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Essential Super Annual Report 2021 Colonial First State Investments Limited ABN 98 002 348 352 AFS Licence 232468 RSE Licence L0002196
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Page 1: Essential Super - CommBank

Essential SuperAnnual Report 2021Colonial First State Investments LimitedABN 98 002 348 352 AFS Licence 232468 RSE Licence L0002196

Page 2: Essential Super - CommBank

Your Annual Report

I am pleased to present the Annual Report for the financial year ended 30 June 2021 for Essential Super.

This Annual Report is the final component of the reporting information for the 2020–2021 financial year.

If you have any questions about the Annual Report please call us on 13 4074 Monday to Friday, 8am to 7pm, Sydney time.

Yours sincerely,

Kelly Power Chief Executive Officer of CFS Superannuation

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The Trustee, Colonial First State Investments Limited, can be contacted as follows:

Postal Address: Darling Park, Tower 1, 201 Sussex Street, Sydney NSW 2000 Phone Number: 13 4074

These accounts were prepared on 30 November 2021.

Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL) is the issuer of interests in Commonwealth Essential Super ABN 56 601 925 435 (Essential Super). Colonial First State (CFS) is Superannuation and Investments HoldCo Pty Limited ABN 64 644 660 882 and its subsidiaries which include CFSIL. Commonwealth Bank of Australia ABN 48 123 123 124 (the Bank) holds a significant minority interest in CFSIL.

Contents

Investment options – Essential Super 2

Asset allocation as at 30 June 2021 (%) – Essential Super 4

Performance returns as at 30 June 2021 (%) – Essential Super 7

Other important information 8

Regulatory changes 12

Proposed changes to superannuation 12

Abridged financial report 16

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2 Essential Super Annual Report 2021

Investment options – Essential SuperPlease refer to our website, commbank.com.au/essentialsuper and look for our Investment fact sheets section to find the objectives and strategies of each investment option, or call us on 13 4074 for more information.

Investment options Underlying manager(s)

Lifestage 1945-49 option First Sentier Investors (Australia) IM Ltd*, Loomis Sayles, Colchester Global Investors, Morgan Stanley Investment Management, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Commonwealth Bank of Australia, Oaktree Capital, Plato Investment Management, PineBridge Investments

Lifestage 1950-54 option First Sentier Investors (Australia) IM Ltd*, Loomis Sayles, Colchester Global Investors, Morgan Stanley Investment Management, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Commonwealth Bank of Australia, Oaktree Capital, Plato Investment Management, PineBridge Investments

Lifestage 1955-59 option First Sentier Investors (Australia) IM Ltd*, Loomis Sayles, Colchester Global Investors, Morgan Stanley Investment Management, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Commonwealth Bank of Australia, Oaktree Capital, Plato Investment Management, PineBridge Investments

Lifestage 1960-64 option First Sentier Investors (Australia) IM Ltd*, Loomis Sayles, Colchester Global Investors, Morgan Stanley Investment Management, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Commonwealth Bank of Australia, Oaktree Capital, Plato Investment Management, PineBridge Investments, Baillie Gifford

Lifestage 1965-69 option First Sentier Investors (Australia) IM Ltd*, Loomis Sayles, Colchester Global Investors, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Commonwealth Bank of Australia, Oaktree Capital, Plato Investment Management, PineBridge Investments, Baillie Gifford, Mercer Investments

Lifestage 1970-74 option First Sentier Investors (Australia) IM Ltd*, Colchester Global Investors, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Plato Investment Management, PineBridge Investments, Baillie Gifford, Mercer Investments

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3Essential Super Annual Report 2021

Investment options Underlying manager(s)

Lifestage 1975-79 option First Sentier Investors (Australia) IM Ltd*, Colchester Global Investors, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Plato Investment Management, PineBridge Investments, Baillie Gifford, Mercer Investments

Lifestage 1980-84 option First Sentier Investors (Australia) IM Ltd*, Colchester Global Investors, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Plato Investment Management, PineBridge Investments, Baillie Gifford, Mercer Investments

