA pays member benefits and taxes relating to the Scheme and the costs of management of the CSS Fund and the investment of its money out of the CSS Fund.

Administration of member records, contributions receipts and benefit payments is conducted on behalf of the Trustee by ComSuper.

The principal place of business of the Scheme is Level 10, 12 Moore Street, Canberra ACT 2601.

Australian Reward Investment Alliance ('ARIA') (ABN 48 882 817 243), Trustee of the Scheme, authorised the financial statements for issue on 15th September 2009.

The form of these financial statements has been agreed by the Minister for Finance and Deregulation and ARIA in accordance with sub-section 161(1A) of the Superannuation Act 1976 .


51



2.

(a) Statement of Compliance (continued)

Standard / Interpretation Effective for annual reporting periods

beginning on or after

Expected to be initially applied in the financial

year ending

1 January 2009 30 June 2010



(b) Functional and presentation currency

The financial statements are presented in Australian dollars, which is the functional currency of the Scheme.

Amounts in these financial statements have been rounded to the nearest thousand dollars, unless otherwise indicated.

AASB 2009-2 'Amendments to Australian Accounting Standards - Improving disclosures about Financial Instruments' and consequential amendments to other accounting standards resulting from its issue.

AASB 2008-6 and 2008-5 'Amendments arising from the first annual improvements project' and consequential amendments to other accounting standards resulting from its issue.

BASIS OF PREPARATION (continued)

AASB 101 'Presentation of Financial Statements' and consequential amendments to other accounting standards resulting from its issue.

Australian Accounting Standards require ARIA to disclose Australian Accounting Standards that have not been applied, for standards that have been issued but are not yet effective. At the date of authorisation of the financial report, the following Standards which are expected to be relevant to the Scheme were in issue but not yet effective. ARIA anticipates the adoption of these Standards upon their application date to the extent that they are not inconsistent with AAS 25 'Financial Reporting by Superannuation Plans' . It is anticipated that the Standards will not have a material financial impact on the financial report of the Scheme.


52



2.

(c) Use of judgements and estimates

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

(a) Assets

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is varied and in any future periods affected.

BASIS OF PREPARATION (continued)

Judgements made by management in the application of Accounting Standards that have significant effects on the financial statements, and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.

Assets are included in the Statement of Net Assets at net market value as at the reporting date and changes in the net market value of assets are recognised in the Statement of Changes in Net Assets in the periods in which they occur. Net market value of investments includes an amount for selling costs which would be expected to be incurred if the investments were sold.

Financial assets (being investments in a pooled superannuation trust, cash at bank and interest receivable) are recognised on the date it becomes a party to the contractual provisions of the asset. Financial assets are recognised using trade date accounting. From this date, any gains and losses from changes in net market value are recorded.

As disposal costs are generally immaterial, net market value approximates fair value unless otherwise stated.

The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2009 and the comparative information presented in these financial statements for the year ended 30 June 2008.


53



3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

(a) Assets (continued)

(i)

(ii)

(b) Cash and Cash Equivalents

(c) Financial Liabilities

Benefits payable

Cash includes cash at bank used to transact member and employer contributions, transfers to and from other funds, benefit payments and tax liabilities.

Receivables are recognised at the amounts receivable. All amounts are unsecured and are subject to normal credit terms.

Net market values have been determined as follows:

Unlisted trusts (including pooled superannuation trusts) are valued at the redemption price at close of business on the last business day of the reporting period as notified by the manager of the trust and reflect the net market value of the underlying investments.

Financial liabilities (being benefits payable, sundry payables and amounts due to other superannuation funds) are recognised at net market value as at reporting date with any change in net market values of those financial liabilities since the beginning of the reporting period included in the Statement of Changes in Net Assets for the reporting period. Net market value is equal to the amortised cost of the liability (using the effective interest method) less estimated transaction costs. As disposal costs are generally immaterial, net market value approximates fair value unless otherwise stated.

The Scheme recognises financial liabilities on the date it becomes a party to the contractual provisions of the liability.

Benefits payable to a member are recognised where a valid withdrawal notice is received from the employer sponsor, and is approved by the Scheme administrator ('ComSuper').

Benefits payable represent amounts approved for payment by ComSuper, but which had not been paid by reporting date.


54




(c) Financial Liabilities (continued)

Sundry payables

(d) Revenue

Investment revenue

Contribution Revenue

(e) Expenses

(f) Foreign Currency Translation

The Scheme does not undertake transactions denominated in foreign currencies.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Specific revenues are recognised as follows:

Interest revenue is recognised using the effective interest method and, if not received at reporting date, is reflected in the Statement of Net Assets as a receivable.

Changes in the net market value of investments are recognised as income and are determined as the difference between the net market value at year end or consideration received (if sold during the year) and the net market value as at the prior year end or cost (if the investment was acquired during the period).

Employer and member contributions, transfers from other funds and superannuation co-contributions from the Commonwealth Government are recognised on a cash basis as this is the only point at which measurement is reliable.

Sundry payables represent liabilities for goods and services provided during the financial period and which are unpaid at reporting date. All amounts are unsecured. Creditors are subject to normal credit terms.

Expenses are recognised on an accruals basis and, if not paid at reporting date, are reflected in the Statement of Net Assets as an accrual or payable depending upon whether or not the expense has been billed.


55




(g) Derivatives

(h) Income Tax

Current tax

Deferred tax

The Scheme does not enter into derivative financial instruments.

Income tax on the increase in net assets for the year comprises current and deferred tax. Income tax is recognised in the Statement of Changes in Net Assets except to the extent that it relates to items recognised directly in members' funds.

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for the current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable incomes nor accounting profit.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Scheme expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.


56




(h) Income Tax (continued)

Deferred tax (continued)

Current and deferred tax for the period

(i) Superannuation Contributions (Surcharge) Tax

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Scheme intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax is recognised as an expense or benefit in the Statement of Changes in Net Assets.

Amounts paid or payable in respect of the surcharge tax are recognised as an expense of the Scheme.

The expense (and any corresponding liability) is brought to account in the period in which the assessments are received by ARIA and are properly payable by the Scheme.

No estimate has been made for the balance of any tax payable in respect of surchargeable contributions received by the Scheme on transfer of member entitlements from other superannuation funds as ARIA is unable to determine the amount until receipt of applicable assessments in the following period.

The superannuation surcharge was abolished with effect from 1 July 2005 by the passing of the Superannuation Laws Amendment (Abolition of Surcharge) Act 2005 .


57




(j) Scheme Liability for Accrued Benefits

(k) Goods and Services Tax ('GST')

The liability for accrued benefits is not included in the Statement of Net Assets, however it is disclosed at note 15.

Revenues, expenses and assets are recognised net of the amount of goods and services tax ('GST') recoverable from the Australian Taxation Office as a reduced input tax credit. Where the amount of GST incurred is not recoverable from the Australian Taxation Office, it is recognised as part of the cost of acquisition of an asset or as part of an expense item.

Receivables and payables are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included as an asset or liability in the Statement of Net Assets.

The liability for accrued benefits is actuarially-measured on at least a triennial basis. Where the liability for accrued benefits is measured during the reporting period, the benefits which have accrued since the last measurement date are also reported by way of note.

The liability for accrued benefits is the value of the Scheme's present obligation to pay benefits to members and other beneficiaries at the date of measurement. The liability is determined as the present value of expected future payments which arise from membership of the Scheme up to the date of measurement. The present value is determined by reference to expected future salary levels and by application of a current, market-determined, risk-adjusted discount rate and appropriate actuarial assumptions.


58



4. INVESTMENTS2009 2008

$'000 $'000

Equity investmentsPooled Superannuation Trust - ARIA Investments Trust 4 715 568 6 051 960

4 715 568 6 051 960

5. CHANGES IN NET MARKET VALUES2009 2008

$'000 $'000

(a) Investments held at 30 June:

Pooled Superannuation Trust - ARIA Investments Trust (719 968) (106 469)(719 968) (106 469)

(b) Investments realised during the year:

Money market investments - - Fixed interest investments - - Equity securities and unlisted trusts (91 424) (3 178)Forward currency - - Options - -

(91 424) (3 178)

(c) Total changes in net market values of investments (811 392) (109 647)


59



6. FUNDING ARRANGEMENTS

(a) Contributions

Member Contributions

Employer Contributions

Transferring superannuation benefits from other funds

Government Co-Contributions

(b) Benefits

Members contribute to the Scheme at optional rates above 5% of salary or they may opt to make nil contributions.

Employers who do not operate their own productivity schemes contribute employer (productivity) contributions to the Scheme on a sliding scale averaging 3% of salaries paid to members.

Money invested in other superannuation funds can be transferred to the Scheme.

The Commonwealth Government contributes $1.50 for every $1 of eligible personal after-tax member contributions paid to the Scheme up to a maximum of $1 500 per member for each financial year.

Where a benefit that becomes payable in respect of a member can be fully met from Scheme assets attributable to that member, the benefit is paid to the beneficiary from the Scheme. Where a benefit becomes payable that cannot be fully met from Scheme assets attributable to the member, all moneys held in the CSS Fund in respect of the member are paid into the Consolidated Revenue Fund, and the Commonwealth Government then assumes responsibility for payment of the benefit.

Benefits payable by the Consolidated Revenue Fund as at 30 June 2009 were $0.003 million (2008: $0.566 million). The Commonwealth Government is the corresponding debtor for this amount in accordance with the funding arrangements described above.


60




(b) Benefits (continued)

2009 2008$'000 $'000

Gross Appropriation from Consolidated Revenue Fund 3 738 264 3 649 535

(667 832) (773 234)Net Appropriation 3 070 432 2 876 301

Consolidated Revenue FundLump-sum Benefits 601 863 718 514 Pensions 3 136 401 2 931 021

3 738 264 3 649 535

CSS FundLump-sum Benefits (1 676) 6 Total benefits paid 3 736 588 3 649 541

(c) Costs of Administration

Costs of and incidental to the management of the Scheme and the investment of its money are charged against the assets of ARIA Investments Trust ('AIT') that are referable to the Scheme. Transactions in respect of these costs have been brought to account in the financial statements of ARIA Investments Trust.

Benefits paid by the CSS Fund and the Consolidated Revenue Fund during the year are as follows:

less: Transfers from CSS Fund to Consolidated Revenue Fund


61



6. FUNDING ARRANGEMENTS (continued)

(c) Costs of Administration (continued)

Expenses are as follows:

AIT AIT2009 2008

InvestmentInvestment Advisors 944 1 152 Investment Managers 8 535 13 961 Custodian 1 480 1 822 Other 81 107

Total direct investment expenses 11 040 17 042

General administration 3 696 4 547

Total costs 14 736 21 589

2009 2008$'000 $'000

ARIA fees 1 336 1 360 ComSuper fees 13 658 13 755 Total 14 994 15 115

Expenses met by

Scheme administration costs met by sponsoring employers are as follows:

The Superannuation Act 1976 requires the Commissioner for Superannuation (through ComSuper) to assist ARIA in performing its member administration responsibilities in relation to the Scheme. The expenses of the Commissioner for Superannuation are met from a share of the administrative fees paid to ComSuper by employing agencies. The remaining share of administrative fees is paid to ARIA to fund costs other than those incurred in managing and investing the assets of the CSS Fund. Transactions in respect of the receipt of these fees and the costs of administration have been brought to account in the financial statements of ARIA and the Commissioner for Superannuation ('ComSuper').


62



7. INCOME TAX2009 2008

$'000 $'000(a) Income tax recognised in the Statement of Changes in Net Assets

Tax expense comprises:Current tax expense 6 216 6 685

- (533)

(29) 7 Total tax expense 6 187 6 159

(1 325 893) (717 541)

Income tax expense / (benefit) calculated at 15% (198 884) (107 631)

Employee contributions (16 561) (18 129)Benefits paid 560 488 547 431 Appropriation from CRF (460 565) (431 445)Investment revenue already taxed 121 709 16 466 Under / (over) provision of income tax in previous year - (533)

6 187 6 159

(b) Current tax liabilities

Current tax payables:Provision for current year income tax 6 216 6 389

6 216 6 389

Add (less) permanent differences - items not assessable or deductible

Adjustments recognised in the current year in relation to the current tax of prior yearsDeferred tax expense relating to the origination and reversal of temporary differences

The prima facie income tax expense on the benefits accrued as a result of operations before income tax reconciles to the income tax expense in the Statement of Changes in Net Assets as follows:

Increase / (decrease) in net assets for the year before income tax


63



7. INCOME TAX (continued)

(c) Deferred tax balances2009 2008

$'000 $'000Deferred tax liabilities comprise:Temporary differences 15 44

15 44

Taxable and deductible temporary differences arise from the following:

2009 Opening balance

Charged to income

Acquisition/ disposal

Closingbalance

$'000 $'000 $'000 $'000Gross deferred tax liabilities:Interest receivable 44 (29) - 15

44 (29) - 15

Total 44 (29) - 15

2008 Openingbalance

Charged to income

Acquisition / disposal

Closingbalance

$'000 $'000 $'000 $'000Gross deferred tax liabilities:Interest receivable 37 7 44

37 7 - 44

Total 37 7 - 44


64



8.

9. SUNDRY PAYABLES2009 2008

$'000 $'000

Surcharge tax 358 384 Other - 109 Total 358 493

10. AUDITOR'S REMUNERATION

Value of audit services provided by the Australian National Audit Office:

2009 2008$ $

Financial statements and APRA forms 71 200 62 300 Risk management strategy and risk management plan 9 000 6 000 Total 80 200 68 300

Deloitte Touche Tohmatsu have been contracted by the Australian National Audit Office to provide audit services on its behalf. Fees for those services are included above.

No other services were provided by the Australian National Audit Office or Deloitte Touche Tohmatsu to the Scheme during the reporting period.

TRANSFERS FROM THE COMMONWEALTH SUPERANNUATION SCHEME TO THE PUBLIC SECTOR SUPERANNUATION SCHEME

Certain former contributors to the Commonwealth Superannuation Scheme who rejoin as members of the Commonwealth Scheme are entitled to elect to transfer to the Public Sector Superannuation Scheme. There were no transfers made during the year ended 30 June 2009 (2008: 0 transfers).

In 2008-09, audit services were provided by the Australian National Audit Office free of charge.

The Scheme audit fee for the year 30 June 2008 was charged against assets of ARIA Investments Trust that are referable to the Scheme.


65



11. FINANCIAL INSTRUMENTS

(a) Financial instruments management

(b) Significant accounting policies

(c) Capital risk management

(d) Categories of financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

The Investments of the Scheme (other than cash held for managing contribution receipts, insurance expenses, benefit payments and tax payments) comprise units in ARIA Investments Trust ('AIT') - a pooled superannuation trust of which ARIA is also trustee.ARIA has determined that this type of investment is appropriate for the Scheme and is in accordance with the Scheme's published investment strategy. ARIA applies strategies to manage the risk relating to the investment activities of AIT. The investments of AIT are managed on behalf of the Trustee by specialist sector fund managers who are required to invest the assets in accordance with a contractual investment mandate.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.

The financial assets and liabilities of the Scheme are recognised at net market value as at the reporting date. Net market value approximates fair value less costs of realisation of investments. The cost of realisation of investments is minimal and therefore net market value that is carrying value approximates fair value. Changes in net market value are recognised through the Statement of Changes in Net Assets.

The RSE license of the Trustee of the Fund requires the Trustee to maintain a balance of at least $100 000 at all times in an administration reserve account. This is required to be maintained in cash or cash equivalents. The Trustee of the Scheme was in compliance with this requirement throughout the year.


66



11. FINANCIAL INSTRUMENTS (continued)

(e) Financial risk management objectives

Derivative Risk Statements set out the strict parameters for the Trustee's investment managers authorised to use derivatives. In essence, derivatives cannot be used to raise the level of risk above the level it would otherwise have been, and derivatives cannot be used to leverage the investments.

The Scheme is exposed to a variety of financial risks as a result of its pooled investment in AIT. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Schemes' risk management and investment policies, approved by the Trustee, seek to minimise the potential adverse effects of these risks on the Schemes' financial performance. These policies may include the use of financial derivative instruments.

ARIA is responsible for ensuring that there is an effective risk management control framework in place for the Scheme. Consistent with regulatory requirements, ARIA has developed, implemented and maintains a Risk Management Strategy and Risk Management Plan to identify the policies, procedures, processes and controls that comprise its risk management and control systems for the Scheme and for the Scheme's investments through the ARIA Investments Trust. The overall investment strategy of the Scheme is set out in the ARIA Investment Policy manual and the ARIA Derivatives Securities Policy which address the investment strategy and objectives and risk mitigation strategies including risk mitigation relating to the use of derivatives.

The Scheme's investments are managed on behalf of ARIA by specialist external investment managers who invest their respective fund allocation in accordance with the terms of a written investment mandate or disclosure document. ARIA has determined that the appointment of these managers is appropriate for the Scheme and is in accordance with its investment strategy.


67




(f) Credit risk

2009 2008$'000 $'000

InvestmentsUnlisted unit trusts 4 715 568 6 051 960 Other financial assetsCash and cash equivalents 37 644 46 912 Interest receivable 99 295 Total 4 753 311 6 099 167

There has been no change to the Scheme's exposure to credit risk or the manner in which it manages and measures that risk since the 2008 reporting period.

The table below shows the maximum exposure of financial assets to credit risk at the reporting date:

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Scheme.

In its capacity as trustee of ARIA Investments Trust, ARIA has adopted a policy of spreading the aggregate value of transactions across approved counterparties with approved credit qualities, as a means of mitigating financial loss. The fund's exposure to its counterparties are continuously monitored by the trustee. Credit risk relating to the master custodian JP Morgan, is mitigated through contract indemnity provisions. No individual exposure within ARIA Investments Trust exceeded 5% of net assets of that trust at 30 June 2009 or 30 June 2008.

The credit risk on the Scheme's directly held cash and cash equivalents and interest receivable is limited because the counterparty is the Reserve Bank of Australia.


68




(g) Liquidity risk

Liquidity risk is the risk that the Scheme will encounter difficulty in either realising assets or otherwise raising sufficient funds to meet its financial liabilities and/or member benefit payments or tax liabilities.

The Scheme's approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities. The Scheme allows members to withdraw benefits, and it is therefore exposed to the liquidity risk of meeting member withdrawals at any time. ARIA undertakes forecasting and scenario testing of the cashflow requirements of the Scheme to ensure timely access to sufficient cash and actively-traded, highly-liquid investments to meet anticipated funding requirements. As a further risk mitigation strategy, it is the Trustees policy that the underlying investments of the Scheme cannot have more than 25% of assets invested in non liquid asset classes at any time and regular scenario testing is performed to confirm the validity of the strategy.

There has been no change to the Scheme's exposure to liquidity risk or the manner in which it manages and measures that risk since the 2008 reporting period.

All financial liabilities (being benefits payable, sundry payables and amounts due to other superannuation funds) are expected to be settled within 3 months of the reporting date (2008: within 3 months). Current tax liabilites are expected to be settled within 1 year of the reporting date (2008: within 1 year) and the deferred tax liability within 2 years (2008: within 2 years). At 30 June 2009 the Scheme's total exposure to liquidity risk was $11.921 million (2008: $26.259 million) relating to scheme liabilities and $64.838 billion representing the liability for vested benefits (2008: $67.421 billion). Refer to note 14 for information on liabilities for vested benefits.


69




(h) Market risk

Foreign currency risk

Interest rate risk

The Scheme is indirectly exposed to interest rate risk through its investments in AIT. As Trustee of AIT, ARIA manages interest rate risk through its investment strategy including diversification of asset allocation and the use of a diversity of specialist investment sector managers.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign exchange risk, interest rate risk and other market price risk. The policies and procedures put in place to mitigate the exposure to market risk are detailed in ARIA's investment policies, the Risk Management Strategy and the Risk Management Plan.

There has been no change to the Scheme's exposure to market risk or the manner in which it manages and measures that risk since the 2008 reporting period.

Foreign currency risk is the risk that the net market value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Scheme does not undertake any transactions in foreign currency and is therefore not directly exposed to foreign currency risk. The pooled investments of the Scheme, in ARIA Investments Trust, are subject to the Trustee's currency hedging policy whereby the currency risk relating to the investments denominated in foreign currencies is neutralised and accordingly no gain or loss on currency fluctuation is incurred. A small part of the investments of AIT, relating to emerging markets, may remain unhedged due to lack of suitable currency instruments for hedging. The Trustee's currency hedging policy was unchanged throughout the reporting period until June 2009, when the Trustee determined that some strategic currency exposures could be adopted in future.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Scheme is directly exposed to interest rate risk on cash and cash equivalents held with the Reserve Bank of Australia to meet benefits and taxation payments. All holdings at 30 June 2009 and 30 June 2008 had a maturity profile of less than one month.


70




(h) Market risk (continued)

Interest rate risk (continued)

Profit Equity Profit Equity2009

-/+0.75% 37 644 (282) (282) 282 282 2008

-/+0.5% 46 912 (235) (235) 235 235

In its capacity as trustee of ARIA Investments Trust, ARIA manages the market price risk arising from these investments by diversifying the portfolio in accordance with its investment strategy.

Other market price riskOther market price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or factors affecting all similar financial instruments traded in the market.

Carryingamount

$'000

Interest rate risk$' 000

Changein

interestrate

The following table illustrates the Scheme's sensitivity to a 0.75% p.a. (2008: 0.5%) increase or decrease in interest rates, based on cash balances directly held at reporting date. This represents an assessment of a reasonably possible change in interest rates. Had interest rates been lower or higher by 0.75% at reporting date, and all other variables were held constant, the financial result would have improved/(deteriorated) as demonstrated:

The Scheme's investment in ARIA Investments Trust is exposed to market price risk in respect of the latter's holdings of equity securities, unit trusts and pooled superannuation trusts. As the investment in ARIA Investments Trust is carried at net market value with changes in net market value recognised in the Statement of Changes in Net Assets, all changes in market conditions will directly affect the Scheme's net investment income.

Cash and cash equivalents

Cash and cash equivalents


71





Other market price risk (continued)

2009

Profit Equity Profit Equity

Default Option -/+10% 4 179 572 (417 957) (417 957) 417 957 417 957 Cash option -/+0.75% 535 996 (4 020) (4 020) 4 020 4 020

Total 4 715 568 (421 977) (421 977) 421 977 421 977

2008

Profit Equity Profit Equity

Default Option -/+7% 5 731 809 (401 227) (401 227) 401 227 401 227 Cash option -/+0.5% 320 150 (1 601) (1 601) 1 601 1 601

Total 6 051 960 (402 827) (402 827) 402 827 402 827

ARIA Investment Trust :Financial Assets

Carryingamount

$'000

Carryingamount$'000

Changein price

Changein price

Other price risk$' 000

Other price risk$' 000

The following table illustrates the Scheme's sensitivity to a reasonably possible change in the unit value of ARIA Investments Trust, based on risk exposures at reporting date. The volatility factor of 10% (2008: 7%) represents the average annual volatility in the default option unit price of the Schemes investment in the ARIA Investments Trust. For the Cash Option a factor of 0.75% (2008: 0.5%) has been applied representing a reasonably possible change in interest rates. Had the unit price been higher or lower throughout the reporting period by the volatility factor, and based on period end balances with all other variables held constant, the financial result would have improved/(deteriorated) as follows:

Financial AssetsARIA Investment Trust :


72



12. SUPERANNUATION CONTRIBUTIONS (SURCHARGE) TAX

Transactions recorded during the reporting period were as follows:

2009 2008$'000 $'000

Total surcharge liability outstanding at start of year 78 206 75 556 Adjustment to opening balances - - Assessments received during the year 6 627 6 163

4 298 4 376 89 131 86 095

(7 794) (7 889)

Total surcharge liability outstanding at end of year 81 337 78 206

Adjustments to opening balances represent amended assessments received from the Australian Taxation Office in respect of surcharge liabilities of prior years.

The surcharge is no longer levied on contributions made after 1 July 2005. However, assessments relating to periods prior to this date continue to be received.

No liability is recognised in the financial statements for the estimated value of the surcharge liability because the liability will be either met by the relevant members during their period of membership or will be recovered from benefits paid on exit from the Scheme.