Lifestage 1985-89 option First Sentier Investors (Australia) IM Ltd*, Colchester Global Investors, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Plato Investment Management, PineBridge Investments, Baillie Gifford, Mercer Investments

Lifestage 1990-94 option First Sentier Investors (Australia) IM Ltd*, Colchester Global Investors, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Plato Investment Management, PineBridge Investments, Baillie Gifford, Mercer Investments

Lifestage 1995-99 option First Sentier Investors (Australia) IM Ltd*, Colchester Global Investors, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Plato Investment Management, PineBridge Investments, Baillie Gifford, Mercer Investments

Lifestage 2000-04 option First Sentier Investors (Australia) IM Ltd*, Colchester Global Investors, Acadian Asset Management, State Street Global Advisors, Realindex Investments, Alliance Bernstein, Plato Investment Management, PineBridge Investments, Baillie Gifford, Mercer Investments

Balanced option First Sentier Investors (Australia) IM Ltd*, State Street Global Advisors, Commonwealth Bank of Australia

Australian Share option First Sentier Investors (Australia) IM Ltd*

Cash Deposit option Commonwealth Bank of Australia

* Formerly Colonial First State Global Asset Management prior to November 2019.

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4 Essential Super Annual Report 2021

Asset allocation as at 30 June 2021 (%) – Essential Super

Essential Super Australian Share Option 2020 2021

Australian shares 99.29% 99.51%

International shares 0.00% 0.00%

Property 0.00% 0.00%

Fixed interest 0.00% 0.00%

International fixed interest 0.00% 0.00%

Cash 0.71% 0.49%

Essential Super Balanced Option 2020 2021

Australian shares 18.17% 17.94%

International shares 27.16% 26.36%

Property 5.18% 4.77%

Fixed interest 17.75% 17.67%

International fixed interest 11.83% 11.64%

Cash 19.91% 21.62%

Essential Super Cash Deposit 2020 2021

Australian shares 0.00% 0.00%

International shares 0.00% 0.00%

Property 0.00% 0.00%

Fixed interest 0.00% 0.00%

International fixed interest 0.00% 0.00%

Cash 100.00% 100.00%

Essential Super Lifestage 1945-49 option 2020 2021

Australian shares 13.48% 13.41%

International shares 21.23% 20.77%

Property 3.01% 2.84%

Fixed interest 14.11% 13.16%

International fixed interest 12.69% 11.44%

Cash & Alternatives 35.48% 38.38%

Essential Super Lifestage 1950-54 option 2020 2021

Australian shares 13.78% 13.70%

International shares 21.08% 21.07%

Property 3.18% 3.07%

Fixed interest 13.82% 12.95%

International fixed interest 12.63% 11.24%

Cash & Alternatives 35.51% 37.97%

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5Essential Super Annual Report 2021

Asset allocation as at 30 June 2021 (%) – Essential Super

Essential Super Lifestage 1955-59 option 2020 2021

Australian shares 13.28% 13.57%

International shares 20.77% 21.30%

Property 2.93% 2.87%

Fixed interest 13.91% 12.89%

International fixed interest 13.02% 11.24%

Cash & Alternatives 36.09% 38.13%

Essential Super Lifestage 1960-64 option 2020 2021

Australian shares 20.63% 19.28%

International shares 27.58% 27.16%

Property 3.55% 3.97%

Fixed interest 13.15% 12.76%

International fixed interest 11.56% 10.06%

Cash & Alternatives 23.53% 26.77%

Essential Super Lifestage 1965-69 option 2020 2021

Australian shares 30.81% 29.63%

International shares 40.67% 40.69%

Property 6.61% 6.62%

Fixed interest 6.10% 5.70%

International fixed interest 4.33% 2.85%

Cash & Alternatives 11.48% 14.51%

Essential Super Lifestage 1970-74 option 2020 2021

Australian shares 36.37% 33.55%

International shares 46.51% 47.42%

Property 7.79% 7.77%

Fixed interest 1.66% 1.72%

International fixed interest 1.74% 1.59%

Cash & Alternatives 5.93% 7.95%

Essential Super Lifestage 1975-79 option 2020 2021

Australian shares 37.44% 34.15%

International shares 45.49% 46.07%

Property 8.00% 7.78%

Fixed interest 1.67% 1.85%

International fixed interest 1.78% 1.75%

Cash & Alternatives 5.62% 8.40%

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Asset allocation as at 30 June 2021 (%) – Essential Super

Essential Super Lifestage 1980-84 option 2020 2021

Australian shares 37.38% 34.61%

International shares 45.77% 46.11%

Property 7.69% 7.68%

Fixed interest 1.49% 1.94%

International fixed interest 1.70% 1.74%

Cash & Alternatives 5.97% 7.92%

Essential Super Lifestage 1985-89 option 2020 2021

Australian shares 37.39% 34.38%

International shares 46.18% 45.89%

Property 7.78% 7.56%

Fixed interest 1.52% 1.96%

International fixed interest 1.68% 1.82%

Cash & Alternatives 5.45% 8.39%

Essential Super Lifestage 1990-94 option 2020 2021

Australian shares 37.47% 34.36%

International shares 46.56% 45.91%

Property 7.72% 7.56%

Fixed interest 1.24% 2.01%

International fixed interest 1.69% 1.82%

Cash & Alternatives 5.32% 8.34%

Essential Super Lifestage 1995-99 option 2020 2021

Australian shares 36.79% 34.38%

International shares 46.55% 45.77%

Property 8.03% 7.51%

Fixed interest 1.42% 1.97%

International fixed interest 1.78% 1.84%

Cash & Alternatives 5.43% 8.53%

Essential Super Lifestage 2000-04 option 2020 2021

Australian shares 37.21% 34.51%

International shares 46.93% 46.91%

Property 7.56% 7.89%

Fixed interest 2.10% 1.72%

International fixed interest 1.84% 1.61%

Cash & Alternatives 4.36% 7.36%

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Performance returns as at 30 June 2021 (%) – Essential Super

Annual effective rate of net earnings1

5 year compound

average rate of return

Since inception2021 2020 2019 2018 2017

Essential Super Australian Share Option 24.67 -5.99 11.10 11.86 12.99 10.48 8.91

Essential Super Balanced Option 11.54 0.46 7.15 5.91 6.00 6.15 6.32

Essential Super Cash Deposit 0.14 0.57 1.26 1.28 1.29 0.91 1.30

Essential Super Lifestage 1945-49 option 9.24 -0.89 5.78 4.89 4.85 4.72 5.16

Essential Super Lifestage 1950-54 option 9.45 -1.15 5.66 4.84 4.81 4.67 5.19

Essential Super Lifestage 1955-59 option 9.28 -0.94 - - - - 4.83

Essential Super Lifestage 1960-64 option 13.52 -2.75 6.70 6.92 7.85 6.32 7.02

Essential Super Lifestage 1965-69 option 21.19 -5.49 - - - - 7.91

Essential Super Lifestage 1970-74 option 25.10 -6.52 7.99 8.75 9.78 8.56 8.45

Essential Super Lifestage 1975-79 option 25.89 -6.49 - - - - 9.27

Essential Super Lifestage 1980-84 option 26.63 -7.15 8.06 8.73 9.82 8.69 8.54

Essential Super Lifestage 1985-89 option 26.35 -6.88 - - - - 9.25

Essential Super Lifestage 1990-94 option 26.16 -6.70 8.09 8.74 9.86 8.73 8.58

Essential Super Lifestage 1995-99 option 26.34 -6.67 - - - - 9.34

Essential Super Lifestage 2000-04 option 25.77 -6.43 8.05 8.59 - - 8.26

1 The annual effective rate of net earnings is calculated on an exit price to exit price basis, net of taxes payable and after ongoing fees and expenses, but excluding entry fees and individual taxes.

Past performance is no indication of future performance.

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8 Essential Super Annual Report 2021

Other important informationThis information is relevant to and forms part of the Annual Report contained in this booklet.