The Superannuation Contributions (Surcharge) Tax applies to the surchargeable superannuation contributions of Scheme members whose adjusted taxable income exceeds the surcharge threshold. Surcharge liabilities are calculated by the Australian Taxation Office and recorded against Scheme member accounts. The surcharge liability may be paid by the member in full or in part during the period of scheme membership. Any surcharge liability remaining at the end of the financial year incurs interest. Scheme rules provide for any outstanding surcharge liability to be recovered from a benefit payable to the member.

Less: Amounts paid by members and Consolidated Revenue Fund

Interest on outstanding surcharge liabilities at end of year


73



13. UNALLOCATED INCOME

2009 2008$'000 $'000

Opening balance of unallocated income 23 734 2 613 638 Add: Earnings of fund for the year (808 749) (106 363)Less: Earnings allocated 777 937 (2 476 184)Less: Adjustments for estimates (12) (7 357)Less: Earnings paid out in benefit payments - - Closing balance of unallocated income (7 090) 23 734

In preparation for administrative changes for the Scheme, the Trustees did not declare crediting rates from 1 July 2003. Between 1 July 2003 and 30 June 2007 members were allocated their proportion of the earnings of the Scheme on exit from the Scheme. The income accumulated in the period from 1 July 2003 to 30 June 2007 was allocated to member accounts during 2007-08. From 1 July 2007, monthly earnings are allocated to members each month-end or for a part of a month where a member exits the Scheme during a month.

The closing balance represents approximately 0.2% (2008: 0.4%) of the members' funded entitlements as at 30 June 2009.


74



14. VESTED BENEFITS

The vested benefits amount is made up of:2009 2008

$billion $billion

Funded component 4.7 6.1 Unfunded component 60.1 61.3

64.8 67.4

The net assets of the Scheme compared to the vested benefits are:

2009 2008$billion $billion

Funded accrued benefits 4.7 6.1 Net assets plus funded benefits payable 4.7 6.1 Surplus (deficiency) - -

The vested benefits have been calculated on the basis of current legislative arrangements for indexation of pension payments.

Vested benefits are benefits which are not conditional upon continued membership of the Scheme (or any other factor other than resignation from the Scheme) and include benefits which members were entitled to receive had they terminated their Scheme membership as at the reporting date.

Mercer Human Resources Consulting has advised that the amount of vested benefits at 30 June 2009 is $64.838 billion (2008: $67.421 billion), based on data supplied by ComSuper. The value of vested benefits represents the liability that would have fallen on the Scheme if all members had ceased service on 30 June 2009 and elected the option which maximised their benefit entitlement.


75



15. LIABILITY FOR ACCRUED BENEFITS

Accrued benefits as at 30 June were:2008 2005

$billion $billion

Funded component 6.1 6.0 Unfunded component 59.2 50.7

65.3 56.7

The net assets compared to the liability for accrued benefits as at 30 June are:2008 2005

$billion $billion

Funded accrued benefits 6.1 6.0 Net assets plus funded benefits payable 6.1 6.0 Surplus (deficiency) - -

The amount of accrued benefits is the present value of expected future benefit payments that arise from membership of the Scheme up to the measurement date. The accrued benefits are comprised of a funded component (i.e. accumulated member contributions, and, where applicable, productivity contributions, plus interest) which will be met from the Scheme, and an unfunded component to be financed from the Consolidated Revenue Fund at the time the superannuation benefits become payable.

The amount of accrued benefits in respect of the Scheme is calculated on a triannual basis.The most recent valuation of the accrued benefits was undertaken by Mercer Human Resources Consulting as part of a comprehensive review as at 30 June 2008. A summary of the report is attached.


76



16. SEGMENT REPORTING

17. RELATED PARTIES

(a) Trustee

(b) Trustees of ARIA

The trustees of ARIA during the year ended 30 June 2009 were:

David Connolly (term expired 18 September 2008)Steven CraneBrian Daley (appointed 19 March 2009)Susan Doyle (Chairman - term expired 27 July 2009)Peter Feltham (term expired 30 June 2009, reappointed 17 July 2009)Margaret GillespieWinsome HallDavid IronsDennis Trewin

David Irons acts as a trustee only when an ACTU-nominated trustee is for any reason unable to perform the duties of that office or when there is a casual vacancy in the office of an ACTU-nominated trustee. Mr Irons did not act as a trustee in 2008-09.

The Scheme operates in the superannuation administration industry in Australia. 100% of Scheme investments (excluding cash) were invested in an Australian-domiciled entity at 30 June 2009 (2008: 100%).

ARIA acted as Trustee throughout the year ended 30 June 2009.

No fees were charged by ARIA for acting as Trustee of the Scheme during the reporting period.

The members of the Scheme are domiciled in Australia.


77



17. RELATED PARTIES (continued)

(c) Key Management Personnel Compensation

Helen Ayres Corporate SecretaryPeter Carrigy-Ryan Chief Operations OfficerLochiel Crafter Chief Executive OfficerLeonie McCracken Head of Investment OperationsAlison Tarditi Chief Investment OfficerKevin Thompson Head of FinancePaul Watson (resigned 20 October 2008) Deputy Chief Executive Officer

2009 2008$ $

Short-term employee benefits 296 231 383 267 Post-employment benefits 47 645 50 605 Other long-term benefits 16 634 9 267 Termination benefits - 81 717 Share-based payment - -

360 511 524 855

The compensation of key management personnel (including trustees) related to investment management was charged as part of general administration expenses against assets of the ARIA Investments Trust that are referable to the Scheme. No charge was made directly against the Scheme.

The Scheme has not made, guaranteed or secured, directly or indirectly, any loans to key management personnel or their personally-related entities at any time during the year.

The aggregate compensation of the key management personnel is set out below:

The trustees of ARIA throughout the year ended 30 June 2009 are listed under note 17(b) above.

The following executives of ARIA also had authority and responsibility for planning, directing and controlling the activities of the Scheme throughout the year ended 30 June 2009:

Aggregate compensation in relation to the Scheme is a pro-rata apportionment of the overall compensation paid by ARIA, based on the net assets of the entities under its trusteeship or actual control.


78




(d) Investing entities

18. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

(a) Expenditure Commitments

(b) Benefit Entitlements

The Scheme had no contingent liabilities in respect of member benefit claims at 30 June 2009 (2008: $nil).

The other investors in ARIA Investments Trust throughout the year were Public Sector Superannuation Scheme and Public Sector Superannuation Accumulation Plan. ARIA acted as Trustee of these three entities during the year ended 30 June 2009. All investing transactions are conducted under normal industry terms and conditions.

ARIA pays costs of and incidental to the management of the Scheme and the investment of its money from the assets of the ARIA Investments Trust that are referable to the Scheme (see note 6(c)). No fees were charged by ARIA for acting as Trustee during the year ended 30 June 2009 (2008: $nil).

The Scheme had no capital or other expenditure commitments at 30 June 2009 (2008: $nil).

In the normal course of business, requests are made by members and former members for the review of decisions relating to benefit entitlements of the Scheme which could result in additional benefits becoming payable in the future. Each request is considered on its merits prior to any benefit becoming payable. In the opinion of the Trustee, these requests do not represent a material liability on the Scheme.

Throughout the year ended 30 June 2009, the Scheme's only investment consisted of units in ARIA Investments Trust, which was established to provide a cost-effective means of gaining exposure to a broad range of listed and unlisted securities across various asset classes.


79



18.

(c) Contingent Assets

19. SUBSEQUENT EVENTS

No other matters have occurred since 30 June 2009 that have materially affected, or may materially affect, the operations of the Scheme, the results of those operations, or the financial position of the Scheme in future financial years.

The Scheme had no contingent assets at 30 June 2009 (2008: $nil).

COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)


80



81



82



83



84



85



86



PSS


88

PSS financial statements



89




90




91


Public Sector Superannuation Scheme (ABN 74 172 177 893)

Statement by the Trustee of the Public Sector Superannuation Scheme ('Scheme')


(a)

(b)

(c)

(d)

(e)

(f)


the financial statements of the Scheme and of the Group have been prepared based on properly maintained financial records; and

the operations of the PSS Fund were conducted in accordance with the Superannuation Act 1990 , the Trust Deed establishing the Scheme, the requirements of the Superannuation Industry (Supervision) Act 1993 and Regulations, and the relevant requirements of the Corporations Act 2001 and Regulations (to the extent applicable).

Signed at Sydney this 15th day of September 2009 in accordance with a resolution of trustees of Australian Reward Investment Alliance (ABN 48 882 817 243) as Trustee of the Scheme.

the attached financial statements of the Scheme and of the Group (comprising the Scheme and its controlled entities) show a true and fair view of the matters required by Australian Accounting Standards, including AAS 25 'Financial Reporting by Superannuation Plans' , and Schedule 1 of the Commonwealth Authorities and Companies Orders (Financial Statements for reporting periods ending on or after 1 July 2008) to the extent that the latter is not inconsistent with AAS 25;

the attached financial statements of the Scheme and of the Group show a true and fair view of the net assets of the Scheme and of the Group as at 30 June 2009 and the changes in net assets of the Scheme and of the Group for the year ended 30 June 2009;

at the date of this statement there are reasonable grounds to believe that the Scheme will be able to pay its debts as and when they fall due;

the Scheme financial statements are in a form agreed by the Minister for Finance and Deregulation and Australian Reward Investment Alliance in accordance with sub-section 28(1)(b) of the Superannuation Act 1990 and have been prepared in accordance with Australian Accounting Standards and other mandatory professional reporting requirements;


92


Statement of Changes in Net AssetsFor the Year Ended 30 June 2009

Note Group Group Scheme Scheme2009 2008 2009 2008

$'000 $'000 $'000 $'000Net assets available to pay benefits at the start of the financial year 11 346 199 11 236 578 11 346 199 11 236 578

Net investment revenueInterest 122 368 119 223 2 189 5 239 Dividends and distributions 354 600 577 211 - - Other investment income 12 634 8 705 - - Property rental income 154 107 154 484 - - Changes in net market values 5c (3 553 954) (1 165 590) (1 718 571) (249 863)Less: Direct investment expenses 6c (97 448) (116 042) - -

(3 007 693) (422 009) (1 716 382) (244 624)

Contribution revenueMember contributions 6a 543 489 524 662 543 489 524 662 Employer contributions 6a 216 850 221 333 216 850 221 333 Government co-contributions 6a 23 648 29 508 23 648 29 508 Appropriation from Consolidated Revenue Fund

6b 236 696 251 886 236 696 251 886

Transfers from the Commonwealth Super Scheme

8- - - -

1 020 683 1 027 389 1 020 683 1 027 389 Total revenue (1 987 010) 605 380 (695 699) 782 765

General administration expenses 6c (13 325) (13 862) - - Benefits paid 6b (625 296) (642 521) (625 296) (642 521)Total expenses (638 621) (656 383) (625 296) (642 521)

Change in net assets before income tax (2 625 631) (51 003) (1 320 995) 140 244

Income tax credit/(expense) 7a 295 464 10 355 (33 125) (30 623)

Change in net assets after income tax (2 330 167) ( 40 648) (1 354 120) 109 621

Distribution to minority interest holders (7 379) - - - Change in net assets attributable to minority interest 983 426 150 268 - -

Net assets available to pay benefits at the end of the financial year 9 992 079 11 346 199 9 992 079 11 346 199



93


Statement of Net AssetsAs at 30 June 2009

Note Group Group Scheme Scheme2009 2008 2009 2008

$'000 $'000 $'000 $'000

InvestmentsCash and cash equivalents 4 588 765 326 775 - - Money market securities 4 1 886 556 2 153 259 - - Fixed interest securities 4 1 592 041 1 633 116 - - Equity investments 4 8 695 550 10 863 570 9 971 816 11 350 387 Property investments 4 3 143 131 3 444 606 - - Derivative contracts 4 228 128 184 585 - - Total investments 16 134 171 18 605 911 9 971 816 11 350 387

Other assetsCash and cash equivalents 66 651 54 321 66 651 54 321 Trade settlements receivable 63 821 77 010 - - Other receivables 9 65 344 173 915 509 599 Amount to be appropriated from /to Consolidated Revenue Fund (10) 18 417 (10) 18 417 Deferred income 18 460 14 789 - - Current tax assets 7b 135 275 - - - Deferred tax assets 7c 72 313 6 135 - - Total other assets 421 854 344 587 67 150 73 337

Total assets 16 556 025 18 950 498 10 038 966 11 423 724

Benefits payable 12 636 42 663 12 636 42 663 Trade settlements payable 208 888 201 638 - - Other payables 10 35 034 36 021 1 259 1 213 Borrowings 11 144 000 196 500 - - Current tax liabilities 7b - 87 033 32 977 33 621 Deferred tax liabilities 7c 15 113 926 15 28 Total liabilities 400 573 677 781 46 887 77 525

Net assets 16 155 452 18 272 717 9 992 079 11 346 199

Net assets attributable to minority interest (6 163 373) (6 926 518) - -

Net assets available to pay benefits 9 992 079 11 346 199 9 992 079 11 346 199



94


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFor the Year Ended 30 June 2009

1. DESCRIPTION OF THE SCHEME

2. BASIS OF PREPARATION

(a) Statement of compliance

The financial report of Public Sector Superannuation Scheme ('Scheme') and of the Group (comprising the Scheme and its controlled entities) is a general purpose financial report which has been prepared in accordance with Schedule 1 of the Commonwealth Authorities and Companies Orders (Financial statements for reporting periods ending on or after 1 July 2008) , Accounting Standards, Australian Interpretations, the Superannuation Industry (Supervision) Act 1993 and provisions of the Trust Deed. Accounting Standards include Australian equivalents to International Financial Reporting Standards ('AIFRS') to the extent that they are not inconsistent with AAS 25 'Financial Reporting by Superannuation Plans' .

The financial statements were authorised for issue by Australian Reward Investment Alliance ('ARIA') (ABN 48 882 817 243) on 15 September 2009.

The Scheme is a defined benefits scheme which provides benefits to its members under the Superannuation Act 1990 (as amended) and is administered in accordance with a Trust Deed dated 21 June 1990 (as amended) . The Trustee at balance date was the Australian Reward Investment Alliance ('ARIA').

Moneys paid to ARIA for the purposes of the Scheme are held in the PSS Fund. The PSS Fund comprises contributions made by members and employers, income arising from investments, and accretions to or profits on realisation of investments held within the PSS Fund. ARIA pays member benefits and taxes relating to the Scheme and the PSS Fund out of the PSS Fund. ARIA pays costs of and incidental to the management of the PSS Fund and the investment of its money from the assets of the ARIA Investments Trust that are referable to the PSS Fund. See notes 19 and 20 for further details regarding ARIA Investments Trust.


The principal place of business of the Scheme is Level 10, 12 Moore Street, Canberra ACT 2601.


95



2. BASIS OF PREPARATION (continued)

(a) Statement of compliance (continued)

Standard / Interpretation Effective for annual reporting periods

beginning on or after

Expected to be initially applied in the financial

year ending

1 July 2009 30 June 2010






The form of these financial statements has been agreed by the Minister for Finance and Deregulation and ARIA in accordance with sub-section 28(1)(b) of the Superannuation Act 1990 .

AASB 3 'Business Combinations' and AASB 127 'Consolidated and separate financial statements' and consequential amendments to other accounting standards resulting from its issue.

AASB 123 'Borrowing Costs' and consequential amendments to other accounting standards resulting from its issue.


AASB 2008-7 'Amendments to accounting for the cost of an investment in a subsidiary, jointly controlled entity or associate' and consequential amendments to other accounting standards resulting from its issue.

Australian Accounting Standards require ARIA to disclose Australian Accounting Standards that have not been applied, for standards that have been issued but are not yet effective. At the date of authorisation of the financial report, the following Standards which are expected to be relevant to the Scheme were in issue but not yet effective. ARIA anticipate the adoption of these Standards upon their application date to the extent that they are not inconsistent with AAS 25 'Financial Reporting by Superannuation Plans' . It is anticipated that the Standards will have no material financial impact on the financial report of the Scheme.




96






The financial statements are presented in Australian dollars, which is the functional currency of the Scheme.

Amounts in these financial statements have been rounded to the nearest thousand dollars, unless otherwise indicated.




97




(a) Principles of consolidation


The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the Group, being the Scheme (the parent entity) and its controlled entities as defined in Accounting Standard AASB 127 'Consolidated and Separate Financial Statements' . A list of controlled entities appears in Note 20 to the financial statements. Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements.

The assets, liabilities and contingent liabilities of a controlled entity are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. If, after reassessment, the fair values of the identifiable net assets acquired exceed the cost of acquisition, the excess is credited to the Statement of Changes in Net Assets in the period of acquisition.

The interest of minority unitholders is stated at the minority's proportion of the fair value of the assets and liabilities recognised.

The consolidated financial statements include the information and results of each controlled entity from the date on which the Scheme obtains control and until such time as the Scheme ceases to control such entity. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. It is presumed to exist where the parent owns directly, or indirectly through interposed subsidiaries, more than half of the voting power of an entity.

In preparing the consolidated financial statements, all intercompany balances and transactions, and unrealised profits arising within the Group are eliminated in full.


98




(b)


(i) Money market securities are valued at the market closing price on the last business day of the reporting period and include accrued interest.

(ii) Fixed interest securities are valued at their market value at the close of business on the last business day of the reporting period. Interest is accrued over the period and is recorded as part of other receivables in the Statement of Net Assets.

(iii) Forward currency and futures contracts are revalued to closing prices quoted on the last business day of the reporting period.

(iv) Equity investments and listed trusts are valued at the last sale price at close of business on the last business day of the reporting period.

(v) Exchange traded options are valued as the premium payable or receivable to close out the contracts at the last buy price at close of business on the last business day of the reporting period.

Assets

The Scheme recognises financial assets on the date it becomes a party to the contractual provisions of the asset. Financial assets are recognised using trade date accounting. From this date, any gains and losses from changes in net market value are recorded.

As disposal costs are generally immaterial, net market value approximates fair value unless otherwise stated.

Investments are included in the Statement of Net Assets at net market value as at reporting date and changes in the net market value of assets are recognised in the Statement of Changes in Net Assets in the periods in which they occur. Net market value of investments includes an amount for selling costs which would be expected to be incurred if the investments were sold.


99




(b)

(vi) Private equity funds are valued according to the most recent valuation obtainable from an independent (third party) valuer or the fund manager, applying valuation and disclosure guidelines consistent with the International Equity & Venture Capital Valuation Guidelines, or for US domiciled funds, Financial Accounting and Standards Board Guidelines under FAS157 'Fair Value Measurements' .

(vii) Unlisted trusts (including pooled superannuation trusts and hedge funds) are valued at their most recent redemption price as determined by the manager of the relevant trust. Unlisted trusts controlled by the Trustee are valued at least annually in accordance with valuation guidelines agreed by the Trustee. Valuations may be completed by an independent valuer, the investment manager or the Trustee. In determining the valuation, reference is made to guidelines set by relevant associations (such as Australian Venture Capital Association Ltd).

(viii) Investment properties which comprise land and buildings for the purpose of letting to produce rental income, are initially measured at cost. Cost includes capital expenditure subsequent to acquisition. Investment properties are not depreciated. Subsequent revaluations to fair value are taken through the Statement of Changes in Net Assets as changes in net market value of investments.

(ix) Receivables are recognised at the amounts receivable. All amounts are unsecured and are subject to normal credit terms.

(c) Cash and cash equivalents

Assets (continued)

Cash under the heading of Investments includes deposits held at call with a bank or financial institution and highly-liquid investments with short periods to maturity which are readily convertible to cash and are subject to insignificant risk of changes in value. Cash held under the heading of Other Assets includes cash at bank used to transact member and employer contributions, transfers from other funds and benefit payments.


100




(d)

(i)The Scheme recognises a benefit to be payable to a member where a valid withdrawal notice is received from the employer sponsor, and is approved by the Scheme administrator ('ComSuper').

Benefits payable represent amounts approved for payment by ComSuper, but which had not been paid by reporting date.

(ii)Trade settlements payable represent liabilities for investments purchased during the financial period and which are unpaid at reporting date. All amounts are secured against the relevant investments, except for futures and forward contracts. All transactions are subject to normal credit terms within the relevant securities markets.

(iii)Other payables represent liabilities for goods and services provided during the financial period and which are unpaid at reporting date. All amounts are unsecured. Creditors are subject to normal credit terms.

Other payables

Financial Liabilities

Benefits payable

Trade settlements payable

The Scheme recognises financial liabilities (being benefits payable, trade settlements payable, other payables and borrowings) at net market value as at reporting date with any change in net market values of those financial liabilities since the beginning of the reporting period included in the Statement of Changes in Net Assets for the reporting period. Net market value is equal to the amortised cost of the liability (using the effective interest method) less estimated transaction costs. As disposal costs are generally immaterial, net market value approximates fair value unless otherwise stated. The Scheme recognises financial liabilities on the date it becomes a party to the contractual provisions of the liability.


101




(d)

(iv)Borrowings are initially measured at cost, being the fair value of the consideration received (net of any transaction costs). Borrowings are subsequently measured at amortised cost (using the effective interest method). The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense using an interest rate that discounts future cash payments through the expected life of the financial liability.

(e) Revenue

Investment revenue

Contribution Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Scheme and the amount can be reliably measured.

Borrowings

Financial Liabilities (continued)

Interest revenue is recognised using the effective interest method and, if not received at reporting date, is reflected in the Statement of Net Assets as a receivable.

Revenue from dividends and distributions is recognised on the date that the dividends and distributions are declared and, if not received at reporting date, is reflected in the Statement of Net Assets as a receivable.

Property rental income is recognised on a receivable basis. Rent received in advance is recorded in the Statement of Net Assets as a liability.

Changes in the net market value of investments are recognised as income and are determined as the difference between the net market value at year end (or consideration received if sold during the year) and the net market value as at the prior year end (or cost if the investment was acquired during the period).

Employer and member contributions, transfers from funds other than the CSS Fund, and superannuation co-contributions from the Commonwealth Government are recognised on a cash basis.


102




(f) Expenses

(g)

(h) Foreign currency translation

(i) cash, amounts receivable and amounts payable denominated in a foreign currency are converted to Australian dollars using the exchange rate prevailing on the last business day of the reporting period; and

(ii) investments that are measured in a foreign currency are converted to Australian dollars at the date that the net market value was determined.

Expenses are recognised on an accruals basis and, if not paid at reporting date, are reflected in the Statement of Net Assets as an accrual or payable depending upon whether or not the expense has been billed. Direct investment expenses in respect of investment managers, the asset custodian and the buying and selling of securities are recognised on an accruals basis.

Borrowing costs directly attributable to the acquisition or construction of an investment property are added to the cost of that property until such time as it is substantially ready for its intended use. All other borrowing costs are recognised in the Statement of Changes in Net Assets in the period in which they are incurred.

Borrowing costs

Foreign currency transactions are converted to Australian dollars using the currency exchange rate in effect at the point of recognition of each transaction.

At each reporting date:

Resulting exchange differences are brought to account in determining the change in market value of investments for the year and hence the net assets available to pay benefits at the end of the financial year.


103




(i) Derivatives

(j) Income tax

Current tax

Deferred tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by balance date. Current tax for the current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate risk, market exposure risk and foreign exchange rate risk, including (but not limited to) interest rate futures, share price index futures, exchange traded options and foreign exchange forward contracts.

Derivatives are initially recognised at fair value at the date a contract is entered into and are subsequently remeasured at each reporting date to their net market value - as determined in accordance with note 2(b). The Group does not undertake hedge accounting as defined in AASB 139 'Financial Instruments: Recognition and Measurement' as all resulting gains or losses are immediately recognised in the Statement of Changes in Net Assets in accordance with AAS 25 'Financial Reporting by Superannuation Plans' .

Income tax on the increase in net assets for the year comprises current and deferred tax. Income tax is recognised in the Statement of Changes in Net Assets except to the extent that it relates to items recognised directly in members' funds.