Indemnity insuranceThe Trustee is responsible for its activities and carries professional indemnity insurance.

Method of allotment of earnings in all investment optionsAll income, including realised and unrealised capital gains and losses, and expenses for all investment options are brought to account and are fully reflected in the unit price of that option. Income tax as appropriate is provided for in the unit price for each investment option.

Trustee’s policy for the use of derivatives The Trustee has a detailed Derivative Risk Management Policy which covers the use of derivatives, the controls over their use, and the processes of assessing compliance with those controls. These policies and controls are intended to ensure proper use of derivatives. Commonwealth Essential Super Fund (the Fund) has an indirect exposure to derivatives through its investments in other managed investment schemes managed by the Trustee. Derivatives are used in the underlying investments as an alternative to direct purchases or sales and not for trading purposes.

Taxation matters • Taxation considerations are general

and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.

• Commonwealth Bank and the Trustee are also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Temporary residentsYou can receive a Departing Australia Superannuation Payment (DASP) benefit equal to your account balance (less tax), if: • you are not an Australian or New

Zealand citizen, are not a permanent resident in Australia or do not hold a 405 or 410 retirement visa

• you leave Australia • your temporary visa is no

longer valid, and • we get written evidence from you, or

where required, the Department of Home Affairs, to confirm these facts.

To claim your DASP benefit: • Complete the DASP online application

at ato.gov.au (search for ‘DASP online application system’), and

• Post a certified copy of your original identification document(s) to us for the purposes of anti-money laundering laws.

For further information about superannuation for temporary residents, refer to ato.gov.au

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The only other benefits that you may receive from Essential Super as a temporary resident are: • a death benefit • a total and permanent

disablement benefit • temporary disability benefit • a terminal illness benefit, or • a release authority.

We’ll withhold the taxable part of your DASP benefit. Speak to a tax adviser or contact the Australian Taxation Office (ATO) to find out what tax rates apply to your DASP benefit.

It’s important to ask for your DASP benefit to be paid to you within six months of the day when your temporary visa expires and you leave the country (whichever happens latest). If you don’t, we may have to pay your account balance to the ATO. In addition, you will no longer be an Essential Super member, your money will no longer be invested in your chosen investment options, and you’ll lose any insurance cover you had with the Fund.

According to ASIC Corporations (Unclaimed Superannuation-Former Temporary Residents) Instrument 2019/873, we don’t have to let you know that we’re transferring your benefit to the ATO or give you an exit statement.

You can still claim your account balance after we’ve transferred it to the ATO. You can do this by using the online application system, which is available on the ATO website at ato.gov.au/Forms/Application-for-payment-of-ATO-held-superannuation-money/

Working holiday makersSince 1 July 2017, Departing Australia Superannuation Payments (DASPs) made to working holiday makers are taxed at a different rate to those paid to temporary residents. You are classified as a working holiday maker where you hold or have held a 417 Working Holiday visa or a 462 Work and Holiday visa. Please refer to ato.gov.au/Individuals/coming-to-australia-or-going-overseas/coming-to-australia/working-holiday-makers/

Unclaimed money and lost membersWe may be required to pay your account balance to the ATO if: • you are 65 years or older, we have

not received a contribution or rollover in two years, and we have been unable to contact you for five years

• your account is subject to a family law payment split, but we are unable to identify the ex-spouse entitled to the super benefit

• you are deceased, we have not received a contribution or rollover for you in the past two years, and we can’t (after reasonable attempts and a reasonable period of time) identify a person entitled to your super benefit

• you are a lost member and either: – your account balance is

less than $6,000, or – we have not received an amount

in respect of you in the last 12 months, and we do not have enough information to identify you and would not be able to pay an amount to you. You will be a lost member where:

Other important information

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10 Essential Super Annual Report 2021

• at least one written communication has been sent back to us undelivered and we believe you can no longer be contacted, or we’ve never had an address for you, and we have not received a contribution or rollover for you within the last 12 months and you have not contacted the fund or accessed information about your account electronically within the last 12 months, or

• you joined the fund as a result of an agreement between your employer and the trustee of the fund, and you have been a member of the fund for longer than two years, and the fund has not received a contribution or rollover in respect of you in five years.