104




(j) Income tax (continued)

Deferred tax (continued)

Current and deferred tax for the period

(k) Superannuation Contributions (Surcharge) Tax

ARIA recognises amounts paid or payable in respect of the surcharge tax as an expense of the Scheme. The expense (and any corresponding liability) is brought to account in the period in which the assessments are received by ARIA and are properly payable by the Scheme.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable incomes nor accounting profit.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by balance date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Scheme expects, at the balance date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Scheme intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax is recognised as an expense or benefit in the Statement of Changes in Net Assets.

No estimate has been made for the balance of any tax payable in respect of surchargeable contributions received by the Scheme on transfer of member entitlements from other superannuation funds as ARIA is unable to determine the amount until receipt of applicable assessments in the following period.



105




(l) Scheme liability for accrued benefits

(m) Goods and Services Tax

The liability for accrued benefits is the value of the Scheme's present obligation to pay benefits to members and other beneficiaries at the date of measurement. The liability is determined as the present value of expected future payments which arise from membership of the Scheme up to date of measurement. The present value is determined be reference to expected future salary levels and by application of a current, market-determined, risk-adjusted discount rate and appropriate actuarial assumptions.

The liability for accrued benefits is not included in the Statement of Net Assets, but is reported at note 17.

The liability for accrued benefits is actuarially measured on at least a triennial basis. Where the liability for accrued benefits is measured during the reporting period, the benefits which have accrued since the last measurement date are also reported by way of note.

Revenues, expenses and assets are recognised net of the amount of goods and services tax ('GST') recoverable from the Australian Taxation Office as a reduced input tax credit. Where the amount of GST incurred is not recoverable from the Australian Taxation Office, it is recognised as part of the cost of acquisition of an asset or as part of an expense item.

Receivables and payables are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included as an asset or liability in the Statement of Net Assets.


106



4. INVESTMENTSGroup Group Scheme Scheme

2009 2008 2009 2008$'000 $'000 $'000 $'000

Cash and cash equivalentsCash at bank - Australia 496 730 229 479 - - Cash at bank - international 84 284 87 969 - - Cash deposits with futures brokers 7 751 9 327 - -

588 765 326 775 - - Money market securitiesAustralian 1 886 556 2 149 300 - - International - 3 959 - -

1 886 556 2 153 259 - - Fixed interest securitiesAustralian 52 815 195 718 - - International 1 539 226 1 437 398 - -

1 592 041 1 633 116 - - Equity investmentsEquity securities - Australian 2 864 447 3 855 966 - - Equity securities - international 1 945 065 2 425 076 - - Unlisted Australian trusts 2 197 237 1 729 982 - - Unlisted Australian controlled trusts - - 9 971 816 11 350 387 Unlisted international trusts 1 688 801 2 852 546 - -

8 695 550 10 863 570 9 971 816 11 350 387 Property investmentsUnlisted Australian trusts 1 327 694 1 489 602 - - Investment Properties - Australian 1 815 437 1 955 004 - -

3 143 131 3 444 606 - - Derivatives contractsForward currency - Australia 4 338 549 6 459 803 - - Forward currency - international (4 136 387) (6 294 503) - - Options - Australian 28 487 21 978 - - Options - international (1 985) (103) - - Futures - Australian (208) 593 - - Futures - international (328) (3 183) - -

228 128 184 585 - -

Total investments 16 134 171 18 605 911 9 971 816 11 350 387


107



5. CHANGES IN NET MARKET VALUES

Group Group Scheme Scheme2009 2008 2009 2008

$'000 $'000 $'000 $'000


Money market securitiesAustralian 6 839 20 116 - - International - - - - Fixed interest securitiesAustralian (1 457) (2 352) - - International (53 367) (74 878) - - Equity investmentsEquity securities - Australian (261 564) (693 157) - - Equity securities - International (189 730) (378 234) - - Unlisted Australian trusts (342 983) (197 403) - - Unlisted Australian controlled trusts

- - (1 712 003) (249 704)

Unlisted international trusts 7 325 (196 187) - - Property investmentsUnlisted Australian trusts (107 665) (32 316) - - Investment Properties - Australian (363 674) 119 366 - - Derivatives contractsForward currency 33 091 20 437 - - Options - Australian 22 254 10 478 - - Options - International (104) 77 - - Futures - Australian (208) 593 - - Futures - International (328) (3 183) - - Total change in net market values (1 251 571) (1 406 643) (1 712 003) (249 704)


108



5. CHANGES IN NET MARKET VALUES (continued)


$'000 $'000 $'000 $'000


Money market securities 75 869 82 169 - - Australian fixed interest securities 1 696 (439) - - International fixed interest securities 285 742 (9 059) - - Australian equity securities and unlisted trusts (859 788) (224 944) - - Unlisted Australian controlled trusts - equity securities - - (6 568) (159)International equity securities and unlisted trusts (235 985) (217 175) - - Forward currency (1 535 291) 659 290 - - Options (43 497) (22 977) - - Futures 8 871 (25 812) - -

(2 302 383) 241 053 (6 568) (159)

(c) Total changes in net market values of investments (3 553 954) (1 165 590) (1 718 571) ( 249 863)


109




(a) Contributions



Transferring superannuation benefits from other funds


(b) Benefits

Where a benefit that becomes payable in respect of a member can be fully met from Scheme assets attributable to that member, the benefit is paid to the beneficiary from the Scheme. Where a benefit becomes payable that cannot be fully met from Scheme assets attributable to the member, all moneys held in the PSS Fund in respect of the member are paid into the Consolidated Revenue Fund, and the Commonwealth Government then assumes responsibility for payment of the benefit.

Benefits payable by the Consolidated Revenue Fund as at 30 June 2009 were $0.003 million (2008: $18.4 million). The Commonwealth is the corresponding debtor for this amount in accordance with the funding arrangements described above.

Members contribute to the Scheme at optional rates ranging from 2% - 10% (2008: 2% - 10%) of salary paid to the member. From 1 July 2008, members can also opt to make nil contributions.

Employers who do not operate their own productivity schemes contribute employer (productivity) contributions to the Scheme on a sliding scale averaging 3% (2008: 3%) of salaries paid to members.

Money invested in other superannuation funds can be rolled over to the Scheme.

The Commonwealth Government contributes $1.50 for every $1 of eligible personal after-tax member contributions paid to the Scheme up to a maximum of $1 500 per member for each financial year.


110




(b) Benefits (continued)

Scheme Scheme2009 2008

$'000 $'000

Gross Appropriation from Consolidated Revenue Fund 612 200 621 465

375 504 369 579 Net Appropriation 236 696 251 886

Consolidated Revenue FundLump-sum benefits 260 440 333 961 Pensions 351 760 287 504

612 200 621 465

PSS FundLump-sums 13 096 21 056 Total benefits paid 625 296 642 521

(c) Costs of administration

Costs of and incidental to the administration of the Scheme and the management and investment of its moneys are charged against the assets of ARIA Investments Trust that are referable to the Scheme. Transactions in respect of these costs have been brought to account in the financial statements of ARIA Investments Trust, and are therefore included in Group expenses.

less: Transfers from PSS Fund to Consolidated Revenue Fund

Benefits paid by the Scheme and the Consolidated Revenue Fund during the year are as follows:


111




(c) Costs of administration (continued)


$'000 $'000 $'000 $'000

Investment managers 43 739 53 723 - - Custodian 5 894 5 605 - - Investment consultants 6 865 4 421 - - Borrowing costs 7 064 15 429 - - Other investment expenses 33 886 36 864 - - Total direct investment expenses 97 448 116 042 - -

General administration 13 325 13 862 - - 110 773 129 904 - -

Less:Minority interest in controlled entities (41 814) (51 837) - -

Total costs met by the Scheme 68 959 78 067 - -

Minority interest in controlled entities include costs charged to ARIA Investments Trust in respect of the administration of the Commonwealth Superannuation Scheme and Public Sector Superannuation Accumulation Plan, and the management and investment of their respective moneys.

The Superannuation Act 1990 requires ComSuper to assist ARIA in performing its member administration responsibilities in relation to the Scheme. The expenses of ComSuper are met from Commonwealth Government appropriation and a share of the administrative fees paid to ComSuper by employing agencies. The remaining share of administrative fees is paid to ARIA to fund costs other than those incurred in managing and investing the assets of the PSS Fund. Transactions in respect of the receipt of these fees and the costs of administration have been brought to account in the financial statements of ARIA and ComSuper.

Expenses met by the Scheme and its controlled entities are as follows:


112




(c) Costs of administration (continued)

Scheme administration costs met by sponsoring employers are as follows:


$'000 $'000

ARIA costs 2 266 2 268 ComSuper costs 27 993 27 894 Total 30 259 30 162

7. INCOME TAX

(a) Income tax recognised in the Statement of Changes in Net Assets


$'000 $'000 $'000 $'000Tax expense comprises:Current tax expense (115 698) 167 151 33 139 34 136 Adjustments recognised in the current year in relation to the current tax of prior years (148) 6 356 - (3 511)Adjustments recognised in the current year in relation to the deferred tax of prior years (33 857) (36 134) - - Write back of Deferred Tax Assets 65 412 - - - Deferred tax expense relating to the origination and reversal of temporary differences (211 173) (147 728) (14) (2)

Total tax (credit)/expense (295 464) (10 355) 33 125 30 623


113




(a) Income tax recognised in the Statement of Changes in Net Assets (continued)


$'000 $'000 $'000 $'000

(2 625 631) (51 003) (1 320 996) 140 244

(393 845) (7 651) (198 149) 21 036

(84 801) (82 977) (84 801) (82 977) 93 794 96 378 93 794 96 378 (35 504) (37 783) (35 504) (37 783)

3 583 569 257 785 37 480 14 362 (5 840) - -

10 169 10 806 - - 548 710 - -

- 2 - - (65 365) (79 457) - -

(157) (21) - - 128 957 121 597 - -

67 251 2 709 - -

(452) 381 - -

(34 004) (29 778) - (3 511)Total tax (credit)/expense (295 464) (10 355) 33 125 30 623

Write back of deferred tax benefits from current and past yearsDeferred franking credit movement gross-up(Over) provision of income tax in previous year

Increase / (decrease) in net assets for the year before income tax

Imputation and foreign tax creditsUtilisation of carry forward foreign tax creditsAdjustment to recognise losses at 10%

Imputation credits from franked dividends receivedForeign Tax CreditsIndexation on realised capital gains

Appropriation from CRFInvestment revenue already taxed Other

The prima facie income tax expense on the benefits accrued as a result of operations before income tax reconciles to the income tax expense in the Statement of Changes in Net Assets as follows:

Add (less) permanent differences - items not assessable or deductibleEmployee contributionsBenefits paid

Income tax expense/(credit) calculated at 15%


114



7. INCOME TAX (continued)Group Group Scheme Scheme

2009 2008 2009 2008$'000 $'000 $'000 $'000

(a) Income tax recognised in the Statement of Changes in Net Assets (continued)

Deferred tax assets not brought to account:The Trustee estimates the potential future income tax benefit in respect of tax losses and net temporary differences not brought to account in the current year, and written off from past years is:

67 251 2 709 - -

(b) Current tax assets

Current tax receivable:Income tax receivable 135 275 - - -

135 275 - - -

(c) Current tax liabilities

Current tax payables:Income tax payable - 87 033 32 977 33 621

- 87 033 32 977 33 621

(d) Deferred tax balances

Deferred tax assets comprise:Temporary differences 72 313 6 135 - -

72 313 6 135 - - Deferred tax liabilities comprise:Temporary differences 15 113 926 15 28

15 113 926 15 28


115




(d) Deferred tax balances (continued)


2009Openingbalance

Charged to income


Exchangedifferences

Closingbalance

$'000 $'000 $'000 $'000 $'000Gross deferred tax liabilities:Unrealised taxable capital gains 108 915 (108 915) - - - Other 5 011 (4 996) - - 15

113 926 (113 911) - - 15 Gross deferred tax assets:Accounts payable 1 169 27 - - 1 196 Tax losses 4 966 66 151 - - 71 117

6 135 66 178 - - 72 313

107 791 (180 089) - - (72 298)

2008Openingbalance

Charged to income


Exchangedifferences

Closingbalance

$'000 $'000 $'000 $'000 $'000Gross deferred tax liabilities:Unrealised taxable capital gains 288 562 (179 647) - - 108 915 Other 6 061 (1 050) - - 5 011

294 623 (180 697) - - 113 926 Gross deferred tax assets:Accounts payable 1 268 (99) - - 1 169 Tax losses 1 702 3 264 - - 4 966

2 970 3 165 - - 6 135

291 653 (183 862) - - 107 791

Group

Group


116




(c) Deferred tax balances (continued)

2009Openingbalance

Charged to income


Exchangedifferences

Closingbalance

$'000 $'000 $'000 $'000 $'000Gross deferred tax liabilities:Unrealised taxable capital gains

- - - - -

Other 28 (13) - - 15 28 (13) - - 15

Gross deferred tax assets:Accounts payable - - - - - Other - - - - -

- - - - -

28 (13) - - 15

2008Openingbalance

Charged to income


Exchangedifferences

Closingbalance

$'000 $'000 $'000 $'000 $'000Gross deferred tax liabilities:Unrealised taxable capital gains

- - - - -

Other 30 (2) - - 28 30 (2) - - 28

Gross deferred tax assets:Accounts payable - - - - - Other - - - - -

- - - - -

30 (2) - - 28

Scheme

Scheme


117



8.

9. OTHER RECEIVABLESGroup Group Scheme Scheme

2009 2008 2009 2008$'000 $'000 $'000 $'000

Interest receivable 18 632 22 914 97 187 Dividends and distributions receivable 38 708 143 009 - - Goods and services tax recoverable 934 196 - - Amounts due from the CSS Fund 412 412 412 412 Other 6 658 7 384 - -

65 344 173 915 509 599

TRANSFER TO THE PUBLIC SECTOR SUPERANNUATION SCHEME FROM THE COMMONWEALTH SUPERANNUATION SCHEME

Certain former contributors to the Commonwealth Superannuation Scheme who again become members of the Commonwealth Scheme are entitled to elect to transfer to the Public Sector Superannuation Scheme. There were no transfers made during the year ended 30 June 2009 (2008: nil transfers).


118



10. OTHER PAYABLESGroup Group Scheme Scheme

2009 2008 2009 2008$'000 $'000 $'000 $'000

Trust distribution payable 3 661 - - - Investment expenses payable 7 257 10 735 - - Accrued expenses 8 051 17 190 - - Other liabilities 16 065 8 096 1 259 1 213

35 034 36 021 1 259 1 213

11. BORROWINGSGroup Group Scheme Scheme

2009 2008 2009 2008$'000 $'000 $'000 $'000

(a) Borrowings CurrentCash advance facility 144 000 196 500 - - Total 144 000 196 500 - -

(b) Borrowing facilities Unsecured cash advance facilityAmount used 144 000 196 500 - - Amount unused 56 000 28 500 - - Total 200 000 225 000 - -

ARIA Property Fund and PSS/CSS A Property Trust, controlled entities (see note 20), have cash advance facilities of $100 million and $100 million respectively (2008: $225 million and $nil) with an Australian bank. The facilities expire on 11 November 2010. The facilities are unsecured.


119



12. AUDITOR'S REMUNERATIONGroup Group Scheme Scheme

2009 2008 2009 2008$ $ $ $

Value of audit services provided by the Australian National Audit Office:

Financial statements and APRA forms 366 050 248 875 82 650 72 300 Risk management strategy and risk management plan 18 000 13 000 9 000 6 000 Total 384 050 261 875 91 650 78 300

Amounts paid or payable to other auditors for the audit of group entities - 39 100 - -

Tax services - international 10 204 - - -

The Scheme audit fee for the year ended 30 June 2008 was charged against assets of the ARIA Investments Trust that are referable to the Scheme.

Deloitte Touche Tohmatsu have been contracted by the Australian National Audit Office to provide audit services on its behalf. Fees for those services are included above. For the 2009 financial year, the audit services for the Scheme were received free of charge.

Value of non-audit services provided by Deloitte:

No other services were provided by the Australian National Audit Office during the reporting period.


120



13. SCHEME SUPERANNUATION CONTRIBUTIONS SURCHARGE

Transactions recorded during the reporting period were as follows:


$'000 $'000

Total surcharge liability outstanding at start of year 45 944 44 898 Assessments received during the year 2 714 2 288 Interest on outstanding surcharge liabilities at end of year 2 691 2 621

51 349 49 807

(5 871) (3 863)Total surcharge liability outstanding at end of year 45 478 45 944

Adjustments to opening balances represent amended assessments received from the Australian Taxation Office in respect of surcharge liabilities of prior years.

The surcharge tax on contributions ceased on 1 July 2005; assessments relating to periods prior to this date continue to be received.

No liability is recognised in the financial statements for the estimated value of the surcharge liability because the liability will be either met by the relevant members during their period of membership or will be recovered from benefits paid on exit from the Scheme.

The Superannuation Contributions (Surcharge) Tax applies to the surchargeable superannuation contributions of Scheme members whose adjusted taxable income exceeds the surcharge threshold. Surcharge liabilities are calculated by the Australian Taxation Office and recorded against Scheme member accounts. The surcharge liability may be paid by the member in full or in part during the period of scheme membership. Any surcharge liability remaining at the end of the financial year incurs interest. Scheme rules provide for any outstanding surcharge liability to be recovered from a benefit payable to the member.

Less: Amounts paid by members and Consolidated Revenue Fund


121









The following disclosures address types of risk that relate to financial instruments of the Group and how those risks are managed. References to the Group encompass the Scheme unless specified otherwise.

The Investments of the Scheme (other than cash held for managing contribution receipts, insurance expenses, benefit payments and tax payments) comprise units in ARIA Investments Trust ('AIT') - a pooled superannuation trust of which ARIA is also trustee. ARIA has determined that this type of investment is appropriate for the Scheme and is in accordance with the Schemes' published investment strategy. ARIA applies strategies to manage risk relating to the investment activities of the AIT. The investments of AIT are managed on behalf of the Trustee by specialist sector fund managers who are required to invest the assets in accordance with a contractual investment mandate.


The RSE license of the Trustee of the Fund requires the Trustee to maintain a balance of at least $100 000 at all times in an administration reserve account. This is required to be maintained in cash or cash equivalents. The Trustee of the Fund was in compliance with this requirement throughout the year.

The assets and liabilities of the Group are recognised at net market value as at the reporting date. Net market value approximates fair value less costs of realisation of investments. The cost of realisation of investments is minimal and therefore net market value that is carrying value approximates fair value. Changes in net market value are recognised through the operating statement.


122





The Group is exposed to a variety of financial risks as a result of its activities. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group’s risk management and investment policies, approved by the Trustee, seek to minimise the potential adverse effects of these risks on the Group’s financial performance. These policies may include the use of financial derivative instruments.

ARIA ensures that there is an effective risk management control framework in place for the Group. Consistent with regulatory requirements, ARIA has developed, implemented and maintains a Risk Management Strategy and Risk Management Plans to identify the policies, procedures, processes and controls that comprise its risk management and control systems. The overall investment strategy of the scheme is set out in the ARIA Investment Policy manual and the ARIA Derivatives Securities Policy which address the investment strategy and objectives and risk mitigation strategies including risk mitigation relating to the use of derivatives.


The Group's investments are managed on behalf of ARIA by specialist external investment managers who invest their respective fund allocation in accordance with the terms of a written investment mandate or disclosure document. ARIA has determined that the appointment of these managers is appropriate for the Group and is in accordance with its investment strategy.

ARIA's internal investment team monitors and manages the financial risks relating to the Group's investments.


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(f) Credit risk

2009 2008 2009 2008$'000 $'000 $'000 $'000

InvestmentsCash and cash equivalents 588 765 326 775 - - Money market investments 1 886 556 2 153 259 - - Fixed interest investments 1 592 041 1 633 116 - - Equity investments 8 695 550 10 863 570 9 971 816 11 350 387 Property investments 3 143 131 3 444 606 - - Derivative financial assets 228 128 184 585 - -

Other financial assetsTrade settlements receivable 63 821 77 010 - - Other receivables 65 344 173 915 509 599

16 263 336 18 856 836 9 972 325 11 350 986

Group Scheme

All trade and other receivables are expected to be settled within 3 months of reporting date (2008: 3 months).

The Group does not have any significant exposure to any single counterparty. No individual exposure exceeds 5% of net assets at either 30 June 2009 or 30 June 2008.

The credit risk on cash and cash equivalents, trade receivables and financial derivatives is limited because the counterparties are banks or brokers with high credit ratings assigned by international credit agencies. The credit risk on the Scheme's directly held cash and interest receivable is limited because the counterparty is Reserve Bank of Australia.


Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. ARIA has adopted a policy of spreading the aggregate value of transactions across approved creditworthy counterparties as a means of mitigating the risk of financial loss.


124



14. FINANCIAL INSTRUMENTS (Continued)

(g) Liquidity risk (continued)

2009 <3 months 3-12 months

1-5 years > 5 years Total

$'000 $'000 $'000 $'000 $'000GroupVested benefits (i) 43 197 000 - - - 43 197 000 Benefits payable 12 636 - - - 12 636 Trade and other payables 243 922 - - - 243 922 Borrowings - 144 000 - - 144 000 Derivative financial liabilities - - - - - Deferred tax liabilities - - 15 - 15

43 453 558 144 000 15 - 43 597 573 SchemeVested benefits (i) 43 197 000 - - - 43 197 000 Benefits payable 12 636 - - - 12 636 Trade and other payables 1 259 - - - 1 259 Current tax liabilities - 32 977 - - 32 977 Deferred tax liabilities - - 15 - 15

43 210 895 32 977 15 - 43 243 887

(i)

Liquidity risk is the risk that the Group will encounter difficulty in either realising assets or otherwise raising sufficient funds to meet its financial liabilities and/or unitholder redemption requests.

The Group's approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities. The Scheme allows members to withdraw benefits, and it is therefore exposed to the liquidity risk of meeting member withdrawals at any time. ARIA undertakes forecasting and scenario testing of the cashflow requirements of the Group to ensure timely access to sufficient cash and actively-traded, highly-liquid investments to meet anticipated funding requirements. As a further risk mitigation strategy, it is the Trustees policy that the underlying investments of the Group cannot have more than 25% of assets invested in non liquid asset classes at any time and regular scenario testing is performed to confirm the validity of the strategy.

The following tables detail the maturity profile of financial liabilities and other liabilities as at reporting date. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest potential date of payment. The tables include both interest and principal cash flows.

Refer to note 16 for information on liabilities for vested benefits.


125





2008 <3 months 3-12 months 1-5 years > 5 years Total

$'000 $'000 $'000 $'000 $'000GroupVested benefits (i) 39 398 000 - - - 39 398 000 Benefits payable 42 663 - - - 42 663 Trade and other payables 237 659 - - - 237 659 Borrowings 196 500 - - - 196 500 Derivative financial liabilities - - - - - Current tax liabilities - 87 033 - - 87 033 Deferred tax liabilities - - 113 926 - 113 926

39 874 822 87 033 113 926 - 40 075 781

SchemeVested benefits (i) 39 398 000 - - - 39 398 000 Benefits payable 42 663 - - - 42 663 Trade and other payables 1 213 - - - 1 213 Current tax liabilities - 33 621 - - 33 621 Deferred tax liabilities - - 28 - 28

39 441 876 33 621 28 - 39 475 525

(i)

(h) Market risk

Foreign currency risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign exchange risk, interest rate risk and other market price risk. The policies and procedures put in place to mitigate the exposure to market risk are detailed in ARIA's investment policies, the Risk Management Strategy and the Risk Management Plans.

There has been no change to the Group's exposure to market risks or the manner in which it manages and measures the risk since the 2008 reporting period.

Foreign currency risk is the risk that the net market value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

Refer to note 16 for information on liabilities for vested benefits.


126





Foreign currency risk (continued)

US Japanese European British Other TotalYen Euros Pounds Currencie

A$'000 A$'000 A$'000 A$'000 A$'000 A$'0002009

Financial assets 3 448 014 348 991 860 138 335 230 385 269 5 377 642

Financial liabilities 126 127 1 071 10 996 7 155 5 444 150 793 3 321 887 347 920 849 142 328 075 379 825 5 226 849

(2 560 344) (303 507) (741 342) (295 851) (235 344) (4 136 388)

761 543 44 413 107 800 32 224 144 481 1 090 461

Net market value of forward foreign exchange contracts 202 162

2008Financial assets 4 600 435 237 783 830 778 152 199 692 205 6 513 400

Financial liabilities 160 594 382 2 198 147 346 163 666 4 439 841 237 401 828 580 152 052 691 859 6 349 734

(3 859 794) (414 624) (1 081 376) (477 821) (460 888) (6 294 503)

580 047 (177 223) (252 796) (325 769) 230 972 55 231

Net market value of forward foreign exchange contracts 165 300

Net exposure (excess hedge)

Gross amounts

The Scheme does not undertake any transactions in foreign currency and is therefore not directly exposed to foreign currency risk. The pooled investments of the Scheme, in AIT, are subject to the Trustee's currency hedging policy whereby the currency risk relating to the investments denominated in foreign currencies is neutralised and accordingly no gain or loss on currency fluctuation is incurred. In addition, a small part of the investments of AIT, relating to emerging markets, may remain unhedged due to lack of suitable currency instruments for hedging.

Forward foreign

The value of the Group's foreign currency dominated financial assets and financial liabilities at the reporting date are shown in the table below. The Scheme does not directly hold foreign currency denominated assets or liabilities.

Gross amounts

Forward foreign

Net exposure (excess hedge)


127




(h) Market risk (Continued)

Foreign currency sensitivity

2009Net operating

incomeattributable to

unitholders

Net assets attributable to

unitholders

Net operating income

attributable to unitholders


unitholders

Currency and volatility factor $'000 $'000 $'000 $'000

US Dollars 12% 103 847 103 847 (81 594) (81 594)Japanese Yen 12% 6 056 6 056 (4 759) (4 759)European Euros 12% 14 700 14 700 (11 550) (11 550)British Pounds 12% 4 394 4 394 (3 453) (3 453)Other currencies 12% 19 702 19 702 (15 480) (15 480)

148 699 148 699 (116 836) (116 836)

2008Net operating

incomeattributable to

unitholders


unitholders

Net operating income

attributable to unitholders


unitholders

Currency and volatility factor $'000 $'000 $'000 $'000

US Dollars 13% 86 674 86 674 (66 731) (66 731)Japanese Yen 11% (21 904) (21 904) 17 563 17 563 European Euros 7% (19 028) (19 028) 16 538 16 538 British Pounds 9% (32 219) (32 219) 26 898 26 898 Other currencies 10% 25 664 25 664 (20 997) (20 997)

39 187 39 187 (26 729) (26 729)

The following table details the Group's sensitivity to an increase or decrease in the Australian Dollar against relevant foreign currencies, assuming that all other variables, and in particular interest rates, remain constant. The Scheme does not directly hold foreign currency denominated assets or liabilities. The percentage increases and decreases applied to each currency represent an assessment of average historical volatility in exchange rates. Had the translation rate at the reporting date been adjusted by the volatility factors in the table, a strengthening/weakening of the Australian Dollar against the respective currencies would have given rise to an improvement/(deterioration) in the financial results as shown. The sensitivity analysis includes only outstanding units of currency or assets and liabilities to be received or paid in fixed or determinable amounts of foreign currency.

+Volatility factor- Volatility factor

- Volatility factor +Volatility factor


128





Interest rate risk

The Group invests in various asset classes, including fixed and floating rate securities, in order to obtain a return on behalf of its unitholders. Future changes in market interest rates will expose these fixed and floating rate securities to changes in valuation and changes in cash flows respectively. Interest rate risk in relation to these securities is managed by ensuring that the relevant investment managers invest in accordance with written investment mandates, which may authorise the use of fixed interest futures, money market securities futures and interest rate swaps.

All Group borrowings arise in a 100% controlled entity. The borrowings of the Group are subject to the risk of changing market interest rates which will affect future cash flows. The overall impact on the Group is disclosed in the interest rate sensitivity analysis below.


The Scheme is directly exposed to interest rate risk on cash and cash equivalents held with the Reserve Bank of Australia to meet benefits and taxation payments. All holdings at 30 June 2009 and 30 June 2008 had a maturity profile of less than one month.


129






30 June 2009 Variable Fixed Interest Interest Non

Rate Rate InterestInstruments Instruments Bearing Total

$'000 $'000 $'000 $'000GroupAssetsCash and cash equivalents 588 765 588 765 Money market investments 1 886 556 1 886 556 Fixed interest investments 1 592 041 1 592 041 Equity investments 8 695 550 8 695 550 Property investments 1 327 694 1 327 694 Derivatives contracts 228 128 228 128 Trade and other receivables 129 165 129 165 LiabilitiesBenefits payable (12 636) (12 636)Trade and other payables (208 888) (208 888)Accrued expenses (35 034) (35 034)Borrowings (144 000) (144 000)Total 2 331 321 1 592 041 10 123 979 14 047 341

SchemeAssetsCash and cash equivalents 66 651 66 651 Equity investments 9 971 816 9 971 816 Trade and other receivables 509 509 LiabilitiesTrade and other payables (1 259) (1 259)

66 651 - 9 971 066 10 037 717

The Group's exposure to interest rate movements on investments at 30 June was as follows:


130






30 June 2008 Variable Fixed Interest Interest Non

Rate Rate Interest

Instruments Instruments Bearing Total$'000 $'000 $'000 $'000

GroupAssetsCash and cash equivalents 326 775 326 775 Money market investments 2 153 259 2 153 259 Fixed interest investments 1 633 116 1 633 116 Equity investments 10 863 570 10 863 570 Property investments 1 489 602 1 489 602 Derivatives contracts 184 585 184 585 Trade and other receivables 250 925 250 925 LiabilitiesBenefits payable (42 663) (42 663)Trade and other payables (201 638) (201 638)Accrued expenses (36 021) (36 021)Borrowings (196 500) (196 500)Total 2 283 534 1 633 116 12 508 360 16 425 010

SchemeAssetsCash and cash equivalents 54 321 54 321 Equity investments 11 350 387 11 350 387 Trade and other receivables 599 599 LiabilitiesTrade and other payables (1 213) (1 213)Total 54 321 - 11 349 773 11 404 094


131






Interest rate sensitivity

Group

$'000 $'000 $'000 $'0002009Exposure +/-0.75% (42 217) 42 217 (42 217) 42 217

Exposure +/-0.5% (29 410) 29 410 (29 410) 29 410

Scheme

$'000 $'000 $'000 $'0002009Exposure +/-0.75% (500) 500 (500) 500

Exposure +/-0.5% (272) 272 (272) 272

Changein

interestrate

Changein

interestrate

In ARIA's opinion, the sensitivity analysis at reporting date is representative of the interest rate exposures during the financial year.

Net operating income attributable to

unitholders

Net assets attributable to unitholders

The following table illustrates the Scheme and Group's sensitivity to a 0.75% p.a. (2008: 0.5% p.a) increase or decrease in interest rates, based on risk exposures in existence at the reporting date. This represents an assessment of the reasonably possible change in interest rates as at that date. If interest rates had been lower or higher by 0.75% p.a. (2008: 0.5% p.a.) at reporting date, and all other variables (including the value of interest-bearing assets and liabilities) were held constant, the financial result would have improved/(deteriorated) as follows:


unitholders


2008

2008


132





Other market risksOther price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or factors affecting all similar financial instruments traded in the market.

The Scheme and Group have investment in equity securities, unit trusts and pooled superannuation trusts which have exposure to price risks. As the financial instruments are carried at net market value with changes in net market value recognised in the operating statement, all changes in market conditions will directly affect net investment income.

ARIA manages the price risk arising from these investments by diversifying the portfolio in accordance with its investment strategy.

The following table illustrate the effect of reasonably possible changes in market prices, based on risk exposures in existence at the reporting date. The volatility factors applied for the Group represent long term market price volatilities for each asset sector. For the Scheme's investment in the default option units in AIT the historical price volatility for that unit price is applied in the analysis; for the Cash option a reasonably possible change in interest rates of 0.75% (2008: 0.5%) is applied. Had market prices been higher or lower at the reporting date by the factors identified below, and all other variables were held constant, the financial result would have improved or deteriorated as follows:


133





2009 2008 2009 2008 2009 2008$'000 $'000 $'000 $'000

+/- +/- +/- +/- +/-Equity securitiesAustralian 20% 18% 570 025 695 465 570 025 695 465 International 18% 14% 354 002 340 464 354 002 340 464 Unlisted equity securitiesAustralian 30% 16% 356 714 175 677 356 714 175 677 International 14% 7% 114 398 88 406 114 398 88 406 Controlled 20% 9% 382 658 207 789 382 658 207 789 Unlisted property securitiesAustralian 11% 4% 96 901 62 982 96 901 62 982 Controlled 9% 4% 60 545 - 60 545 - Derivative contractsOptions 20% 18% 5 669 4 033 5 669 4 033 Futures 20% 12% (67) (26) (67) (26)

2009 2008 2009 2008 2009 2008$'000 $'000 $'000 $'000

+/- +/- +/- +/- +/-Unlisted equity securitiesCash option 0.75% 0.5% 382 667 382 667 Default option 8% 7% 793 674 793 593 793 674 793 593

SchemeChange in

price


unitholders



unitholders


Other market risks (continued)

Change in price

Group


134



15. SCHEME UNALLOCATED INCOME


$'000 $'000

Opening balance of unallocated income 77 768 4 060 113 Add/Less: Adjustments for estimates (4) 7 768 Add: Earnings of Fund for the year (1 716 053) (241 898)Less: Earnings paid out in benefit payments - - Less: Earnings allocation to members' accounts 1 611 368 (3 748 215)Closing balance of unallocated income (26 921) 77 768

In preparation for administrative changes for the Scheme, the Trustees did not declare crediting rates from 1 July 2003. Between 1 July 2003 and 30 June 2007 members were allocated their proportion of the earnings of the Scheme on exit from the Scheme. The income accumulated in the period from 1 July 2003 to 30 June 2007 was allocated to member accounts during 2007-08. From 1 July 2007 monthly earnings are allocated to members each month-end, or for part of a month where a member exits the Scheme during a month.

The closing balance represents approximately 0.27% (2008: 0.7%) of the members' funded entitlements as at the 30 June 2009. For 30 June 2009, income was over allocated to members.


135



16. SCHEME VESTED BENEFITS

The vested benefits amount is made up of:Scheme Scheme


Funded component 10.0 11.4Unfunded component 33.2 28.0

43.2 39.4

The net assets of the Scheme compared to the vested benefits are:Scheme Scheme


Funded component 10.0 11.4Net assets plus funded benefits payable 10.0 11.4Surplus (deficiency) - -

The vested benefits have been calculated on the basis of current legislative arrangements for indexation of pension payments.

Vested benefits are benefits which are not conditional upon continued membership of the Scheme (or any other factor other than resignation from the Scheme) and include benefits which members were entitled to receive had they terminated their Scheme membership as at the reporting date.

Mercer Human Resources Consulting has advised that the amount of vested benefits at 30 June 2009 is $43.2 billion (2008: $39.4 billion), based on data maintained by ComSuper. The value of vested benefits represents the liability that would have fallen on the Scheme if all members had ceased service on 30 June 2009 and elected the option which maximised their benefit entitlement.


136



17. SCHEME LIABILITY FOR ACCRUED BENEFITS

Accrued benefits as at 30 June were:Scheme Scheme


Funded component 11.4 7.6Unfunded component 20.9 13.8

32.3 21.4

The net assets compared to the liability for accrued benefits as at 30 June are:2008 2005

$billion $billion

Funded accrued benefits 11.4 7.6Net assets plus funded benefits payable 11.4 7.6Surplus (deficiency) - -


The amount of accrued benefits in respect of the Scheme is calculated on a triennial basis.The most recent valuation of the accrued benefits was undertaken by Mercer Human Resources Consulting as part of a comprehensive review as at 30 June 2008. A summary of the review is attached.

The Group operates in the superannuation and funds management industries in Australia. Approximately 34% (2008: 37%) of Group investments (excluding cash and derivatives contracts) are placed directly overseas.

The amount of accrued benefits is the present value of expected future benefit payments that arise from membership of the Scheme up to the measurement date. The accrued benefits are comprised of a funded component (i.e. accumulated member contributions, and, where applicable, productivity contributions, plus interest) which will be met from the Scheme, and an unfunded component to be financed from the Consolidated Revenue Fund at the time the superannuation benefits become payable.


137



19. RELATED PARTIES

(a) Trustee


The trustees of ARIA throughout the year ended 30 June 2009 were:

David Connolly (term expired 18 September 2008)Steven CraneBrian Daley (appointed 19 March 2009)Susan Doyle (Chairman - term expired 27 July 2009)Peter Feltham (term expired 30 June 2009, reappointed 17 July 2009)Margaret GillespieWinsome HallDavid IronsDennis Trewin

No fees were charged by ARIA for acting as Trustee of the Scheme or its controlled entities during the reporting period.

ARIA acted as Trustee throughout the year ended 30 June 2009.



138




(c) Key management personnel compensation



$ $ $ $

Short-term employee benefits 1 740 991 1 920 236 584 478 673 486 Post-employment benefits 280 018 253 540 94 007 88 924 Other long-term benefits 97 763 46 428 32 821 16 284 Termination benefits - 409 415 - 143 595 Share-based payment - - - -

2 118 772 2 629 619 711 306 922 289

The trustees of ARIA throughout the year ended 30 June 2009 are listed under note 19(b) above.

The following executives of ARIA also had authority and responsibility for planning, directing and controlling the activities of the Scheme throughout the year ended 30 June 2009:

The aggregate compensation of the key management personnel is set out below:


139




(c) Key management personnel compensation (continued)

(d) Related party investment

The Scheme held the following investments in related parties at 30 June:

Net Market Value of

Investment

Net Market Value of

Investment

Share of NetIncome after

tax

Share of NetIncome after

tax2009 2008 2009 2008

$'000 $'000 $'000 $'000Controlled EntitiesARIA Investments Trust 9 971 816 11 350 387 (1 712 003) (249 704)

9 971 816 11 350 387 (1 712 003) (249 704)

All transactions are conducted under normal industry terms and conditions.

The Scheme has not made, guaranteed or secured, directly or indirectly, any loans to key management personnel or their personally-related entities at any time during the year.

The compensation of key management personnel (including trustees) related to investment management is charged as part of general administration expenses against assets of the ARIA Investments Trust.

Aggregate compensation is a pro-rata apportionment of the overall compensation paid by ARIA, based on the net assets of the entities under its trusteeship or actual control.


140



20. GROUP ENTITIES

Name of Entity Country ofdomicile

at 30 June at 30 June2009 2008

% %Parent Entity:Public Sector Superannuation Scheme Australia 100 100

ARIA Investments Trust Australia 61 66

Entities controlled by ARIA Investments Trust:PSS/CSS International Investments Trust Australia 100 100CFM Australian Equities Fund Australia 100 100

Australia100 100

ARIA Alternative Assets Trust Australia 100 100ARIA Property Fund Australia 100 100PSS/CSS A Property Trust Australia 100 100PSS/CSS B Property Trust Australia 100 100

Australia- 100

SSGA Rexiter Emerging Markets Trust # Australia 73 96

Loomis Sayle Senior Loan Fund # Australia 82 92

Proportion of ownership

Entities controlled by Public Sector Superannuation Scheme:

Entities controlled by ARIA Alternative Assets Trust:

# Consolidated for the first time during the year ended 30 June 2009.

Commonwealth Funds Management Limited Pooled Superannuation Trust

ARIA Long Short Trust (wound up as at 30 June 2009)


141




(a) Investments


$'000 $'000 $'000 $'000

Within 12 months 114 163 21 930 - - Greater than 12 months but less than 5 years 199 421 99 667 - - Greater than 5 years 943 354 1 099 177 - -

1 256 938 1 220 774 - -

(b) Benefit entitlements

(c) Contingent assets

The Scheme and Group had no contingent assets at 30 June 2009 (2008: $nil).


At 30 June the outstanding investment capital commitments of the Scheme and Group are expected to be settled as follows:

There were no other contingent liabilities or contingent assets for the Scheme or Group at 30 June 2009 (2008: $nil).

No other matters have occurred since 30 June 2009 that have materially affected, or may materially affect, the operations of the Scheme, the results of those operations, or the financial position of the Scheme in future financial years.

In the normal course of business, requests are made by members and former members for the review of decisions relating to benefit entitlements of the Scheme which could result in additional benefits becoming payable in the future. Each request is considered on its merits prior to any benefit becoming payable. In the opinion of the Trustee, these requests do not represent a material liability on the Scheme and Group.


142



143



144



145



146



147



148



PSSap


150

PSSap financial statements



151




152




153


Public Sector Superannuation Accumulation Plan (ABN 65 127 917 725)


(a)

(b)

(c)

(d)

(e)

(f)


the financial statements are in a form agreed by the Minister for Finance and Deregulation and Australian Reward Investment Alliance in accordance with sub-section 26(1)(d) of the Superannuation Act 2005 and have been prepared in accordance with Australian Accounting Standards and other mandatory professional reporting requirements;

the financial statements have been prepared based on properly maintained financial records; and

the operations of the Plan were conducted in accordance with the SuperannuationAct 2005, the Trust Deed establishing the Plan, the requirements of the Superannuation Industry (Supervision) Act 1993 and Regulations, and the relevant requirements of the Corporations Act 2001 and Regulations (to the extent applicable).

Signed at Sydney this 15th day of September 2009 in accordance with a resolution of trustees of Australian Reward Investment Alliance (ABN 48 882 817 243) as Trustee of the Plan:

the attached financial statements of the Plan show a true and fair view of the matters required by Australian Accounting Standard AAS 25 'Financial Reporting by Superannuation Plans' and Schedule 1 of the Commonwealth Authorities and Companies Orders (Financial Statements for reporting periods ending on or after 1 July 2008) to the extent that the latter is not inconsistent with the former;

the attached financial statements of the Plan show a true and fair view of the financial position as at 30 June 2009, the operating result for the year ended 30 June 2009, and the cash flows for the year ended 30 June 2009;

at the date of this statement there are reasonable grounds to believe that the Plan will be able to pay its debts as and when they fall due;

Statement by the Trustee of the Public Sector Superannuation Accumulation Plan ('Plan')


154


Operating StatementFor the Year Ended 30 June 2009

Note 2009 2008$'000 $'000

Investment revenueInterest 3 666 4 545 Changes in net market values 4c (143 545) (25 777)Total investment revenue (139 879) (21 232)

Contribution revenueEmployer contributions 492 217 385 605 Member contributions 10 473 10 540 Transfers from other funds 112 368 141 266 Government co-contributions 2 274 2 691 Total contributions revenue 7a 617 332 540 102

Other revenueInsurance proceeds 5 537 2 089 Total other revenue 5 537 2 089

Total revenue 482 990 520 958

ExpensesInsurance premiums 21 744 18 322 Superannuation contributions (surcharge) tax 20 25 Total expenses 21 764 18 347

461 226 502 612

Income tax expense 8a 71 963 57 190

389 263 445 422


Benefits accrued as a result of operations before income tax

Benefits accrued as a result of operations after income tax


155


Statement of Financial PositionAs at 30 June 2009

Note 2009 2008$'000 $'000

InvestmentsPooled superannuation trust 1 240 513 890 067 Total investments 1 240 513 890 067

Other assetsCash and cash equivalents 9a 76 915 76 845 Sundry debtors 5 170 432 Deferred tax asset 8c 230 195 Total other assets 77 315 77 472

Total assets 1 317 828 967 539

LiabilitiesBenefits payable 865 17 536 Sundry payables 6 1 706 1 729 Current tax liability 8b 55 955 57 246 Total liabilities 58 526 76 511

Net assets available to pay benefits 1 259 302 891 028

Represented by:

Liability for accrued benefitsAllocated to members' accounts 1 248 312 876 321 Not allocated to members' accounts 10a 10 990 14 707 Total liability for accrued benefits 10b 1 259 302 891 028



156


Statement of Cash FlowsFor the Year Ended 30 June 2009

Note 2009 2008$'000 $'000

Cash flows from operating activitiesContributions received -

Employer 492 217 385 605 Member 10 473 10 540 Transfers from other funds 112 368 141 266 Government co-contributions 2 274 2 691

Interest received 3 928 4 357 Insurance proceeds 5 537 2 089 Insurance premiums paid (21 767) (17 758)Superannuation contributions (surcharge) tax paid (20) (29)Benefits paid (37 661) (21 436)Income tax paid (73 287) (34 698)Net cash inflows from operating activities 9b 494 062 472 627

Cash flows from investing activities

1 543 828 16 250 Purchases of units in pooled superannuation trusts (2 037 820) (463 738)Net cash outflows from investing activities (493 992) (447 488)

Net increase in cash held 70 25 139

Cash at the beginning of the financial year 76 845 51 706

Cash at the end of the financial year 9a 76 915 76 845


Proceeds from sales of units in pooled superannuation trusts


157



1. DESCRIPTION OF THE PLAN

2. BASIS OF PREPARATION

(a) Statement of compliance

The Plan is a defined contribution scheme constituted by Trust Deed dated 29 June 2005 under the 'Superannuation Act 2005' and is domiciled in Australia.

The Plan is operated for the purpose of providing new employees who join the Commonwealth Government or participating employers on or after 1 July 2005 with lump sum benefits on retirement, termination of service, death or disablement.


The principal place of business and registered office of the Plan is Level 10, 12 Moore Street, Canberra ACT 2601.

The financial report of Public Sector Superannuation Accumulation Plan ('Plan') is a general purpose financial report which has been prepared in accordance with Schedule 1 of the Commonwealth Authorities and Companies Orders (Financial statements for reporting periods ending on or after 1 July 2008) , Accounting Standards, Australian Interpretations, the Superannuation Industry (Supervision) Act 1993 and provisions of the Trust Deed. Accounting Standards include Australian equivalents to International Financial Reporting Standards ('AIFRS') to the extent that they are not inconsistent with AAS 25 'FinancialReporting by Superannuation Plans' .

Australian Reward Investment Alliance ('ARIA') (ABN 48 882 817 243), Trustee of the Plan, authorised the financial statements for issue on 15 September 2009.

The form of these financial statements has been agreed by the Minister for Finance and Deregulation and ARIA in accordance with sub-section 26(1)(d) of the Superannuation Act 2005 .

At the date of authorisation of the financial report, the following Standards which are expected to be relevant to the Plan were in issue but not yet effective. ARIA anticipates the adoption of these Standards will have no material financial impact on the financial report of the Plan. ARIA intends to adopt all of the standards upon their application date to the extent that they are not inconsistent with AAS 25 'Financial Reporting by Superannuation Plans' .


158




(a) Statement of compliance (continued)

Standard / Interpretation Effective for annual reporting periods beginning on or

after

Expected to be initially applied in the financial year

ending1 January 2009 30 June 2010










The financial statements are presented in Australian dollars, which is the functional currency of the Plan. Amounts in these financial statements have been rounded to the nearest thousand dollars, unless otherwise indicated.


159




(a) Assets


(i) Pooled superannuation trust

(ii) Sundry debtors

(b) Cash and Cash Equivalents

Cash comprises cash at bank and is used to transact contributions, transfers to and from other funds, benefit payments and tax liabilities.

Units in a pooled superannuation trust are valued at the redemption price at close of business on the last business day of the reporting period as notified by the manager of the trust and reflect the net market value of the underlying investments.


Assets are included in the Statement of Financial Position at net market value as at reporting date and movements in the net market value of assets are recognised in the Operating Statement in the periods in which they occur.

Financial assets (being investments in a pooled superannuation trust, cash at bank and sundry debtors) are recognised on the date the Plan becomes a party to the contractual provisions of the asset. Financial assets are recognised using trade date accounting. From this date, any gains and losses from changes in net market value are recorded.

Net market value means the amount which could be expected to be received from the disposal of an asset in an orderly market after deducting costs expected to be incurred in realising the proceeds of such a disposal. As disposal costs are generally immaterial, net market value approximates fair value unless otherwise stated.

Sundry debtors are recognised at the amounts receivable. All amounts are unsecured and are subject to normal credit terms.