When you become a lost member, we may request your latest contact information from the ATO. If the address the ATO provides us is more recent than the address we hold on file, we may update your address with the address provided by the ATO, and you will no longer be classified as a lost member.

If your account balance is transferred to the ATO, you will no longer be a member of Essential Super and you will lose any insurance cover. You will also no longer be invested in your chosen investment option(s).

From 1 July 2013, interest will accrue on your account balance from the time it is paid to the ATO. You may claim your benefit by completing the online application, or downloading a paper application form, from ato.gov.au

Payment of superannuation contribution surchargePayments of the superannuation contribution surcharge if applicable are paid by deductions from your account,

or, if the Trustee receives an assessment after you have left, it will generally be forwarded on to the fund or institution to which you have transferred your benefit.

Inactive accounts with a low account balanceIf your account has no insurance cover, your account balance is below $6,000, you have not satisfied a prescribed condition of release and we have not received a contribution or rollover to your account for a continuous period of 16 months (inactive low balance account), we are required by law to report and transfer your account to the Australian Taxation Office (ATO).

Your account will no longer be considered inactive and will not be transferred to the ATO, if for example, in the last 16 months you make a contribution or rollover, change your investment options, make or alter a binding beneficiary nomination or instruct us not to transfer your inactive low balance account to the ATO, before the relevant ATO transfer date.

We will report on and transfer inactive low balance accounts to the ATO twice a year, in accordance with legislated timeframes. The ATO will transfer your balance to your active super account, where possible.

Trustee Voluntary Payments In certain circumstances, we may transfer to the ATO any amount we hold on behalf of a member, former member or non-member spouse if we reasonably believe doing so would be in the best interests of either of these three parties.

These circumstances may include where: – we receive no response within 30

days of trying to make contact to receive payment instructions

Other important information

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11Essential Super Annual Report 2021

– we are unable to: – transfer funds to an active CFS

superannuation account

– transfer funds into a nominated bank account used in the previous 12 months (if the party has met a condition of release such as retirement); or

– make contact for payment instructions for rollover benefits; or

– the account does not meet another Unclaimed Super Money category.

What to do if you have a complaintWe recognise that even in the best run organisations things can go wrong. If you have a complaint, please tell us so we can work with you to try and fix the problem. We aim to resolve complaints promptly and we will do all we can to resolve the situation for you.

In resolving your complaint, we will: acknowledge your complaint and make sure we understand the issues record your complaint and investigate the matters raised do everything we can to fix the problem keep you informed of our progress give you our name, a reference number and contact details so that you can follow up at any time and provide a written resolution letter which explains our investigation, decision and reasons for our decision.

We will make every effort to resolve your query as quickly as possible, but no later than 45 days, unless your complaint relates to a death benefit distribution, in which case no later than 90 days. Occasionally, there may be delays in responding to your complaint, due to the complexity of the resolution or due to circumstances outside of our control.

If this occurs we will let you know about the delay, the reason for the delay and your options, including your right to complain to the external dispute body.

To lodge a complaint, you can contact us by:Phone: 13 4074 Email: [email protected] Mail: Complaints Resolutions

Reply Paid 27 Sydney NSW 2001

External dispute resolutionIf at any time you are not satisfied with the handling of your complaint or the resolution we have provided, you can lodge a complaint with the Australian Financial Complaints Authority (AFCA). AFCA provides fair and independent financial services complaint resolution that is free to consumers.

You can contact AFCA by: Website: www.afca.org.au Email: [email protected] Phone: 1800 931 678 (free call) Mail: Australian Financial Complaints

Authority GPO Box 3 Melbourne VIC 3001

Time limits may apply when making a complaint to AFCA so you should act promptly or otherwise consult the AFCA website to find out if or when the time limit relevant to your circumstances expires.