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(c) Financial liabilities

Benefits payable

Sundry payables

(d) Foreign Currency Translation

(e) Use of Derivatives

Financial liabilities (being benefits payable and sundry payables) are recognised at net market value as at reporting date with any change in net market values of those financial liabilities since the beginning of the reporting period included in the Operating Statement for the reporting period. Net market value is equal to the amortised cost of the liability using the effective interest method less estimated transaction costs. As disposal costs are generally immaterial, net market value approximates fair value unless otherwise stated.

The Plan recognises financial liabilities on the date it becomes a party to the contractual provisions of the liability.

The Plan does not enter into derivative financial instruments.

Benefits payable to a member are recognised where a valid withdrawal notice is received from the employer sponsor, and is approved by the Plan administrator ('ComSuper').Benefits payable represent amounts approved for payment by ComSuper, but which had not been paid by reporting date.

Sundry payables represent liabilities for goods and services provided to the Plan during the financial period and which are unpaid at reporting date. All amounts are unsecured. Creditors are subject to normal credit terms.

The Plan does not undertake transactions denominated in foreign currencies.


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(f) Revenue

Investment revenue

Contribution revenue

Other revenue

(g) Insurance Premiums

(h) Superannuation Contributions (Surcharge) Tax

Death and total & permanent disability insurance premiums are charged to member accounts on a monthly basis and then remitted to the life insurer in arrears.

No estimate has been made for the balance of any tax payable in respect of surchargeable contributions received by the Plan on transfer of member entitlements from other superannuation funds as ARIA is unable to determine the amount until receipt of applicable assessments in the following period.

Interest revenue is reflected in the Statement of Financial Position on an accrual basis.

Changes in the net market value of investments are recognised as income and are determined as the difference between the net market value at year end or consideration received (if sold during the year) and the net market value as at the prior year end or amount originally incurred (if the investment was acquired during the period).

Employer and member contributions, transfers from other funds and superannuation co-contributions from the Commonwealth Government are recognised on a cash basis as this is the only point at which measurement is reliable.

Insurance claim amounts on a group life policy are recognised on a cash basis.


Amounts paid or payable in respect of the surcharge tax are recognised as an expense of the Plan. The expense (and any corresponding liability) is brought to account in the period in which the assessments are received by ARIA and are properly payable by the Plan. All amounts paid are allocated back against the member account to which the surcharge reflects.


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(i) Income Tax

Current tax

Deferred tax

Current and deferred tax for the periodCurrent and deferred tax is recognised as an expense or benefit in the Operating Statement.

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from the carrying amounts of assets and liabilities in the financial statements and the corresponding tax base of those items.

Income tax on benefits accrued as a result of operations for the year comprises current and deferred tax. Income tax is recognised in the Operating Statement except to the extent that it relates to items recognised directly in members' funds.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Plan expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Plan intends to settle its current tax assets on a net basis.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit.

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for the current period is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).


163




(j) Goods and Services Tax ('GST')

Receivables and payables are recognised inclusive of GST.

4. CHANGES IN NET MARKET VALUE OF INVESTMENTS2009 2008$'000 $'000


Pooled superannuation trust - ARIA Investments Trust (140 486) (25 762)


Pooled superannuation trust - ARIA Investments Trust (3 059) (15)

(c) Total changes in net market values of investments (143 545) (25 777)

5. SUNDRY DEBTORS2009 2008$'000 $'000

Interest receivable 170 432 170 432

All amounts are expected to be settled within one year of reporting date.

See note 14(d) for further details regarding the Plan's investments.

Revenues, expenses and assets are recognised net of the amount of goods and services tax ('GST') recoverable from the Australian Taxation Office ('ATO') as a reduced input tax credit. Where the amount of GST incurred is not recoverable from the ATO, it is recognised as part of the cost of acquisition of an asset or as part of an expense item.

The net amount of GST recoverable from, or payable to, the ATO is included as an asset or liability in the Statement of Financial Position.


164



6. SUNDRY PAYABLES2009 2008$'000 $'000

Insurance premiums payable 1 706 1 729 1 706 1 729

All amounts are expected to be settled within one year of reporting date.


(a) Contributions



Transferring superannuation from other funds

Spouse Contributions


Employers contribute at least 15.4% (2008: 15.4%) of employees superannuation salary to the Plan, subject to superannuation law.

The Commonwealth Government contributes $1.50 for every $1 of eligible personal after-tax member contributions to the Plan up to a maximum of $1 500 per member for each financial year.

Members may make voluntary contributions to the Plan in the form of personal contributions (after tax). Alternatively, employers may make salary sacrifice contributions (before tax) to the Plan on behalf of members.

Money invested in other superannuation funds can be rolled over to the Plan.

Additional contributions can be made by a spouse on behalf of a member of the Plan.


165




(b) Costs of Administration

Expenses met by ARIA Investments Trust :2009 2008$'000 $'000

Administration 788 526 Investment

Investment advisors 187 115 Investment managers 1 689 1 395 Custodian 293 182 Other 16 11

Total 2 973 2 229

Plan administration costs met by sponsoring employers are as follows:2009 2008$'000 $'000

ARIA costs 648 490 ComSuper costs 6 727 5 106 Total 7 375 5 596

Costs of and incidental to the management of the Plan and the investment of its money are charged against the assets of ARIA Investments Trust that are referable to the Plan. Transactions in respect of these costs have been brought to account in the financial statements of ARIA Investments Trust.

The Superannuation Act 2005 requires the Commissioner for Superannuation (through ComSuper) to assist ARIA in performing its member administration responsibilities in relation to the Plan. The expenses of the Commissioner for Superannuation are met from a share of the administrative fees paid to ComSuper by employing agencies. The remaining share of administrative fees is paid to the Trustee to fund costs other than those incurred in managing and investing the assets of the Plan. Transactions in respect of the receipt of these fees and the costs of administration have been brought to account in the financial statements of ARIA and the Commissioner for Superannuation (ComSuper).


166



8. INCOME TAX

(a) Income tax recognised in Operating Statement2009 2008$'000 $'000

Tax expense comprises:Current tax expense 71 769 57 246

(35) (56)

229 - Total tax expense 71 963 57 190

461 226 502 612

Income tax expense calculated at 15% 69 184 75 392

Group life insurance proceeds (831) (313)Investment revenue already taxed 21 532 4 333

(18 154) (21 648)Superannuation contributions (surcharge) tax 3 4 Under provision for income tax in previous year 229 - Total 71 963 57 768

Member contributions, Govt co-contributions and transfers from other superannuation funds

The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows:

Income tax in the Operating Statement represents the tax on the benefits accrued as a result of operations before income tax, adjusted for non-taxable and non-deductible amounts.

The tax effect of timing differences, which occur where items are allowed for income tax purposes in a period different from that in which they are recognised in the financial statements, is included in the deferred tax asset at current taxation rates.

The tax rate used in the reconciliation below is the superannuation tax rate of 15% payable by Australian superannuation funds on taxable profits under Australian tax law. There has been no change in the superannuation tax rate when compared with the previous financial year.

Add (less) permanent differences - items not assessable or deductible

Deferred tax income relating to the origination and reversal of temporary differences

Benefits accrued as a result of operations before income tax

Adjustments recognised in current year in relation to current tax of prior year


167



8. INCOME TAX (continued)2009 2008$'000 $'000

(b) Current tax balances

Current tax payables:Provision for current income tax 55 955 57 246

55 955 57 246

(c) Deferred tax balances

Deferred tax asset:Temporary differences 230 195

230 195



Charged to income

Acquisition/ (disposal)

Closingbalance

$'000 $'000 $'000 $'000Gross deferred tax assets:Temporary differences 195 35 - 230

195 35 - 230


Charged to income

Acquisition / (disposal)

Closingbalance

$'000 $'000 $'000 $'000Gross deferred tax assets:Temporary differences 139 56 - 195

139 56 - 195


168



9. CASH FLOW INFORMATION

(a) Reconciliation of Cash

2009 2008$'000 $'000

Cash at bank 76 915 76 845

(b)

2009 2008$'000 $'000

389 263 445 422 Less: benefits payable (20 989) (38 803)

143 546 25 777 Less:

Increase in sundry debtors 262 (188)Increase in deferred tax asset (35) (56)

Add back:Increase in benefits payable (16 671) 17 367

Increase in sundry payables (23) 561 Increase in provision for income tax (1 290) 22 548

Net cash inflows from operating activities 494 062 472 627

For the purposes of the Statement of Cash Flows, cash represents cash at bank. Cash at the end of the reporting period as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

Reconciliation of Benefits Accrued as a Result of Operations after Income Tax to Net Cash Inflows from Operating Activities

Benefits accrued as a result of operations after income tax

Decrease / (increase) in net market value of investments


169



10. LIABILITY FOR ACCRUED BENEFITS

2009 2008$'000 $'000

(a) Funds Not Allocated to Members' Accounts

7 545 8 976 Change in net market value of investments (7 132) (582)Other 10 577 6 314

10 990 14 707

(b) Changes in the Liability for Accrued Benefits

Liability for accrued benefits at beginning of the year 891 028 484 410

Add:Increase in liability for accrued benefits 389 263 445 422 Less:Benefits and transfers paid and payable (20 989) (38 804)Net change 368 274 406 618

Liability for accrued benefits at the end of the year 1 259 302 891 028

11. GUARANTEED BENEFITS

The liability for accrued benefits is the Plan's present obligation to pay benefits to members and beneficiaries and has been calculated as the difference between the total assets and total liabilities as at year-end.

Funds not allocated to members' accounts at the end of the year

No guarantees have been made in respect of any part of the liability for accrued benefits.

Employer contributions (net of contributions tax) and member transfers received prior to year-end but not allocated at balance date


170



12. VESTED BENEFITS

The vested benefits amount is made up of:2009 2008$'000 $'000

Members' account balances at 30 June 1 248 312 876 321

8 363 10 560

(818) (1 584)Vested benefits 1 255 857 885 297

Net assets available to pay benefits 1 259 302 891 028

13. AUDITOR'S REMUNERATION

Value of audit services provided by the Australian National Audit Office:2009 2008

Financial statements and APRA forms 64 450 62 300 Risk management strategy and risk management plan 9 000 6 000

73 450 68 300

Vested benefits are benefits which are not conditional upon continued membership of the Plan (or any factor other than resignation from the Plan) and include benefits which members were entitled to receive had they terminated their Plan membership as at the balance date.

Plus contributions (refundable) allocated after balance date

The Plan audit fee for the year ended 30 June 2008 was charged against assets of ARIA Investments Trust that are referable to the Plan.

No other services were provided by the Australian National Audit Office or Deloitte Touche Tohmatsu to the Plan during the reporting period.

In 2008-09 audit services were provided by the Australian National Audit Office free of charge.

Deloitte Touche Tohmatsu have been contracted by the Australian National Audit Office to provide audit services on its behalf. Fees for those services are included above.

Less accrued contributions tax on refunds / unallocated contributions


171



14. RELATED PARTIES

(a) Trustee


The trustees of ARIA throughout the year ended 30 June 2009 were:

David Connolly (term ended 18 September 2008)Steven CraneBrian Daley (appointed 19 March 2009)Susan Doyle (Chairman - term ended 27 July 2009)Peter Feltham (term expired 30 June 2009, reappointed 17 July 2009)Margaret GillespieWinsome HallDennis Trewin

(c) Key Management Personnel Compensation


ARIA acted as Trustee of the Plan throughout the year ended 30 June 2009.


The trustees of ARIA throughout the year ended 30 June 2009 are listed under note 14(b) above. The following executives of ARIA also had authority and responsibility for planning, directing and controlling the activities of the Plan throughout the year ended 30 June 2009:


172



14. RELATED PARTIES

(c) Key Management Personnel Compensation (continued)

2009 2008$ $

Short-term employee benefits 58 900 41 020 Post-employment benefits 9 473 5 416 Other long-term benefits 3 307 992 Termination benefits - 8 746 Share-based payment - -

71 680 56 174

(d) Investing entities

Aggregate compensation in relation to the Plan is a pro-rata apportionment of the overall compensation paid by ARIA, based on the net assets of the entities under its trusteeship or actual control.

The aggregate compensation of the key management personnel in relation to the Plan is set out below:

The compensation of key management personnel (including trustees) related to investment management for the year ended 30 June 2009 was charged as part of general administration expenses against assets of the ARIA Investments Trust. No charge was made directly against the Plan.

ARIA pays costs of and incidental to the management of the Plan and the investment of its money from the assets of the ARIA Investments Trust that are referable to the Plan - see note 7(b). No fees were charged by ARIA for acting as Trustee during the year ended 30 June 2009 (2008 - $nil).

The Plan has not made, guaranteed or secured, directly or indirectly, any loans to key management personnel or their personally-related entities at any time during the year.

Throughout the year ended 30 June 2009, the Plan's only investment consisted of units in ARIA Investments Trust, which was established to provide a cost-effective means of gaining exposure to a broad range of listed and unlisted securities across various asset classes.

The only other investors in ARIA Investments Trust throughout the year were Public Sector Superannuation Scheme and Commonwealth Superannuation Scheme. ARIA acted as Trustee of these three entities during the year ended 30 June 2009. All investing transactions are conducted under normal industry terms and conditions.


173








The Investments of the Plan (other than cash held for managing contribution receipts, insurance expenses, benefit payments and tax payments) comprise units in ARIA Investments Trust ('AIT') - a pooled superannuation trust of which ARIA is also trustee. ARIA has determined that this type of investment is appropriate for the Plan and is in accordance with the Plans published investment strategy. ARIA applies strategies to manage risk relating to the investment activities of the AIT. The investments of AIT are managed on behalf of the Trustee by specialist sector fund managers who are required to invest the assets in accordance with a contractual investment mandate.


The RSE license of the Trustee of the Plan requires the Trustee to maintain a balance of at least $100 000 at all times in an administration reserve account. This is required to be maintained in cash or cash equivalents. The Trustee was in compliance with this requirement throughout the year.

The financial assets and liabilities of the Plan are recognised at net market value as at the reporting date. Net market value approximates fair value less costs of realisation of investments. The cost of realisation of investments is minimal and therefore net market value that is carrying value approximates fair value. Changes in net market value are recognised through the Operating Statement.



174





(f) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Plan.

In its capacity as trustee of ARIA Investments Trust, ARIA has adopted a policy of spreading the aggregate value of transactions across approved counterparties with approved credit qualities, as a means of mitigating financial loss. The Plan's exposure to its counterparties are continuously monitored by the trustee. Credit risk relating to the master custodian JP Morgan is mitigated through contract indemnity provisions. No individual exposure within ARIA Investments Trust exceeded 5% of net assets of that trust at either 30 June 2009 or 30 June 2008.

The Plan is exposed to a variety of financial risks as a result of its activities. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Plan's risk management and investment policies, approved by the Trustee, seek to minimise the potential adverse effects of these risks on the Plan's financial performance. These policies may include the use of financial derivative instruments.

ARIA ensures that there is an effective risk management control framework in place for the Plan. Consistent with regulatory requirements, ARIA has developed, implemented and maintains a Risk Management Strategy and Risk Management Plan to identify the policies, procedures, processes and controls that comprise its risk management and control systems for the Plan and for the Plan's investments through the ARIA Investment Trust. The overall investment strategy of the Plan is set out in the ARIA Investment Policy manual and the ARIA Derivatives Securities Policy which address the investment strategy and objectives and risk mitigation strategies including risk mitigation relating to the use of derivatives.



175




(f) Credit risk (continued)

2009 2008$'000 $'000

InvestmentsPooled superannuation trust 1 240 513 890 067 Other financial assetsCash and cash equivalents 76 915 76 845 Sundry debtors 170 432 Total financial assets 1 317 598 967 344

(g) Liquidity risk

The credit risk on the Plan's directly held cash and cash equivalents and interest receivable is limited because the counterparty is the Reserve Bank of Australia.


There has been no change to the Plan's exposure to credit risk or the manner in which it manages and measures that risk since the 2007 reporting period.

Liquidity risk is the risk that the Plan will encounter difficulty in either realising assets or otherwise raising sufficient funds to meet its financial liabilities and/or member benefit payments.

The Plan's approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities. The Plan allows members to withdraw benefits, and it is therefore exposed to the liquidity risk of meeting member withdrawals at any time. The Plan has a high level of net inward cash flows through new contributions which provide capacity to manage liquidity risk. ARIA undertakes forecasting and scenario testing of the cashflow requirements of the scheme to ensure timely access to sufficient cash and actively-traded, highly-liquid investments to meet anticipated funding requirements. As a further risk mitigation strategy, it is the Trustees policy that the underlying investments of the Plan cannot have more than 25% of assets invested in non liquid asset classes at any one point in time and regular scenario testing is performed to confirm the validity of the strategy.


176





(h) Market risk

Foreign currency riskForeign currency risk is the risk that the net market value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Plan does not undertake any transactions in foreign currency and is therefore not directly exposed to foreign currency risk. The pooled investments of the Plan held in the ARIA Investments Trust are subject to the Trustee's currency hedging policy whereby the currency risk relating to the investments denominated in foreign currency is neutralised and accordingly no gain or loss on currency fluctuation is incurred. A small part of the investments of AIT, relating to emerging markets, may remain unhedged due to lack of suitable currency instruments for hedging. The Trustee's currency hedging policy was unchanged throughout the reporting period until June 2009, when the Trustee determined that some strategic currency exposures could be adopted in future.

All financial liabilities (being benefits payable and sundry payables) are expected to be settled within 3 months of reporting date (2008: within 3 months). At 30 June 2009 the Plan's total exposure to liquidity risk was $1 255.9 million relating to vested benefits (2008: $885.3 million).

There has been no change to the Plan's exposure to liquidity risk or the management and measurement of that risk since the 2008 reporting period.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign exchange risk, interest rate risk and other market price risk. The policies and procedures put in place to mitigate the exposure to market risk are detailed in ARIA's investment policies, the Risk Management Statement and the Risk Management Plans.

There has been no change to the Plan's exposure to market risks or the manner in which it manages and measures the risk since the 2008 reporting period.


177





Interest rate risk

Benefitsaccrued

Equity Benefits accrued

Equity

2009Cash and cash equivalents 76 915 (577) (577) 577 577

2008Cash and cash equivalents 76 845 (384) (384) 384 384

Interest rate risk $' 000Carryingamount

$'000

In ARIA's opinion, the sensitivity analysis at reporting date approximates the interest rate exposures during the financial year.


The Plan is directly exposed to interest rate risk on cash and cash equivalents held with the Reserve Bank of Australia to meet benefits, taxation and insurance costs. All holdings at 30 June 2009 and 30 June 2008 had a maturity profile of less than one month. The Plan is indirectly exposed to interest rate risk through its pooled investments in AIT. As trustee of AIT, ARIA manages interest rate risk through its investment strategy including diversification of asset allocation and the use of specialist investment sector managers.

The following table illustrates the Plan's sensitivity to a 0.75% p.a. increase or decrease in interest rates (2008: 0.5%), based on cash balances directly held at reporting date. This represents an assessment of the reasonably possible change in interest rates as at that date. Had interest rates been lower or higher by 0.75% at reporting date, and all other variables were held constant, the financial result would have improved/(deteriorated) as demonstrated:

-0.75% +0.75%

-0.5% +0.5%


178





Other market price riskOther market price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or factors affecting all similar financial instruments traded in the market.

The Plan's investment in ARIA Investments Trust is exposed to market price risk in respect of the latter's holdings of equity securities, unit trusts and pooled superannuation trusts. As the investment in ARIA Investments Trust is carried at net market value with changes in net market value recognised in the Statement of Changes in Net Assets, all changes in market conditions will directly affect the Plan's net investment income. In its capacity as trustee of ARIA Investments Trust, ARIA manages the market price risk arising from these investments by diversifying the portfolio in accordance with its investment strategy.

The following table illustrates the Plan's sensitivity to a reasonably possible change in the unit value of ARIA Investments Trust, based on risk exposures at reporting date with the exception of the cash option. The volatility factors represent the average annual historical volatility in the investment option unit prices. For the Cash Option a factor of 0.75% (2008: 0.5%) has been applied representing a reasonably possible change in interest rates. Had the unit price been higher or lower at the reporting date by the volatility factor, and all other variables were held constant, the financial result would have improved/(deteriorated) as follows:


179






2009

Investment option

Balanced +5% 11 122 556 556 -5% (556) (556)

Aggressive +14% 31 942 4 472 4 472 -14% (4 472) (4 472)

Australian Shares +21% 14 738 3 095 3 095 -21% (3 095) (3 095)

Cash +0.75% 28 621 215 215 -0.75% (215) (215)

Conservative +4% 9 715 389 389 -4% (389) (389)

International Shares Hedged +19% 1 966 374 374 -19% (374) (374)

International Shares Unhedged +18% 1 063 191 191 -18% (191) (191)

Bonds Fixed Interest +4% 3 694 148 148 -4% (148) (148)

Property +5% 5 444 272 272 -5% (272) (272)

Sustainable +19% 3 764 715 715 -19% (715) (715)

Trustee Choice +8% 1 128 444 90 276 90 276 -8% (90 276) (90 276)

Total increase 100 703 100 703 Total decrease (100 703) (100 703)

Volatilityfactors

Carryingamount

$'000

Benefitsaccrued

$'000

Equity$'000


180






2008

Investment option

Balanced +4% 6 717 269 269 -4% (269) (269)

Aggressive +8% 27 928 2 234 2 234 -8% (2 234) (2 234)

Australian Shares +16% 8 302 1 328 1 328 -16% (1 328) (1 328)

Cash +0.5% 5 436 27 27 -0.5% (27) (27)

Conservative +3% 3 677 110 110 -3% (110) (110)

International Shares Hedged +12% 1 620 194 194 -12% (194) (194)

International Shares Unhedged +13% 833 108 108 -13% (108) (108)

Bonds Fixed Interest +3% 1 986 60 60 -3% (60) (60)

Property +6% 2 631 158 158 -6% (158) (158)

Sustainable +15% 3 683 552 552 -15% (552) (552)

Trustee Choice +6% 827 255 49 635 49 635 -6% (49 635) (49 635)

Total increase 54 675 54 675 Total decrease (54 675) (54 675)

Carryingamount

$'000

Benefitsaccrued

$'000

Volatilityfactors

In ARIA's opinion, the sensitivity analysis at reporting date is representative of the other market price exposures during the financial year.

Equity$'000


181





The Plan had no capital or other expenditure commitments at 30 June 2009 (2008: $nil).


No matters have occurred since 30 June 2009 that have materially affected, or may materially affect, the operations of the Plan, the results of those operations, or the financial position of the Plan in future financial years.

The Plan operates in the superannuation industry in Australia. 100% of Plan investments (excluding cash) were invested in an Australian-domiciled pooled superannuation trust at 30 June 2009 (2008: 100%).

The members of the Plan are domiciled in Australia.

In the normal course of business, requests are made by members and former members for the review of decisions relating to benefit entitlements of the Plan which could result in additional benefits becoming payable in the future. Each request is considered on its merits prior to any benefit becoming payable. In the opinion of the Trustee, these requests do not represent a material liability on the Plan.

There were no other contingent liabilities or contingent assets as at the reporting date (2008: $nil).


ARIA


184

ARIA financial statements



185



186


AUSTRALIAN REWARD INVESTMENT ALLIANCESTATEMENT BY CHAIRMAN AND CHIEF EXECUTIVE

In our opinion, the attached financial statements for the year ended 30 June 2009 are based on properly maintained financial records and give a true and fair view of the matters required by the Finance Minister's Orders made under the Financial Management and Accountability Act 1997.

Winsome Hall Lochiel CrafterChairman of the Board Chief Executive Officer

15 September 2009 15 September 2009


187


Notes 2009 2008$’000 $’000

INCOMERevenueSale of goods and rendering of services 4.1 16 733 14 428Total Revenue 16 733 14 428

GainsOther gains 4.2 24 20Total Gains 24 20

16 757 14 448

EXPENSESEmployee benefits 5.1 9 259 8 007Suppliers 5.2 5 945 5 971Depreciation and amortisation 5.3 464 370Losses from asset sales 5.4 7 10TOTAL EXPENSES 15 675 14 358

1 082 90

AUSTRALIAN REWARD INVESTMENT ALLIANCE

Net Surplus Attributable to the Australian Government

The above statement should be read in conjunction with the accompanying notes.

INCOME STATEMENTFor the period ended 30 June 2009


188


Notes 2009 2008$’000 $’000

ASSETSFinancial AssetsCash and cash equivalents 6.1 2 593 1 374Trade and other receivables 6.2 1 114 3 277Total financial assets 3 707 4 651

Non-Financial AssetsProperty, plant and equipment 7.1 2 120 2 285Other non-financial assets 7.2 63 109Total non-financial assets 2 183 2 394TOTAL ASSETS 5 890 7 045

LIABILITIESPayablesSuppliers 8.1 163 1 113Other payables 8.2 1 103 2 513Total payables 1 266 3 626

ProvisionsEmployees 9.1 967 845Total provisions 967 845TOTAL LIABILITIES 2 233 4 471

NET ASSETS 3 657 2 574

EQUITYContributed equity 1 343 1 343Reserves 589 588Retained surplus 1 725 643TOTAL EQUITY 3 657 2 574

Current assets 3 770 4 759Non-current assets 2 120 2 285Current liabilities 1 895 4 155Non-current liabilities 338 315



BALANCE SHEETAs at 30 June 2009


189


Notes 2009 2008$’000 $’000

OPERATING ACTIVITIESCash received Goods and services 16 448 16 165Total cash received 16 448 16 165

Cash usedEmployees 8 888 7 779Suppliers 6 037 6 924Total cash used 14 925 14 703Net cash from operating activities 10 1 523 1 462

INVESTING ACTIVITIESCash receivedProceeds from sale of property, plant and equipment - - Total cash received - -

Cash usedPurchase of property, plant and equipment 304 1 602Total cash used 304 1 602Net cash from (used by) investing activities ( 304) (1 602)

FINANCING ACTIVITIESCash usedCash used for other financing activities - - Total cash used - - Net cash used by financing activities - -

Net increase/(decrease) in cash held 1 219 ( 140)Cash at beginning of the reporting period 1 374 1 514Cash at end of the reporting period 6.1 2 593 1 374



CASH FLOW STATEMENTFor the period ended 30 June 2009


190


2009 2008 2009 2008 2009 2008 2009 2008$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Opening Balance 643 553 589 588 1 343 1 343 2 575 2 484

Income and expenses Revaluation adjustment - - - 1 - - - 1Surplus for the period 1 082 90 - - - 1 082 90Total income and expenses recognised directly in equity 1 082 90 - 1 - - 1 082 91

Closing balance at 30 June 1 725 643 589 589 1 343 1 343 3 657 2 575

AUSTRALIAN REWARD INVESTMENT ALLIANCESTATEMENT OF CHANGES IN EQUITYAs at 30 June 2009


Total EquityRetainedEarnings

AssetRevaluation

ContributedEquity/Capital


191


SCHEDULE OF COMMITMENTSAs at 30 June 2009

2009 2008BY TYPE $’000 $’000

Commitments receivableGST recoverable on commitments 463 563Total commitments receivable 463 563

Commitments payable

Other commitmentsOperating leases1 (5 099) (6 191)Total other commitments ( 5 099) ( 6 191)

Net commitments by type ( 4 636) ( 5 628)

BY MATURITY

Commitments receivableOne year or less 102 99From one to five years 361 464Over five years - - Total other commitments 463 563

Operating lease commitmentsOne year or less ( 1 125) ( 1 092)From one to five years ( 3 974) ( 5 099)Over five years - - Total operating lease commitments ( 5 099) ( 6 191)

Net commitments by maturity ( 4 636) ( 5 628)


1 Operating leases included are effectively non-cancellable and comprise of lease for office accommodation. Lease payments are subject to periodic CPI or indexed increases.


192


For the period ended 30 June 2009

Note 1

1.1

1.2

AUSTRALIAN REWARD INVESTMENT ALLIANCENOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

Summary of Significant Accounting Policies

Objectives of the Australian Reward Investment Alliance

Basis of Preparation of the Financial Report

The financial statements and notes are required by section 49 of the FinancialManagement and Accountability Act 1997 and are a general purpose financial report.

The objective of Australian Reward Investment Alliance ('ARIA') (ABN 48 882 817 243) is to provide superannuation services that meet the expectations of government, employers, members and beneficiaries, and which comply with the superannuation regulatory environment.

ARIA administers the Public Sector Superannuation Scheme ('PSS'), Commonwealth Superannuation Scheme ('CSS') and Public Sector Superannuation Accumulation Plan ('PSSap'), and is responsible for the management and investment of the respective assets.

In its capacity as a prescribed agency under the Financial Management and Accountability Act 1997 , ARIA conducts these activities through the ARIA Special Account, an account held with the Reserve Bank of Australia.

The Schemes invest solely in ARIA Investments Trust - a pooled superannuation trust under ARIA's trusteeship. Such investment facilitates access to a broad range of underlying securities across various asset classes on an efficient and cost-effective basis.

(ii) charges to the ARIA Investments Trust to recover the cost of administering and managing the PSS Fund, CSS Fund and PSSap Fund.

ARIA's sole source of income is from external sources, and therefore no appropriations are included.

During the period ended 30 June 2009, ARIA's activities were funded through:(i) an agreed share of the scheme administration charges collected by ComSuper from employers participating in PSS, CSS and PSSap; and


193


1.3

1.4 Changes in Australian Accounting Standards

In the process of applying the accounting policies listed in this note, ARIA has made no judgements that have significant impact on the amounts recorded in the financial statements.

Significant Accounting Judgements and Estimates

No accounting standard has been adopted earlier than the application date as stated in the standard. No new or amended standards or interpretations were issued prior to the signing of the statement by the chairman and chief executive and were applicable to the current reporting period that had a financial impact on the financial statements.

Adoption of New Australian Accounting Standard Requirements

The Financial Statements and notes have been prepared in accordance with:

Finance Minister’s Orders (or FMO) for reporting periods ending on or after 1 July 2008; and

Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial report has been prepared on an accrual basis and is in accordance with the historical cost convention, except for certain assets at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial report is presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

Unless an alternative treatment is specifically required by an accounting standard or the FMO, assets and liabilities are recognised in the balance sheet when and only when it is probable that future economic benefits will flow to the entity or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under Agreements Equally Proportionately Unperformed are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the schedule of commitments and the schedule of contingencies.

Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the income statement when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured.


194


1.5

1.6

1.7

Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) are recognised directly in contributed equity in that year.

Revenue

Sale of goods and rendering of services

Transactions with the Government as Owners

ARIA recovers expenses incurred in respect of the investment and management of the CSS Fund, PSS Fund, and PSSap Fund, from the ARIA Investments Trust.

No new standards or revised standards were issued by the Australian Accounting Standards Board prior to the signing of the statement by the chairman and chief executive which are expected to have a material financial impact on ARIA's financial statement for future reporting periods.

Net assets received from or relinquished to another Australian Government agency or authority under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.

Other Resources Received Free of ChargeResources received free of charge are recognised as gains when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Restructuring of Administrative Arrangements

Equity Injections

Gains

Future Australian Accounting Standard Requirements

ARIA receives a share of an administration fee charged by ComSuper to participating employers of Schemes. Any revenue not received by balance date is reflected in the balance sheet as a receivable.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another government agency or authority as a consequence of a restructuring of administrative arrangements.

Resources received free of charge are recorded as either revenue or gains depending on their nature.


195


1.8

The liability for long service leave has been calculated by reference to the shorthand measurement technique prescribed by the Finance Minister's Orders i.e. as the present value of the probability-weighted long service leave liability.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

LeaveThe liability for employee benefits includes provisions for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of ARIA is estimated to be less than the annual entitlement for sick leave.

All other employee benefit liabilities are measured at the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.

Employee Benefits

Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled.

ARIA makes employer contributions to the relevant Schemes at rates determined by an actuary to be sufficient to meet the cost to the government of the superannuation entitlements of the Agency’s employees. ARIA accounts for the contributions as contributions to defined contribution plans.

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119) and termination benefits due within twelve months are measured at their nominal amounts.

The leave liabilities are calculated on the basis of employees’ remuneration, including ARIA employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

SuperannuationThe trustees and employees of ARIA are eligible to participate in CSS, PSS and PSSap on terms identical to all other members. The liability for the unfunded superannuation benefits of the CSS and PSS is recognised in the financial statements of the Australian Government and is settled by the Australian Government as and when the obligations fall due. The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.


196


1.9

1.10

1.11

Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss.

Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

Where a non-current asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease property or, if lower, the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time and for the same amount.

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased non-current assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.

Leases

The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Cash and Cash Equivalents

Cash and cash equivalents includes notes and coins held and any deposits in bank accounts with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash is recognised at its nominal amount.

Effective Interest Method

ARIA classifies its financial assets as loans and receivables.

Financial Assets


197


1.12

Other financial liabilities are initially measured at fair value, net of transaction costs.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Other Financial Liabilities

If there is objective evidence that an impairment loss has been incurred for loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the income statement.

Financial liabilities are classified as other financial liabilities.

Financial Liabilities

Impairment of Financial Assets

Loans and Receivables

Financial assets are assessed for impairment at each balance date.

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non current assets. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.


198


1.13

1.14

Leasehold ImprovementsInfrastructure, Plant and Equipment

Acquisition of Assets

Depreciated replacement cost

Property, Plant and Equipment

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor agency’s accounts immediately prior to the restructuring.

RevaluationsFair values for each class of asset are determined as shown below:

Fair value measured atAsset Class

Asset Recognition ThresholdPurchases of property, plant and equipment are recognised initially at cost in the Balance Sheet, except for purchases costing less than $2 000 which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

Market selling price

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised through operating result. Revaluation decrements for a class of assets are recognised directly through operating result except to the extent that they reverse a previous revaluation increment for that class.

Following initial recognition at cost, property plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.


199


2009 2008Lease term Lease term3 to 5 years 3 to 5 years

Computer Software 4 years 4 years5 years 5 years7 years 7 to 15 years

1.15

Leasehold improvements

Depreciation and Amortisation

Impairment

Furniture and Fittings

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if ARIA were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Intangibles

ARIA's intangibles comprise of purchased software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Office Equipment

All assets are assessed for impairment at 30 June 2009. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

Computer hardware

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of ARIA’s software is four years (2007-08: four years).

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciable property plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to ARIA using, in all cases, the straight-line method of depreciation.


200


1.16

1.17

Note 2

Note 3 Contingent Liabilities

No contingent liabilities are noted at reporting date.

except for receivables and payables.

ARIA was not aware of any other events occurring after balance sheet date.

Events After the Balance Sheet Date

In October 2008 the government announced that it intends to merge the Australian Reward Investment Alliance, the Military Superannuation and Benefits Board and the Defence Force Retirement and Death Benefits Authority into a single trustee board from 1 July 2010.

Insurance

ARIA has insured for trustee liability and comprehensive crime risks through insurance policies with a group of insurers, (ACE Insurance, London Australia Underwriting, Chubb, Liberty American Home Assurance and QBE Insurance); and business travel and group personal injury risks through insurance policies held with Allianz Australia and Chubb Insurance. Workers compensation risks are insured through ComCare.

Taxation

Revenues, expenses and assets are recognised net of GST:

The Agency is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

except where the amount of GST incurred is not recoverable from the Australian Taxation Office; and

All software assets are assessed for indications of impairment as at30 June 2009.


201


2009 2008$'000 $'000

Note 4 Income

Revenues

4.1 Sale of Goods and Rendering of ServicesProvision of services - related entities 5 251 4 118Provision of services - external parties 11 482 10 310Total sale of goods and rendering of services 16 733 14 428

Gains

4.2 Other GainsResources received free of charge 24 20 Total other gains 24 20


202


2009 2008$'000 $'000

Note 5 Expenses

5.1 Employee BenefitsWages and salaries 8 026 7 066Superannuation 1 037 797Leave and other entitlements 196 144Total employee benefits 9 259 8 007

5.2 SuppliersProvision of goods - related entities - - Provision of goods - external parties 354 405Rendering of services - related entities 386 683Rendering of services - external parties 3 905 4 228Operating lease rentals - external parties:

Minimum lease payments 1 278 624Workers compensation premiums 22 31Total supplier expenses 5 945 5 971

5.3 Depreciation and AmortisationDepreciationLeasehold improvements 290 265Infrastructure, plant and equipment 166 105Total depreciation 456 370

AmortisationComputer Software 8 - Total amortisation 8 -

Total depreciation and amortisation 464 370

5.4 Losses from Asset SalesInfrastructure, plant and equipment:

Proceeds from sale - 10Carrying value of assets sold 7 - Selling Expense - -

Total losses from asset sales 7 10


203


2009 2008$'000 $'000

Note 6 Financial Assets

6.1 Cash and Cash Equivalents Special Account 2 593 1 374Total cash and cash equivalents 2 593 1 374

6.2 Trade and Other ReceivablesGoods and services - external parties 641 2 962Total receivables for goods and services 641 2 962

GST receivable from the Australian Taxation Office 72 315Accrued Revenue 401 - Total other receivables 473 315

Total trade and other receivables 1 114 3 277

Receivables are represented by:Current 1 114 3 277Non-current - -

Total trade and other receivables 1 114 3 277

Receivables are aged as follows:Not overdue 1 114 3 277Overdue by:

Less than 30 days - - 30 to 60 days - - 61 to 90 days - - More than 90 days - -

Total receivables 1 114 3 277


204


2009 2008$’000 $’000

Note 7 Non-Financial Assets

7.1 Property, Plant and Equipment

Land and BuildingsLeasehold improvements

Fair value 1 992 2 275Accumulated depreciation ( 466) ( 265)

Total land and buildings: 1 526 2 010

Infrastructure, Plant and Equipment Infrastructure, Plant and Equipment:

Gross carrying value (at fair value) 799 516Accumulated depreciation ( 237) ( 241)

Total infrastructure, plant and equipment: 562 275

IntangiblesComputer software at cost:

Acquired - in use 40 - Accumulated depreciation ( 8) -

Total intangibles: 32 -

Total Property, Plant and EquipmentProperty, Plant and Equipment:

Carrying value 2 831 2 792Accumulated depreciation ( 711) ( 507)

Total property, plant and equipment: 2 120 2 285

7.2 Other Non-Financial AssetsPrepaid Expenditure 63 109Total other non-financial assets 63 109


205


Note 7 Non-Financial Assets (continued)

7.3 Analysis of Property, Plant and Equipment

LeaseholdImprovements

OtherIP and E Software Total

$’000 $’000 $’000 $’000As at 1 July 2008Gross book value 2 275 516 - 2 791Accumulated depreciation/amortisation and impairment ( 265) ( 241) - ( 506)Net book value 1 July 2008 2 010 275 - 2 285Additions:

By purchase 191 143 13 347Reclassification ( 344) 317 27 - Depreciation/amortisation expense ( 290) ( 166) ( 8) ( 464)Other movements:

Adjust 1 July 08 opening balances:Gross book value ( 89) ( 171) - ( 260)

Accumulateddepreciation/amortisation 89 171 - 260

Other disposals ( 41) ( 7) - ( 48)Net book value 30 June 2009 1 526 562 32 2 120

Net book value as of 30 June 2009 represented by:Gross book value 1 992 799 40 2 831

Accumulated depreciation/amortisation and impairment ( 466) ( 237) ( 8) ( 711)

1 526 562 32 2 120

Table A - Reconciliation of the opening and closing balances of property, plant and equipment (2008-09)


206


7.3 Analysis of Property, Plant and Equipment continued

LeaseholdImprovements

OtherIP and E Software Total

$’000 $’000 $’000 $’000As at 1 July 2007Gross book value 725 453 - 1 178Accumulated depreciation/amortisation and impairment - ( 137) - ( 137)Net book value 1 July 2007 725 316 - 1 041Additions:

By purchase 1 557 66 - 1 623

Revaluations and impairments through equity - 1 - 1Depreciation/amortisation expense ( 265) ( 105) - ( 370)Other movements (give details below):

Other disposals ( 6) ( 4) - ( 10)Net book value 30 June 2008 2 011 274 - 2 285

Net book value as of 30 June 2008 represented by:Gross book value 2 275 516 - 2 791

Accumulated depreciation/amortisation and impairment ( 265) ( 241) - ( 506)

2 010 275 - 2 285

Table B - Reconciliation of the opening and closing balances of property, plant and equipment (2007-08)


207


2009 2008$’000 $’000

Note 8 Payables

8.1 SuppliersTrade Creditors 163 1 113Total supplier payables 163 1 113

Supplier payables - related entities are represented by:Current 163 1 113Non-current - -

Total supplier payables 163 1 113

Settlement is usually made net 30 days.

8.2 Other Payables GST payable to the Australian Taxation Office 309 443Accrued Expenses 98 - Accrued Salaries 126 - Unearned Revenue - 2 070Lease Payable 570 - Total other payables 1 103 2 513

Note 9 Provisions

9.1 Employee ProvisionsLeave 959 761Other 8 84Total employee provisions 967 845

Employee provisions are represented by:Current 629 530Non-current 338 315

Total employee provisions 967 845


208


Notes 2009 2008$'000 $'000

Note 10 Cash Flow Reconciliation

Reconciliation of cash and cash equivalents as per Balance Sheet to Cash Flow Statement

Report cash and cash equivalents as per:Cash flow statement 2 593 1 374Balance sheet 2 593 1 374Difference - -

Reconciliation of operating result to net cash from operating activities:Operating result 1 082 90Depreciation / amortisation 464 370Loss/(gain) on disposal of assets 7 ( 10)(Increase)/decrease in net receivables 2 320 (1 268)Decrease in prepayments 46 49Decrease in GST receivable 243 - (Increase)/decrease in accrued revenue ( 401) - Increase/(decrease) in employee provisions 122 ( 206)Increase/(decrease) in supplier payables ( 950) 2 438Increase/(decrease) in accrued expenses 98 - Increase/(decrease) in accrued salaries 126 - Increase/(decrease) in GST payable ( 134) - Increase/(decrease) in unearned revenue (2 070) - (Increase)/decrease in other payables 570 - Net cash from operating activities 1 523 1 463


209


2009 2008

Note 11 Senior Executive Remuneration

The number of senior executives who received or were due to receive total remuneration of $130,000 or more:

$130 000 to $144 999 - -$145 000 to $159 999 - 1$160 000 to $174 999 2 -$175 000 to $189 999 1 1$250 000 to $264 999 - 1$265 000 to $279 999 1 -$355 000 to $369 999 - 1$400 000 to $414 999 - 1$450 000 to $464 999 1 -$550 000 to $564 999 - 1$600 000 to $614 999 1 -$685 000 to $699 999 1$805 000 to $819 999 - 1Total 7 7

2009 2008$'000 $'000

The aggregate amount of total remuneration of senior executives shown above. 2 550 2 136

Note 12 Trustee Remuneration 2009 2008

The number of trustees who received remuneration during the financial year fell within the following bands:

$0 to $14 999 1 3$15 000 to $29 999 - 2$30 000 to $44 999 - 2$45 000 to $59 999 4 2$60 000 to $74 999 1 1$90 000 to $104 999 1 1Total 7 11

2009 2008$'000 $'000

The aggregate amount of total remuneration of trustees shown above. 376 425


210


2009 2008$'000 $'000

Note 13 Remuneration of Auditors

24 20

The fair value of non-audit services provided by Deloitte:

Tax services - International 10 -

Deloitte Touche Tohmatsu (Deloitte) have been contracted by the ANAO to provide audit services to the agency. Fees for these services are included above. The ANAO also contracted Deloitte to provide audit services to ARIA Board which are not included in the above resources received free of charge. These services relate to the Australian Financial Services Licence to the value of $5,520.

Financial statement audit services were provided free of charge to ARIA.

The fair value of the services provided was:

No other services were provided by the Auditor-General.


211


2009 2008$'000 $'000

Note 14 Financial Instruments

14.1 Categories of Financial Instruments

Financial AssetsLoans and receivables:

Cash and cash equivalents 6.1 2 593 1 374Trade and other receivables 6.2 1 114 3 277

Carrying amount of financial assets 3 707 4 651

Financial LiabilitiesOther financial liabilities at amortised cost:

Supplier payables 8.1 163 1 113Accrued Expenses 8.2 98 - Accrued Salaries 8.2 126 - Operating Lease Payable 8.2 570 -

Carrying amount of financial liabilities 957 1 113

14.2 Net Income and Expense from Financial AssetsThere is no interest income from financial assets.

14.3 Net Income and Expense from Financial LiabilitiesThere is no interest expense on financial liabilities.

14.4 Fair Value of Financial InstrumentsThe financial instruments held by ARIA are carried at amounts which approximate fair value.


212


Note 14 Financial Instruments continued

14.5 Credit Risk

2009 2008$'000 $'000


Cash and cash equivalents 2 593 1 374Trade and other receivables 1 114 3 277

Total Financial Assets 3 707 4 651

2009 2008 2009 2008$'000 $'000 $'000 $'000

Notpasseddue or

impaired

Notpasseddue or

impaired

Passeddue or

impaired

Passeddue or

impaired


Cash and cash equivalents 2 593 1 374 - - Trade and other receivables 1 114 3 277 - -

Total Financial Assets 3 707 4 651 - -

ARIA holds cash balances with the Reserve Bank of Australia, and credit exposures are usually limited to the ARIA Investments Trust and Australian Government agencies. These parties are considered to have nil credit risk to ARIA. ARIA has no outstanding debt obligations beyond 30 days short-term obligations to trade creditors and would receive no nominal gain or loss due to changes in credit rating by the market.

The following table illustrates ARIA's gross exposure to credit risk, excluding any collateral or credit enhancements.

Credit quality of financial instruments not past due or individually determined as impaired:


213


Note 14 Financial Instruments continued

14.6 Liquidity Risk

Ondemand

2009$'000

within 1year2009$'000

1 to 2years2009$'000

2 to 5years2009$'000

> 5years2009$'000

Total2009$'000

Other financial liabilitiesSupplier payables - 163 - - - 163Accrued expenses - 98 - - - 98Accrued Salaries - 126 - - - 126Lease Payable - 186 85 256 43 570

Total - 573 85 256 43 956

Ondemand

2008$'000

within 1year2008$'000

1 to 2years2008$'000

2 to 5years2008$'000

> 5years2008$'000

Total2008$'000

Other financial liabilitiesSupplier payables - 1 113 - - - 1 113Accrued expenses - - - - - - Accrued Salaries - - - - - - Lease Payable - - - - - -

Total - 1 113 - - - 1 113

ARIA cash receipts are primarily received from the ARIA Investments Trust and Australian Government agencies. These parties are considered to have nil liquidity risk to ARIA . ARIA expects to meet obligations associated with the financial liabilities as they arise.


214


Note 15 Special Accounts

ARIA Special Account (Departmental)Legal Authority:

Appropriation:

Purpose:

2009 2008$'000 $'000 1 374 1 514

- - 17 751 14 574

831 1 591- - - -

19 956 17 679

8 888 7 779 6 868 6 924 1 303 -

304 1 602- - - -

17 363 16 305

2 593 1 374- -

2 593 1 374 2 593 1 374

Cash – held by the agencyTotal balance carried to the next period

Repayments debited from the special accountp (section 39)Total debitsBalance carried to next period (excluding investment balances) and represented by:Cash - transferred to the Official Public Account

SuppliersGST paidPurchase of property, plant and equipment

Realised investmentsOther receiptsTotal creditsPayments made:

Financial Management and Accountability Determination; 2007/04Financial Management and Accountability Act 1997 ;section 21For ARIA to administer the expenditure related to the administration of the CSS, PSS and PSSap Schemes

Employees

Balance carried from previous periodAppropriation for reporting periodCosts recoveredGST credits (FMA Act section 30A)


215


2009 2008$'000 $'000

Note 16 Assets Held in Trust

CSSOpening balance 6 099 733 6 817 110Closing balance 4 753 314 6 099 733

PSSOpening balance 11 423 724 11 293 074Closing balance 10 038 966 11 423 724

PSSapOpening balance 967 540 520 445Closing balance 1 317 828 967 540

Shown below are the values of gross assets held in trust by ARIA in its capacity as trustee of the CSS, PSS and PSSap superannuation schemes.