Contact Details of the Trustee You can contact the trustee, Colonial First State Investments Limited, at:Darling Park, Tower 1 201 Sussex Street, Sydney NSW 2000 Telephone: 13 4074 Email: [email protected]

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Further information you may request to receiveYou may also request the following additional information from the Trustee at any time, free of charge: • the full audited financial

statements for the Fund • a copy of the most recent Product

Disclosure Statement covering the relevant investment strategies and options, contribution levels and insurance cover of the Fund

• audited financial statements for Colonial First State Investments Limited

• the Trust Deed governing Commonwealth Essential Super

• information published on any of the underlying funds that the investment options invest in, and

• performance reports for each of the investment options comprising Essential Super, which are updated quarterly.

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2 Employers determine whether an employee has a stapled fund by checking with the ATO.

Regulatory changes

The information contained in the following sections is general information only and does not take into account your objectives, personal financial situation, or needs. You should assess whether the information is appropriate for you and talk to your financial planner for further information. The information in this section is current as of 21 December 2021.

Recent legislative changes to superannuationThe following are some key changes to superannuation legislation which have taken effect recently.

Increase in maximum age to use ‘bring-forward rule’The bring-forward rule may allow you to make up to $330,000 in non-concessional contributions at one time, which is above the standard cap of $110,000 per financial year (based on 2021-22 cap amount).

Prior to 1 July 2020, you had to be under 65 at any time during a financial year to use the bring-forward rule. However, from 1 July 2020, the bring-forward rule has been extended to people aged under 67 any time during a financial year.

It is important to note that your non-concessional contributions cap (including under the bring-forward rule) may also be reduced based on your total superannuation balance. You must also meet general contribution eligibility requirements (eg, the work test or work test exemption if aged 67 to 74) at the time of making a voluntary contribution.

Re-contribution of COVID-19 early release superannuation amountsIf you made eligible withdrawals of up to $20,000 from super between 20 April 2020 and 31 December 2020 under the COVID-19 early release rules, you can recontribute these amounts from 1 July 2021 to 30 June 2030 as a ‘re-contribution of COVID-19 early release superannuation amounts’. These amounts will not count towards your non-concessional contributions cap and you cannot claim a tax-deduction for the recontribution. You must provide us with a ‘Notice of re-contributions of COVID-19 Early Release amounts’ form at the time you make this type of contribution (available from the ATO).

Introduction of ‘stapled fund’ rulesMost people are eligible to choose which superannuation fund receives their employer Superannuation Guarantee (SG) contributions. Where an eligible employee does not exercise choice of fund, the employer must instead generally pay their SG contributions to the employer’s default super fund.

However, where a new employee starts with an employer on or after 1 November 2021, and does not choose a super fund, the employer must instead generally contribute to their existing (stapled) fund where one exists2, or to the employer’s default fund if the employee doesn’t have a stapled fund. In some situations where a new employee is not eligible to choose a super fund, an employer may also be required to contribute to the employee’s stapled fund.

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This new legislation aims to help prevent the creation of unintended multiple superannuation accounts by having a person’s existing superannuation fund follow them as they change employment. The stapled fund rules don’t apply to employees who started with an employer prior to 1 November 2021.

For more information about the stapled fund rules, refer to www.ato.gov.au.

YourSuper comparison toolThe ATO has introduced an interactive online comparison tool that: • Displays a table of simple super

products (MySuper products) ranked by fees and net returns (updated quarterly).

• Allows you to select and compare in more detail up to four MySuper products at a time.

• Links you to a super fund’s website when you select a MySuper product from the table.

• Can show your current super accounts alongside other MySuper products – if you access the personalised version through myGov.

• Provides links to help you consolidate your super accounts.

To access the YourSuper comparison tool, log in to ATO online services through myGov (personalised version) or visit www.ato.gov.au/YourSuper-Comparison-Tool/ (non-personalised version).

Annual performance testFrom 1 July 2021, the Australian Prudential Regulation Authority (APRA) commenced annual performance tests on MySuper products. Where a product fails the performance test, it is required to notify members and provide them with information about the YourSuper comparison tool (see above). Where a product fails the performance test for a second consecutive time, it is prohibited from accepting new members until APRA is satisfied its performance has improved.