216


Note 17 Reporting of Outcomes

17.1 Net Cost of Outcome Delivery

2009 2008$’000 $’000

ExpensesDepartmental 15 675 14 358Total expenses 15 675 14 358Costs recovered from provision of goods and services to the non government sectorDepartmental 16 757 14 448Total costs recovered 16 757 14 448Other external incomeDepartmental - - Total other external income - - Net cost/(contribution) of outcome ( 1 082) ( 90)

17.2

Outcome 1 2009 2008$’000 $’000

Departmental ExpensesEmployee benefits 9 259 8 007Suppliers 5 945 5 971Depreciation and amortisation 464 370Losses from asset sales 7 10Total departmental expenses 15 675 14 358Funded by:Departmental IncomeSale of goods and rendering of services 16 733 14 428Other Gains 24 20Total departmental income 16 757 14 448

ARIA receives departmental funding which is to be used solely for the Outcome specified in Note 1.1.

Outcome 1

Major Classes of Departmental Income and Expenses by Output Groups and Outputs


217


Note 17 Reporting of Outcomes (continued)

17.3

Outcome 1 2009 2008$’000 $’000

Departmental AssetsCash and Cash Equivalents 2 593 1 374Trade and Other Receivables 1 114 2 962Other Financial Assets 63 109Infrastructure, Plant and Equipment 2 088 275Intangibles 32 - Total departmental assets 5 890 4 719

Departmental LiabilitiesSuppliers 163 1 113Other Payables 1 103 2 513Employee Provisions 967 845Total departmental liabilities 2 233 4 470

Major Classes of Departmental Assets and Liabilities by Outcomes

13. AppendicesAppendix A: Changes to legislation

Appendix B: Organisation chart

Appendix C: Functional chart

Appendix D: Access to information

Appendix E: Publications

Appendix F: Contact officer

Appendix G: Compliance

Appendix H: New consultancies

Appendix I: Advertising and market research

Appendix J: Commonwealth Disability Strategy

Appendix K: Summary resource table by outcomes

Appendix L: Glossary


220

Appendix A: Changes to legislation

Changes to legislation

The Superannuation Act 1976 (CSS Act)

The Same-Sex Relationships (Equal Treatment in Commonwealth Laws-Superannuation) Act 2008 amended the CSS Act to broaden the scope and definition of marital and couple relationships to include same-sex relationships, and to recognise these partners, and children of these partnerships, as dependents eligible for superannuation benefits. Previously the only legally recognised relationships were marriage, or marriage-like relationships between people of different genders. These amendments had effect from 1 January 2009.

The Superannuation Act 1990 (PSS Act)

There have been no amendments to the PSS Act. The Thirty-Third Amending Deed to the PSS Trust Deed made a number of minor amendments and changes, including consequential amendments as a result of the Fair Work Act 2009 and changes to the Superannuation Industry (Supervision) Regulations 1994, relating to payments to temporary residents departing Australia and contributions that must be paid by employers during a member’s period of leave without pay. The amendments also include allowing co-contributions for preserved benefit members, but only in relation to periods where the person was a contributing member.

The Superannuation Act 2005 (PSSap Act)

There have been no amendments to the PSSap Act. There have been no amendments to the PSSap Trust Deed. There was a Fourth Amending Deed made to the PSSap Trust Deed similar to the PSS Thirty-Third Amending Deed (above).


221

Appendix B: Organisation chart

Organisation chart

The Trustee Board and ChairmanSusan Doyle

Chief Executive OfficerLochiel Crafter

Chief Investment OfficerAlison Tarditi

Chief Operating OfficerPeter Carrigy-Ryan

Investment operations

Board services

Finance

Communications

Legal and risk

Policy and projects

Business services

Human resources

Investment strategy and policy

Fund analysis

Investment performance

Manager assessment and review

Manager monitoring and relationship

Investment governance

Transaction analysis and assessment

(alternatives)

Investment Strategy and Policy

Investment Performance

Manager Assessment and Review

Investment and Corporate Governance

Fund Analysis


222

Appendix C: Functional chart

Functional chart

Custodian

ARIA

Funds

Memberpayments

Employerproductivity

contributions

Investment

Investmentmanagers

Administration

Benefit payments

Safekeeping of assets

Transaction processing

Fundaccounting

Memberrecords

Benefitinformation


223

Appendix D: Access to information

Access to information

Freedom of information

Organisation, functions and decision making powers

ARIA’s functions and powers are set out in sections 27C and 27D of the Superannuation Act 1976 (CSS Act), clause 3 of the PSS Trust Deed and clause 3 of the PSSap Trust Deed.

The general functions of the administrator of CSS, PSS and PSSap, ComSuper, are described in the main body of this report and detailed in the Commissioner for Superannuation Annual Report 2008/09.

The authority for ARIA to delegate its powers and functions is contained in section 27Q of the CSS Act, clause 12 of the PSS Trust Deed and clause 8 of the PSSap Trust Deed.

Informal consultative arrangements

Informal arrangements exist whereby the national, state and territory branches of the Superannuated Commonwealth Officers’ Association (SCOA) and those unions whose members are covered by the CSS, PSS and PSSap may make representations relating to the general administration of the schemes.

Representations are also received which relate to the determination of individual contributors’ benefit entitlements.

Requests for consultation and/or representations relating to policy aspects of the schemes and their underlying legislation are referred to the Financial Framework Division of the Department of Finance and Deregulation, which has responsibility for advising the Minister for Finance and Deregulation on such matters.

Categories of documents

In accordance with an enactment, other than the Freedom of Information Act 1982 (FOI Act) where access is subject to a fee or other charge, ARIA does not maintain any categories of documents that are open to public access as part of a public register or otherwise. Books and fact sheets that describe various aspects of the superannuation schemes, and annual reports, are made available to the public free of charge upon request. They are also available free of charge via the ARIA website. ComSuper keeps and maintains member records.

Facilities for access

Facilities for viewing member records and other documents are provided at ComSuper’s office in Canberra. Publications may be inspected at ComSuper’s offices and copies (for which there may be a charge) can be obtained by writing to ComSuper. Information about facilities for access by people with a disability can be obtained by contacting the Freedom of Information (FOI) Unit.


224

Appendix D: Access to information – cont’

Freedom of information procedures

Matters associated with the administration of the FOI Act, in so far as they relate to members and their information, are dealt with by ComSuper’s FOI Unit.

Enquiries relating to the disclosure of information about members of the CSS, PSS and PSSap, under the provisions of the FOI Act should be directed in writing to:

Postal address FOI Unit ComSuper PO Box 22 Belconnen ACT 2616

Phone 02 6272 9080

Fax 02 6272 9001

TTY 02 6272 9827


Decisions to grant access, levy charges, or refuse access are made by an appropriate delegate in the FOI Unit.

Table A1: Freedom of information requests 2008/09

CSS PSS PSSap Total

Total number of requests 45 46 0 91

Number fully granted 42 44 0 86

Number partially granted 2 2 0 4

Number refused 1 0 0 1

Number transferred to other agencies 0 0 0 0

Number of requests for internal review under section 154 0 0 0 0

Number of appeals lodged with the AAT (section IV of the FOI Act) 1 1 0 2


225

Appendix E: Publications

Publications ARIA publishes the following communications, publications and fact sheets for the benefit of members. In addition to those publications listed below there are also employer training notes, calculators and a wide range of other tools and information for members available online.

All of the below publications are available by calling our customer service centre or online at the relevant scheme website.

Annual reports

ARIA annual report to parliament Annual reports to members ARIA annual trustee report

Newsletters

Employer news – issued monthly via email and online Aspire... your super update – issued quarterly online Pensioner news – issued twice a year via mail

Pensions

Death benefits Good news about completing your tax return Tax and your CSS benefit Tax and your PSS benefit Service charter of the scheme administrator ComSuper Superannuation contributions surcharge Taxation concessions for pensions (applies to financial year 2008/09)

Employers

Quick guides

Membership eligibility Part-time members What to do in the case of a contributing member’s death Casuals Continuous service and membership numbers How to complete departmental reports for CSS and PSS members Tax file numbers 0% member contributions in the CSS and PSS Salary reductions Transition to retirement (CSS only)


226

Appendix E: Publications – cont’

Quick guides – cont’

Part time members (CSS only) Commencing new members (PSSap only) Ceasing members (PSSap only) Changes to MBLs from 1 January 2008 (PSS only) PSS members ceasing scheme membership – administration arrangements PSS members electing to cease membership

Training notes

PSSap training notes

Employer training manual

PSS training notes

Contributions Employer productivity superannuation General benefit accrual Medical status Membership Part-time and casual membership Reduction in salary Salary for superannuation Shift allowance

CSS training notes

Contributions Employer productivity superannuation General benefit accrual Membership Permanent part time membership Reduction in salary

Other

Employer services online


227


CSS

Publications

Financial services guide CSS product disclosure statement CSS benefit tables Family law and splitting super: how it’s done and what happens next Service charter of the scheme administrator ComSuper Market volatility and your super – 6 steps to guide you through (Contributing member)Market volatility and your super – 6 steps to guide you through (Deferred member)

Fact sheets

Accessing your super information online Age retirement benefits Allocation of CSS fund earnings Cash Investment Option Changing from permanent full-time to permanent part-time Contributing to the CSS Death benefits Early access to superannuation benefits How the 1 July 2007 changes affect you in the CSS How the 1 July 2007 changes affect you in the CSS (deferred) Invalidity benefits Leave without pay Postponement of benefits Preservation of benefits Retrenchment Salary reduction and your super Super co-contributions Supplementary contributions Superannuation contributions surcharge Tax and your CSS benefit Taxation concessions for pensions (applies to financial year 2008/09) Rolling money into the CSS Transition to retirement


228


PSS

Publications

Financial services guide PSS product disclosure statement (including supplementary dated 5 February 2008) The PSS super book: your guide to the PSS Service charter of the scheme administrator ComSuper Market volatility and your super – 6 steps to guide you through (Contributing member) Market volatility and your super – 6 steps to guide you through (Preserved member) Family law and splitting super: how it’s done and what happens next

Fact Sheets

Additional death and invalidity cover Allocation of PSS fund earnings Cash Investment Option for preserved benefit and associate members Ceasing PSS membership Changing from full-time to part-time Contributing to the PSS Death benefits Early access for superannuation benefits Getting info online How the 1 July 2007 changes affect you in the PSS (contributor) How the 1 July 2007 changes affect you in the PSS (preserver) Invalidity benefits Leave without pay Maximum benefit limits Multiple PSS memberships Pensions for an eligible spouse Rolling money into the PSS Retrenchment benefits Salary reductions and your PSS super Super co-contributions Superannuation contributions surcharge Tax and your PSS benefit Taxation concessions for pensions (applies to financial year 2008/09) Transition to retirement


229


PSSap

Publications

PSSap product disclosure statement Financial services guide Your quick guide to the PSSap Market volatility and your super – 6 steps to guide you through

Fact Sheets

Beneficiary nomination How the 1 July 2007 changes affect you in the PSSap Contributions Dependants Income protection claims Insurance Super co-contributions Superannuation salary Tax and your super Transfers Type of employment Withdrawing your super


230

Appendix F: Contact officer

Contact officerInformation relating to ARIA, or the schemes it manages, is made available to Members of Parliament, Senators and members of the public on request.

In the interests of timeliness and conciseness, this report has been designed to provide fundamental information. Requests for more detailed information should be directed to:

Web www.aria.gov.au

Street address ARIA Level 10 12 Moore Street Canberra City ACT 2601

Postal address ARIA GPO Box 1907 Canberra City ACT 2601

Phone 02 6263 6999

Fax 02 6263 6900

TTY 02 6272 9827



231

Appendix G: Compliance

ComplianceWhile this report is not a departmental annual report, ARIA has endeavoured to comply with the ‘Requirements for Annual Reports’, where applicable. Details of the scheme administrator’s (ComSuper) operations are provided separately in the Commissioner for Superannuation Annual Report 2008/09.

Description Requirement Page

Letter of transmittal Mandatory v

Table of contents Mandatory viii

Index Mandatory 241

Glossary Mandatory 239

Contact officer(s) Mandatory ii, 29, 224, 230

Internet home page address and internet address for report Mandatory ii

Review by departmental secretary Mandatory xvi

Summary of significant issues and developments Suggested xvii, 23

Overview of department’s performance and financial results Suggested 7-8, 24-29

Outlook for following year Suggested xix

Overview description of department Mandatory 12-15, 222

Role and functions Mandatory 2, 6, 18, 222

Organisational structure Mandatory 2, 221, 222

Outcome and output structure Mandatory 10

Where outcome and output structures differ from PBS format, details of variation and reasons for change

Mandatory -

Review of performance during the year in relation to outputs and contribution outcomes

Mandatory 10, 24-29, 238

Actual performance in relation to performance targets set out in PBS/PAES

Mandatory 10, 24-29, 238

Performance of purchaser/provider arrangements Mandatory 18-19

Where performance targets differ from the PBS/PAES, details of both former and new targets, and reasons for the change

Mandatory -

Narrative discussion and analysis of performance Mandatory 7-8, 23-29

Trend information Suggested 35, 39

Factors, events or trends influencing departmental performance Suggested 23-26


232

Appendix G: Compliance – cont’


Significant changes in nature of principal functions/services Suggested -

Performance against service charter customer service standards, complaints data, and the department’s response to complaints

Mandatory 37-42

Social justice and equity impacts Suggested -

Discussion and analysis of the department’s financial performance Mandatory 7-8

Discussion of any significant changes from the prior year or from budget

Suggested xiii, xvii, 23-29

Agency resource statement and summary resource tables by outcomes

Mandatory 238

Developments since the end of the financial year that have affected or may significantly affect the department’s operations or financial results in future

Mandatory xix

Statement of the main corporate governance practices in place Mandatory xviii, 9-10, 31

Names of the senior executive and their responsibilities Suggested 221

Senior management committees and their roles Suggested -

Corporate and operational planning and associated performance reporting and review

Suggested 6, 23-29

Approach adopted to identifying areas of significant financial or operational risk and arrangements in place to manage risks

Suggested 9-10

Agency heads are required to certify that their agency comply with the Commonwealth Fraud Control Guidelines

Mandatory 10

Policy and practices on the establishment and maintenance of appropriate ethical standards

Suggested 31

How nature and amount of remuneration for SES officers is determined

Suggested 6

Significant developments in external scrutiny Mandatory 14-15

Judicial decisions and decisions of administrative tribunals Mandatory 41

Reports by the Auditor-General, a Parliamentary Committee or the Commonwealth Ombudsman

Mandatory 42

Assessment of effectiveness in managing and developing human resources to achieve departmental objectives

Mandatory 6-7

Workforce planning, staff turnover and retention Suggested 6

Impact and features of collective agreements, determinations, common law contracts and AWAs

Suggested 6

Training and development undertaken and its impact Suggested 7


233

Appendix G: Compliance – cont’


Occupational health and safety performance Suggested 7

Productivity gains Suggested -

Statistics on staffing Mandatory 6

Certified agreements, determinations, common law contracts and AWAs Mandatory 6

Performance pay Mandatory 6

Assessment of effectiveness of assets management Mandatory 8

Assessment of purchasing against core policies and principles Mandatory 8

Summary statement detailing new consultancy services contracts let during the year

Mandatory 234-235

Absence of provisions in contracts allowing access by the Auditor-General

Mandatory -

Contracts exempt from the AusTender Mandatory 234

Report on performance in implementing the Commonwealth Disability Strategy

Mandatory 237

Financial statements Mandatory 43, 87, 149, 183

Occupational health and safety (section 74 of the Occupational Health and Safety Act 1991)

Mandatory 7

Freedom of Information (subsection 8 (1) of the Freedom of Information Act 1982)

Mandatory 223

Advertising and Market Research (Section 311A of the Commonwealth Electoral Act 1918)

Mandatory 236

Ecologically sustainable development and environmental performance (Section 516A of the Environment Protection and Biodiversity Conservation Act 1999)

Mandatory 8

Grant programs Mandatory -

Correction of material errors in previous annual report Mandatory -


234

Appendix H: New consultancies

New consultanciesARIA engages consultants where a specialist skill or expertise is required or where internal resources are unavailable. Consultants are typically engaged to:

investigate or diagnose a defined issue >

carry out defined reviews or evaluations >

provide independent advice, information or solutions to assist ARIA in its >decision making.

These consultancies have been distinguished from other service provider contracts by the nature of the work performed, which typically involves the application of expert professional skills and the exercising of expert judgement.

ARIA administration consultancies

Policy

ARIA’s policy on selection and engagement of consultants accords with its purchasing principles and policies outlined in Section 5 – Trustees.

Table A2 provides details of consultancies engaged by ARIA during 2008/09 with a contract value, GST inclusive, of $10 000 or more.

This list includes contracts referring to the administration of the funds and excludes contracts related to the management and investment of the three funds.

Table A2: New consultancies 2008/09

Consultant name DescriptionValue

$Selection

methodPrinciple

justification

W & K Robinson Consulting Pty Ltd

Provision of HR advice 29 381* Direct sourcing B

Egan Associates Provision of HR advice 22 423 Direct sourcing B

Total new consultancies 51 804

*Amount paid under the contract for 2008/09


235

Appendix H: New consultancies – cont’

Selection method categories The selection methods used for consultancies are categorised as follows:

Justification categories

A Need for access to the latest technology.

Open tender

Public tenders are sought from the marketplace using national and major metropolitan newspaper advertising.

B Need for specialised skills.

Select tender

Tenders are invited from a short list of competent suppliers.

C Need for an independent view.

Direct sourcing

Single supplier invited to bid reflecting unique qualifications or circumstances.


236

Appendix I: Advertising and market research

Advertising and market researchIn respect of public moneys, during 2008/09 the expenditure for advertising and market research on contracts individually more than $10 900 (inclusive of GST) amounted to $76 828 (inclusive of GST).

The following list contains details of payments, as required under section 311A of the Commonwealth Electoral Act 1918. All amounts include GST.

Table A3: Advertising and market research expenditure 2008/09

Organisation Purpose Expenditure $

Orima Research Pty Ltd Member statement survey 27 145

Telstra White pages advertisements 49 683

Total 76 828


237

Appendix J: Commonwealth Disability Strategy

Commonwealth Disability StrategyWithin the framework of the Commonwealth Disability Strategy, ARIA performs the role of ‘provider’ with performance measured against the following indicators:

providers have established mechanisms for quality improvement and assurance >

providers have an established > service charter that specifies the roles of the provider and consumer, and service standards which address accessibility for people with disabilities

a > complaints/grievance mechanism, including access to external mechanisms, is in place to address issues and concerns raised about performance.

In conjunction with the scheme administrator (ComSuper), ARIA met all the requirements of the Commonwealth Disability Strategy in its role as provider.

Quality improvement and assurance mechanisms were in place during the year in the form of a client satisfaction survey conducted both by ARIA, through independent research firm Orima Research, and by the scheme administrator, which conducts an annual cyclical research program, also through Orima Research.

Through the scheme administrator, members have access to:

a > TTY phone line

a > service charter specifying the roles and responsibilities of both the scheme administrator and its clients

a > complaints system to address issues and concerns raised by members.

Both ARIA and ComSuper’s offices have wheelchair access and facilities.


238

Appendix K: Summary resource table by outcomes

Summary resource table by outcomesOutcome 1 – Effective and efficient administration of Australian Government

superannuation schemes

Budget Actual expenses

Variation Budget

2008/09 $’000

2008/09 $’000

$’000 2009/10 $’000

Price of departmental outputs

Output Group 1.1 – Superannuation scheme governance

Revenue from other sources 17 729 15 675 2 054 16 937

Total price of Outputs 17 729 15 675 2 054 16 937

Total for Outcome 1 17 729 15 675 2 054 16 937

2008/09 2009/10

Average staffing level 45.0 47


239

Appendix L: Glossary

Glossary

AAS25 Australian Accounting Standard 25

AASB Australian Accounting Standards Board

AAT Administrative Appeals Tribunal

ABN Australian business number

ACTU Australian Council of Trade Unions

administrator ComSuper, Commissioner for Superannuation

AD(JR) Act Administrative Decisions (Judicial Review) Act 1977

AFS Australian Financial Services

ANAO Australian National Audit Office

AO Officer of the Order of Australia

APRA Australian Prudential Regulation Authority

ARIA Australian Reward Investment Alliance

ASFA Association of Superannuation Funds of Australia

ASIC Australian Securities and Investments Commission

ASX Australian Stock Exchange

ATO Australian Taxation Office

AWA Australian workplace agreement

BZW Barclays der Zoete Wedd

CEO Chief Executive Officer

CPI Consumer Price index

CPSU Community and Public Sector Union

CPSUSF Community and Public Sector Union Superannuation Trust Fund

CRF Consolidated Revenue Fund

CSS Commonwealth Superannuation Scheme

CSS Act Superannuation Act 1976

FASFA Fellow of the Association of Superannuation Funds of Australia

FBT Fringe benefit tax

FMA Act Financial Management and Accountability Act 1997

FOI Freedom of information

GAS Governance Advisory Service

GST Goods and services tax

HTML Hypertext Markup Language

HTTP Hypertext Transfer Protocol

IAG Insurance Australia Group Limited

i-Estimator Online tool for scheme members

IPP Information Privacy Principles

ISBN International Standard Book Number


240

Appendix L: Glossary – cont’

ISSN International Standard Serial Number

MBL Maximum Benefit Limit

MSCI Morgan Stanley Capital International Inc

OECD Organisation for Economic Co-operation and Development

p.a. per annum

PBS Portfolio Budget Statement

PAES Portfolio Additional Estimates Statements

PDS Product Disclosure Statement

PHIAC Private Health Insurance Administration Council

PSS Public Sector Superannuation (scheme)

PSS Act Superannuation Act 1990

PSSap Public Sector Superannuation accumulation plan

PSSap Act Superannuation Act 2005

PRI Principles for Responsible Investment

RAC Reconsideration Advisory Committee

RSE Registrable Superannuation Entity

S&P Standard and Poor’s

SCT Superannuation Complaints Tribunal

SES Senior executive service

SIS Act Superannuation Industry (Supervision) Act 1993

SPIN Superannuation Product Identification Number

SRC Act Superannuation (Resolution of Complaints) Act 1993

TTY Text Telephone (tele-typewriter)

UN United Nations

WC3 World Wide Web Consortium

14. Index


242

Index

Symbols452 Capital Pty Limited 191922 Act 34, 38

AAAS 25 47, 50, 51, 91, 94, 95, 103, 153, 157, 239AASB 51, 95, 97, 103, 158, 193, 195, 239AAT 224, 239ABM 12ABN iv, 2, 47, 50, 91, 94, 153, 157, 192, 239accessibility 237accounting standards see AASBaccrued benefit multiple (ABM) 12accumulation plan vii, 12, 13, 14, 78, 111 153, 157, 192, 240ACE insurance 200ACT Ministerial Advisory Council on Women 3ACTU 2, 3, 76, 239actual asset allocation 22actuarial 15 projection 15 review 14, 15address ii, 29, 224, 230, 231Adelaide Bank 2AD(JR) Act 41, 239administration xiii, xv, xvii, xviii, xix, 6, 7, v, 9, 10, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 223, 224, 226, 234, 238 fee 7Administrative Appeals Tribunal 5, 239Administrative Decisions (Judicial Review) Act 1977 41, 239 see also AD(JR) Actadministrator ii, xviii, 18, 30, 33, 36, 37, 39, 223, 225, 227, 228, 231, 237, 239advertising 219, 233, 236AFS 9, 10, 239aggressive 21, 22, 25, 29aggressive option 25allocated 30alternative investments 23alternatives 22, 27, 28Altius Associates 18AMP Capital Investors Limited 19

appropriations from the CRF 34APRA 7, 9, 10, 239APRA licence 7, 9, 10Arcadia Funds Management Limited 19ARIA Alternative Assests Trust 140 beneficiaries 32 employees 1, 6, 7 fees 61 Investments Trust (AIT) 60, 65, 69, 121, 126, 132, 173, 176, 177 Long Short Trust 140 Property Fund 140 trustees xiii, xviii, 2 see also TrusteeASFA 239ASIC 10, 239asset 18 allocation 22 class 22 management 8Association of Superannuation Funds of Australia 3,4, 239ASX 200 21ASX 300 Accumulation Index 23, 25ASX 300 ex Listed Property Trust Accumulation 23Attorney General’s Department iiAt Work for You xviii, 36audit 10 Audit and Risk Management Committee 3, 4, 5, 9, 10 fee 64, 119, 170 internal 10 plan 10auditor 232, 233audits 10Aurora Investment Management LLC 19Australian Accounting Standards 239Australian and Asian private equity 18Australian Bureau of Statistics 4Australian Council of Trade Unions 2, 239 see also ACTUAustralian dollar 24, 26Australian equities 23, 24, 25, 31Australian equity 22, 27, 28Australian equity investments 31Australian Financial Services (AFS) 9, 10, 210, 239Australian Government xvii, 10, 14, 15, 238