From 1 July 2022, the above performance test rules will be extended to certain other (trustee-directed) super products.

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Proposed changes to superannuation

The following are some key future changes to superannuation legislation which have been announced by the Government. The Government introduced a Bill to implement these changes on 27 October 2021, however at the time of writing (21 December 2021) the Bill had not passed Parliament or become law.

End of the work test for certain contributions for people aged up to 74Under current rules, you must meet a work test (or alternatively qualify for a work test exemption) if making most types of voluntary superannuation contributions while aged 67 to 743.

From an expected date of 1 July 2022, the Government has proposed that people in this age group will be able to make or receive non-concessional contributions (including under the bring-forward rule) or salary sacrifice super contributions without meeting the work test (or work test exemption), subject to existing contribution caps.

However, people in this age group wanting to make personal tax-deductible contributions will still have to satisfy a work test or work test exemption.

Further increase in maximum age to use ‘bring-forward rule’The bring-forward rule may allow you to make up to $330,000 in non-concessional contributions at one time, which is above the standard cap of $110,000 per financial year (based on 2021-22 cap amount).

On 1 July 2020, the bring-forward rule was extended to people aged 65 or 66 at the start of a financial year (see the previous section for further information). From an expected date of 1 July 2022, the Government has announced that access to the bring-forward rule will be further extended to people aged under 754 any time during a financial year.

At the time of writing (21 December 2021), it is unclear whether the proposed change would involve a tapering of the contribution amount permitted under the bring-forward rule as a person gets closer to age 75.

It is important to note that your non-concessional contributions cap (including under the bring-forward rule) may also be reduced based on your total superannuation balance.

Increasing the maximum releasable amount under the First Home Super Saver SchemeUnder existing First Home Super Saver Scheme (FHSSS) rules, a person can only apply to have up to $30,000 of their eligible voluntary contributions plus a deemed earnings amount released from super to purchase their first home.

From an expected date of 1 July 2022, the Government has proposed increasing the maximum releasable contributions amount for the FHSSS from $30,000 to $50,000

3 Age 74 includes the period up to 28 days after the end of the month in which you turn 75.4 Under general contribution eligibility requirements, any non-concessional contributions would need to be

made no later than 28 days after the end of the month in which you turn 75.

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Reduction of the eligibility age for downsizer contributions

The downsizer contribution allows people to make a one-off after-tax contribution to super of up to $300,000 from the proceeds of selling their home they have held for at least 10 years. Under the rules both members of a couple can make downsizer contributions in respect of the same home, and the contributions do not count towards a member’s non-concessional contributions caps.

Currently you must be aged 65 or over to make a downsizer contribution. However, from an expected date of 1 July 2022, the Government has proposed expanding access to allow eligible people aged 60 or over to make a downsizer contribution.

Removal of the $450 per month minimum Super Guarantee threshold

From an expected date of 1 July 2022, the Government has proposed removing the $450 per month minimum Super Guarantee income threshold. Under the current rules, an employer is not required to pay Super Guarantee contributions for an employee who earns less than $450 per month.

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Investments with a market value of over 5% of the Fund