243

Index

Australian National Audit Office 44, 45, 46, 64, 88, 89, 90, 119, 150, 151, 152, 170, 239Australian private equity 23, 27, 28Australian Reward Investment Alliance v Superannuation Complaints Tribunal [2008] FCA 1548 41Australian Securities and Investments Commission (ASIC) 10, 239Australian shares 21, 25, 27, 28, 29, 179, 180Australian Taxation Office 57, 72, 105, 120, 163, 200, 203, 207, 239Australian Teleservices Association xviii, 36AXA Rosenberg Investment Management Ltd 19

BBalanced Equity Management Pty Ltd 19Balanced option 25Barclays Global Investors Australia Limited 19, 25benefit ix, xiii, xvii, xix, 12, 13, 15, 19, 20, 34, 37, 38, 41, 50, 53, 56, 59, 62, 65, 68, 72, 73, 74, 75, 78, 94, 99, 100, 104, 109, 114, 120, 121, 134, 135, 136, 141, 157, 159, 162, 173, 175, 181, 195, 199, 220, 222, 223, 225, 226, 227, 228, 239, 240 entitlements 41, 78, 141, 181, 223 payments ix, 37, 38, 50, 53, 65, 68, 73, 75, 94, 99, 121, 134, 136, 157, 159, 173, 175, 222benefits paid 48, 60, 62, 72, 92, 110, 113, 120, 156 payable 15, 49, 53, 59, 68, 74, 75, 93, 100, 109, 124, 125, 129, 130, 135, 136, 155, 160, 168, 176BlackRock Financial Management 19bonds 21, 23, 24, 26, 29, 179, 180Brazil 4breaches 9breach policy 9Bridgewater Associates, Inc 19budget xvii, 7, 232, 238, 240business plan 6, 9BZW Australia 2

CCarbon Disclosure Project 8cash ix, xiii, xvi, 20, 21, 22, 24, 25-30, 49, 52, 53, 54, 65, 67-70, 71, 76, 93, 99, 101, 102, 106, 118, 121, 122, 123, 124, 125, 128, 129, 130, 132, 133, 136, 153, 155, 156, 159, 161, 168, 173, 174, 175, 176, 177, 178, 179, 180, 188, 189, 195, 196, 197, 199, 203, 208, 211, 212, 213, 214, 217, 227, 228Cash Investment Options xiii, xvi, 20, 24Chairman v, xiii, 2, 4, 5, 7, 47, 76, 91, 137, 153, 171, 186, 193, 194, 221Chief executive instructions 8 officer xix, 10, 77, 138, 171, 186, 221, 239Chubb 200claims against ARIA 41client satisfaction survey 237Climate change 8code of conduct 9Colonial First State Property Limited 19Comcare 7, 200Commissioner for Superannuation ii, 61 165, 223, 231, 239 see also ComSuperCommissioner for Superannuation Annual Report 2008/09 223, 231committee viii, ix, 1, 3, 4, 5, 9, 10, 39, 232, 240Commonwealth Authorities and Companies orders (Financial statements for reporting periods ending on or after 1 July 2008) 47, 50, 91, 94, 153, 157Commonwealth Copyright Administration iiCommonwealth Disability Strategy viii, 219, 237Commonwealth Electoral Act 1918 233, 236Commonwealth Fraud Control Guidelines 10, 232Commonwealth Funds Management 2, 140Commonwealth Ombudsman 41, 232Commonwealth Procurement Guidelines 8communication viii, 6, 33, 36


244

Index

Community and Public Sector Union (CPSU) 3, 239Compensation 7, 41, 77, 138, 139, 171, 172, 200, 202complaints ix, 39, 40, 41, 42, 232, 237, 240compliance viii, 6, 9, 10, 11, 14, 50, 51, 65, 94, 95, 121, 157, 158, 173, 219, 231, 232, 233 programs 9ComSuper ii, xiii, 10, 37, 39, 223, 224, 225, 227, 228, 231, 237, 239 see also administratorconcessional rate 7, 14Concord Capital Limited 19Conservative 21, 22, 25, 26, 29, 179, 180 Option 25consolidated revenue 12, 20Consolidated Revenue Fund 48, 49, 59, 60, 72, 75, 93, 109, 110, 120, 136, 239consultancies viii, ix, 219, 234, 235consultancy contracts 8consultants 8, 111, 234Consumer Price Index 21, 239Contact officer viii, 219, 230, 231contract 65, 67, 103, 121, 173, 174, 196, 234contributions xvii, xix, 12, 13, 14, 15, 20, 34, 37, 44-217, 220, 225, 227, 228 received 34contributors 34, 37, 64, 117, 223Copyright Act 1968 iicorporate governance viii, 17, 31, 232Corporations Act 2001 2, 10, 47, 91, 153costs of administration 44-217CPSUSF 239crediting rate policy 20crediting rates 73, 134credit risk 66, 67, 122, 123, 174-175, 212CSS i, ii, v, viii, ix, xiii, xvi, xvii, xviii, xix, 2, 6, 7, 12, 14, 15, 18, 19, 20, 22, 24, 27, 30, 31, 34, 35, 36, 37, 38, 40, 42-86, 101, 117, 118, 140, 192, 194, 195, 214, 215, 220, 223-227, 239, 253CSS Act v, xix, 220, 223, 239CSS Default Fund xiii, xvi, 19, 22, 24, 27CSS Fund 18, 47, 50, 59, 60, 61, 101, 117, 192, 194, 227

CSS Long Term Cost Report 14, 15custodian 17, 18, 44-217customer service 36, 37, 225, 232

Ddeath xvii, 37, 38, 157, 161, 200, 225, 227, 228death and total & permanent disability insurance 61Default Fund ix, xiii, xvi, 19, 20, 22, 24, 25, 27, 28, 30 performance ix, 24, 27, 28Default Option xiii, 21, 71, 132, 133deferred 12, 34, 35, 49, 55, 56, 62, 63, 68, 93, 103, 104, 112, 113, 114, 115, 116, 124, 125, 155, 162, 166, 167, 168, 227defined benefit xiii, xvii, 12delegates 39, 41Deloitte Touche Tohmatsu 64, 119, 170, 210 Department of Finance and Deregulation xvii, 223Department of the Prime Minister and Cabinet 4derivative financial assests 123Derivative Risk Statements 66, 122, 174Dexus Property Group Limited 19Disability Strategy viii, 219, 233, 237dispute resolution 39dividends 18, 92, 101, 113, 117

Eearning rate 20, 41 policy 41earnings viii, 12, 13, 17, 20, 30, 73, 134, 190, 227, 228 allocated 73ecologically sustainable development and environmental performance viii, 1, 8, 233 see also Environment Protection and Biodiversity Conservation Act 1999, section 516A of theEgan Associates 234email 29, 35, 224, 225, 230, 253employee ix, 3, 6, 7, 36, 62, 77, 113, 138, 172, 187, 195, 202, 207, 208, 216, 217 benefits 77, 138, 172, 187, 195, 202, 216 contributions 62, 113


245

Index

employer ix, xviii, 2, 7, 12, 13, 14, 15, 20, 34, 36, 48, 53, 54, 59, 92, 99, 100, 101, 109, 154, 156, 160, 161, 164, 169, 195, 222, 225, 226 contributions ix, 12, 13, 34, 48, 53, 59, 92, 99, 109, 154, 164, 169, 195 support xviii, 36environment xiii, xv, xviii, xix, 8, 26Environment Protection and Biodiversity Conservation Act 1999, section 516A of the 233equity 18, 22, 23, 24, 25, 26, 27, 28, 31, 58, 65, 70, 71, 93, 98, 99, 106-108, 121, 123, 129, 130, 132, 133, 173, 177, 178, 179, 180, 188, 190, 194, 198, 206, 232 investments 31, 58, 93, 98, 106, 107, 123, 129, 130 securities 58, 70, 106, 107, 108, 132, 133, 178Eureka Funds Management Company 19executive remuneration 209exits 13, 38, 73, 134expenses 7, 30, 48, 54, 57, 61, 65, 77, 92, 102, 105, 110, 111, 118, 121, 129, 130, 139, 154, 163, 165, 187, 172, 173, 187, 190, 193, 194, 200, 202, 207, 208, 211, 213, 126, 238external review 39, 41

Ffacilities for access 223fact sheets 223, 225, 227, 228, 229Fair Work Act 2009 xix, 220family law xvii, 227, 228 splitting 227, 228FASFA 239fax ii, 29, 224, 230Federal Court 41fee 7, 18, 64, 119, 170, 194, 223fees xiii, xvi, 6, 7, 10, 13, 19, 20, 24, 25, 27, 28, 29, 30, 61, 64, 76, 78, 111, 119, 137, 165, 170, 172Feltham, Peter 3, 5, 76, 137, 171Fiduciary Trust Company International 19final average salary 12Finance Minister’s Orders 186, 193, 195

financial liabilities 53, 54, 68, 100, 101, 124, 125, 126, 160, 175, 176, 197, 211, 213 performance 7 reporting by superannuation plans 47, 50, 51, 91, 94, 95, 103, 153, 157 risks 66, 122, 174 statements 43, 87, 149, 233Financial Management and Accountability Act 1997 7, 186, 192, 124, 239Financial Reporting by Superannuation Plans (AAS 25) 47, 50, 51, 91, 94, 95, 103, 153, 157fixed income 22, 27, 28fixed interest 21, 23, 25, 27, 28, 29, 58, 93, 98, 106, 107, 108, 123, 128, 129, 130, 179, 180 investments 58, 123, 129, 130FMA Act 7, 8, 214, 239focus groups 37FOI 223, 224, 239 see also Freedom of InformationFoodland Associates 2foreign currency 23, 26 risk 69, 125, 126, 176foreign exchange rates 69, 125, 176Fourth Amending Deed xix, 220Forward, Ann 39Franklin Templeton Real Estate Advisers 18fraud 10, 232 control 232 control plan 10 measures, certification of 10fraud risk assessment 10Freedom of information 223, 224, 239Freedom of Information Act 1982 223, 233fringe benefits tax 7fully funded 15functional chart 219, 222functions v, 6, 9, 223, 231, 232


246

Index

fund allocation 66, 122 earnings 12, 13, 20, 227, 228 investments 27, 28 performance 17, 24, 27, 28funding 7, 59, 60, 61, 68, 109, 110, 111, 112, 124, 164, 165, 175, 216Funds under management 12, 31Future Fund 2

GGlobal Valve Technology Limited 2GMO Australia Limited 19governance xv, xvii, xviii, 1, 8, 9, 17, 31, 32, 232, 238Governance Advisory Service (GAS) 239Government co-contributions xvii, xix, 13, 24, 34, 48, 59, 92, 101, 109, 154, 156, 186, 188, 228, 229, 242, funding 7Government bonds (previously Bonds/ Fixed interest) 29GST 57, 105, 163, 191, 200, 203, 207, 208, 214, 234, 236, 239

Hhedged 21, 23, 24, 26, 179, 180hedging policy 23, 69, 126, 176High Commissioner to South Africa 5holdings 27, 28, 29, 69, 70, 128, 177, 178Holowesko Partners Limited 19human resources 6, 232Human Rights and Equal Opportunity Commission 41hybrid superannuation scheme 12

IIAG Ltd 2identified risks 9, 10i-Estimator 239illiquid assets 19, 20income tax 48, 55, 56, 62, 63, 92, 103, 104, 112, 113, 114, 115, 116, 154, 156, 162, 166, 167, 168indexed pension 12, 13Information Privacy Principles 239input tax credit 57, 105, 163insurance 2, 13, 200, 229, 239, 240 claim 161, 164 costs 177 expenses 65, 121, 173 policies 200 premiums 13, 30, 41, 154 proceeds 154, 156, 188interest rate risk 66, 69, 70, 103, 122, 125, 128, 129, 130, 131, 132, 174, 176, 177, 178interest receivable 49, 52, 63, 67, 117, 123, 163, 175internal audit 10international equities 23, 24, 25, 26International Equity 22, 27, 28, 29, 108International Equity & Venture Capital Valuation Guidelines 99International fixed interest 27, 28, 108International private equity 18, 23, 27, 28International shares 21, 25, 26, 27, 28, 29, 179, 180invalidity 37, 38, 40, 227, 228Investa Property Group 2investing entities 78, 172


247

Index

investment xiii, xvi, xv, xvii, xviii, xix, xxi, 2, 6, 7, 8, 9, 10, 13, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 41, 48, 49, 50, 52, 53, 54, 58, 60, 61, 64, 65, 66, 67, 68, 69, 70, 71, 76, 77, 78, 91, 92, 93, 94, 95, 98, 99, 100, 101, 106, 107, 108, 110, 111, 119, 121, 122, 123, 124, 126, 129, 130, 132, 136, 139, 140, 141, 155, 159, 161, 163, 165, 168, 169, 170, 172, 173, 174, 175, 176, 177, 178, 181, 192, 194, 214, 234 arrangements 17, 18 choice 30 expenses 17, 18, 61, 92, 102, 111, 118 governance xv, xviii, xx, 17, 18, 31 guidelines 18 information 17, 18, 29, 17, 29 management 17, 18, 19, 31, 77, 139, 172 managers xiii, 18, 19, 26, 61, 66, 69, 99, 102, 111, 122, 128, 165, 174 mandate 18, 23, 65, 66, 121, 122, 128, 173 objectives 17, 19, 21, 26 options xiii, xv, xvi, xviii, 18, 22, 24, 25, 27, 28, 29, 30, 178, 179, 180 performance 10, 13, 18, 19, 20, 29 policies 20, 66, 69, 122, 125, 174, 176 results xv, xvi, xviii revenue xv, xvi, 48, 54, 62, 92, 101, 113, 154, 161, 166 risk management 32 strategy 6, 19, 20, 65, 66, 69, 70, 121, 122, 132, 173, 174, 177, 178 structure 17, 18 team 18, 122involuntary retirement 38ISBN ii, 239ISSN ii, 240

JJP Morgan 44-217, 240

Kkey management personnel compensation 77, 138, 139, 171, 172

Llegislation xiii, xvii, 6, 7, 9, 10, 18, 20, 39, 219, 220, 223legislative xix, 9, 10, 74, 135 amendments xix requirements 9Lend Lease Real Estate Investments Limited 19letter of transmittal iii, v, 231Liberty American Home Assurance 200licences 9life insurer 161limited benefits member 40liquidity risk 26, 66, 68, 122, 124, 125, 174, 175, 176, 213listed global equity markets 25London Australia Underwriting 200Long/short equity funds 22, 23, 26, 27, 28Long Term Cost Report 14, 15Loomis Sayles & Company LP 19lump sum 13, 41, 60, 110, 157


248

Index

MMacquarie Investment Management Limited 19Macquarie Investment Management Ltd 18Marathon Asset Management Limited 19market neutral fund 23, 26, 27, 28market research 219, 236market risk 66, 69, 70, 71, 122, 125, 126, 127, 128, 129, 130, 131, 132, 133, 174, 176, 177, 178, 179, 180, 219, 236Marvin & Palmer Associates Inc 19master custodian xvii, 18, 67, 174 see also JP Morganmeetings 1, 5member xvi, xviii, xix, 2, 3, 4, 5, 6, 8, 9, 10, 12, 13, 15, 19, 20, 30, 31, 34, 35, 36, 37, 38, 39, 40, 48, 50, 52, 54, 55, 56, 57, 59, 61, 64, 68, 72, 73, 74, 75, 76, 78, 92, 94, 99, 100, 101, 103, 104, 105, 109, 111, 117, 120, 124, 134, 135, 136, 141, 154, 155, 156, 157, 160, 161, 162, 164, 165, 166, 169, 170, 175, 181, 193, 195, 220, 222, 223, 224, 225, 226, 227, 228 communication xviii, 36 education program xviii, 36membership xvi, 12, 34, 35, 57, 72, 74, 75, 105, 120, 135, 136, 170 225, 226 summary 34Mercer 14, 21, 26, 74, 75, 135, 136Mercer Direct Property Index 21Mercer Human Resources Consulting 74, 75, 135, 136Migration Review Tribunal 5Minister v, 2, 4, 223 see also Tanner, LindsayMinister for Finance and Deregulation v, 2, 47, 50, 91, 95, 153, 157, 223, 223ministerials 42MIR Investment Management Limited 19money market investments 58, 123, 129, 130MSCI Emerging Market index 25

Nnewsletters 225New Zealand 4, 8nominal return 19non-salary 6

OOccupational Health and Safety 7Occupational Health and Safety (Commonwealth Employment) Act 1991 7OECD 4, 233Ombudsman 41, 42, 232online xviii, 8, 36, 225, 226, 227, 228 tools xviii, 36operations v, 7, 8, 31, 231, 232Orbis Investment Management Limited 19organisation chart 221Orima Research 236, 237outcomes and outputs 1, 10

Ppension xvii, 12, 13, 34, 35, 37, 38, 39, 60, 74, 110, 135, 227, 225, 228 payments 74, 135 summary 38performance xvi, xviii, 6, 7, 8, 10, 13, 18, 19, 20, 21, 24, 25, 27, 28, 29, 37, 66, 122, 174, 221, 231, 232, 233 bonus 6 indicator 10 pay 6, 233Perpetual Investments 19PHIAC 240phone ii, 29, 35, 36, 224, 230, 237place of business 50, 94, 157Platinum Asset Management 19pooled property trust 24pooled superannuation trust 49, 52, 53, 58, 65, 70, 99, 121, 132, 140, 155, 156, 159, 163, 173, 175, 178, 181, 192postal address ii, 29, 224, 230preservation of rights 40preserved xix, 12, 13, 20, 30, 34, 35, 36, 40, 220, 228


249

Index

Principal Global Investors (Australia) Limited 19private equity funds 23, 99procurement 8productivity components 13, 20 contributions 15, 20, 59, 75, 109, 136, 222Professional development 7property 2, 3, 21, 23, 24, 25, 26, 27, 28, 29 investments 24, 93, 106, 107, 123, 129, 130Proxy voting 31PSS Act v, xix, 220PSSap Act v, xix, 2, 220PSSap fund 18, 20, 192, 194PSSap Trust Deed xix, 220, 223PSS Cash Investment Options xiii, xvi, 24, 28PSS/CSS A Property trust 118, 140PSS/CSS B Property trust 140PSS/CSS International Investments Trust 140PSS Default Fund xiii, xvi, 20, 22, 24, 28PSS fund 18, 30, 91, 94, 109, 110, 111, 192, 194, 228PSS Trust Deed xix, 220, 223Public Accounts Committee 5publications 219, 223, 225, 226, 227, 228, 229public moneys 8, 236public tenders 235purchasing 8 principles 8, 234

QQBE insurance 200

RRBS Advisory Council 2Real assets 22, 27, 28real return 19, 20reconsideration 39Reconsideration Advisory Committee (RAC) 39recycling 8redundancies 36Refugee Review Tribunal 5Registrable Superannuation Entity 10Regnan 8, 31, 32regulatory change 10 reporting 9 requirements 10, 66, 122, 174remuneration 64, 119, 170, 195, 209, 210, 232representatives 39requirements for annual reports 231research 31, 233, 236, 237Reserve Bank of Australia xviii, 8, 26, 32, 36, 67, 69, 123, 128, 175, 177, 192, 212resignation 38resources 1, 6, 7, 8, 9, 24, 25, 194, 201, 232, 234retirement xvi, 5, 13, 37, 38, 40, 157, 200, 225, 227, 228retrenchment 227, 228Rexiter Capital Management Limited 19Rice Warner Actuaries 5risk 5 management 3, 4, 5, 9, 10, 31, 32, 64, 65, 66, 68, 119, 121, 122, 125, 170, 173, 174, 176Rogge Global Partners PLC 19RSE license ii, 10, 65, 66, 78, 121, 173


250

Index

Ssalary 6 packaging 6, 7, 13 sacrifice 13sale of assets 30Same-Sex Relationships (Equal Treatment in Commonwealth Laws Superannuation) Act 2008 xix, 220satisfaction 10, 237scheme rules 30, 72, 120scheme administrator ii, xviii, 18, 36, 37, 39, 53, 100, 225, 227, 228, 231, 237 see also ComSupersecurities 18, 26senior executives 209, 225, 227, 228service charter 232, 237 level agreement 37 standards 9, 37, 232, 237SIS Act 2, 9, 14, 40Safety, Rehabilitation and Compensation Act 1988 7Senators 230SPIN ii, 240spouse 40, 38, 164, 228 contributions 164State Street Global Advisors Limited 19State Super Financial Services 4statutory mandate 37street address ii, 230Suncorp Insurance and Finance 2Sunnyfield Association 2Superannuated Commonwealth Officers’ Association 223Superannuation Act 1976 v, 10, 12, 47, 50, 61, 220, 223Superannuation Act 1990 v, 2, 9, 10, 12, 91, 94, 95, 111, 220Superannuation Act 2005 v, 10, 12, 153, 157, 165, 220

superannuation co-contributions 101Superannuation Complaints Tribunal 40, 41, 240Superannuation Contributions (Surcharge) Tax 56, 72, 104, 120, 154, 156, 161, 166Superannuation Industry (Supervision) Act 1993 2, 10, 14, 40, 240Superannuation Industry (Supervision) Regulations 1994 xix, 220Superannuation (Resolution of Complaints) Act 1993 (the SRC Act) 40, 41superannuation salary 229SuperRatings xvisurcharge 56, 64, 72, 104, 120, 154, 156, 161, 166, 225, 227, 228 liability 72, 120sustainable 21, 25, 29

TTelstra 236tender 235Thirty-Third Amending Deed xix, 220total fund investments 27, 28total & permanent disability 161training 7, 36, 225, 226, 232transferring superannuation benefits 59, 109transfers 13, 34, 34, 48, 53, 54, 60, 64, 92, 99, 101, 110, 117, 154, 156, 159, 161, 166, 169, 229transfers from other funds 13, 54, 99, 154, 156, 161Transfield Services 2Trust Deed xix, 91, 94, 153, 157, 220, 223trustee Choice xiii, xvi, 21, 22, 24, 25, 29, 179, 180TTY 224, 230, 237


251

Index

Uunallocated contributions 170 income 73, 134unfunded liability 14unhedged 21, 24, 26, 29, 69, 126, 176, 179, 180United Nations 4, 31, 32United Nations Principles for Responsible Investment (UNPRI) 32unit pricing 18units 30, 65, 78, 121, 127, 132, 156, 159, 172, 173unlisted trusts 53, 58, 99, 108user-charging 7

VVanguard Investments Australia Limited 19

WWatson Wyatt xviiiweb 29, 230website iv, xviii, 8, 30, 36, 223, 225Wellington International Management 19Westpac Investment Management 31Westscheme 4W & K Robinson Consulting Pty Ltd 234workers’ compensation 7World Bank 4

ZZurich Australian Superannuation Limited 4

Contact details

Mail ARIA GPO Box 1907 Canberra City ACT 2601

Phone 02 6263 6999

Fax 02 6263 6900


Web www.aria.gov.au www.css.gov.au www.pss.gov.au www.pssap.gov.au

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Documents

2008-09 ARIA annual report