Investments Directly Held

% Investments Indirectly Held %

Lifestage 1960-64

5% Commonwealth Multi Manager Cash Fund 15%

Commonwealth Global Share Fund 30 7%

Colonial First State Investment Fund 50 8%

Commonwealth Specialist Fund 45 5%

Commonwealth Specialist Fund 51 14%

Commonwealth Specialist Fund 52 5%

Colonial First State Wholesale Indexed Australian Bond Fund 13%

Lifestage 1965-69

7% Colonial First State Investment Fund 22 7%

Colonial First State Investment Fund 78 7%

Commonwealth Global Share Fund 30 7%

Commonwealth Specialist Fund 51 24%

Colonial First State Investment Fund 50 13%

Commonwealth Global Share Fund 22 10%

Commonwealth Specialist Fund 52 5%

Colonial First State Wholesale Indexed Australian Bond Fund 6%

Lifestage 1970-74

9% Colonial First State Investment Fund 22 9%

Colonial First State Investment Fund 78 8%

Commonwealth Global Share Fund 30 6%

Colonial First State Investment Fund 50 15%

Commonwealth Global Share Fund 22 13%

Commonwealth Specialist Fund 51 28%

Lifestage 1975-79

11% Colonial First State Investment Fund 22 9%

Colonial First State Investment Fund 78 8%

Colonial First State Investment Fund 50 15%

Commonwealth Global Share Fund 22 15%

Commonwealth Specialist Fund 51 30%

Lifestage 1980-84

16% Colonial First State Investment Fund 22 9%

Colonial First State Investment Fund 78 8%

Colonial First State Investment Fund 50 15%

Commonwealth Global Share Fund 22 16%

Commonwealth Specialist Fund 51 31%

Page 20: Essential Super - CommBank

18 Essential Super Annual Report 2021

Investments with a market value of over 5% of the Fund

Investments Directly Held

% Investments Indirectly Held %

Lifestage 1985-89

19% Colonial First State Investment Fund 22 9%

Colonial First State Investment Fund 78 8%

Colonial First State Investment Fund 50 15%

Commonwealth Global Share Fund 22 16%

Commonwealth Specialist Fund 51 31%

Lifestage 1990-94

13% Colonial First State Investment Fund 22 9%

Colonial First State Investment Fund 78 8%

Colonial First State Investment Fund 50 15%

Commonwealth Global Share Fund 22 16%

Commonwealth Specialist Fund 51 31%

Page 21: Essential Super - CommBank

19Essential Super Annual Report 2021

Abridged financial report

The financial report of Essential Super (the Fund) has been audited by PricewaterhouseCoopers, and in their opinion, presents fairly in accordance with applicable Accounting Standards and other mandatory professional reporting requirements in Australia, the financial position of the Fund as at 30 June 2021 and the results of its operations for the year ended 30 June 2021. Set out below is an abridged version of the accounts for the Fund for the year to 30 June 2021 along with comparatives for the year to 30 June 2020. The abridged financial report is unaudited and only the annual financial report has been audited. For a better understanding of the financial report and auditor’s report, the abridged financial information should be read in conjunction with the annual financial report for the year ended 30 June 2021.

Statement of Financial Position as at 30 June 2021 2021 $’000

2020 $’000

Assets

Cash and cash equivalents 253,404 243,375

Contributions receivable 5,770 4,300

Receivables 199 91

Financial investments 3,708,813 3,006,305

Deferred tax assets - 27,399

Total assets 3,968,186 3,281,470

Liabilities

Benefits payable 1,115 4,780

Other payables 1,646 1,218

Income tax payable 27,859 3,795

Deferred tax liabilities 14,283 -

Total liabilities excluding member benefits 44,903 9,793

Net assets available for member benefits 3,923,283 3,271,677

Defined contribution member liabilities 3,920,374 3,272,208

Total net assets 2,909 (531)

Equity

Unallocated surplus/(deficit) 2,909 (531)

Total equity 2,909 (531)

Income Statement for the year ended 30 June 2021 2021 $’000

2020 $’000

Superannuation activities

Interest income 326 1,452

Distribution income 265,660 138,978

Net changes in fair value of financial investments 485,226 (424,589)

Page 22: Essential Super - CommBank

20 Essential Super Annual Report 2021

Income Statement for the year ended 30 June 2021 2021 $’000

2020 $’000

Other income 6,236 433

Total income 757,448 (283,726)

Administration expenses 12,124 15,667

Total expenses 12,124 15,667

Results from superannuation activities before income tax expense 745,324 (299,393)

Income tax benefit/(expense) (52,181) 38,859

Results from superannuation activities after income tax expense 693,143 (260,534)

Net benefits allocated to defined contribution members (689,703) 256,540

Operating result after income tax 3,440 (3,994)

Statement of Changes in Member Benefits for the year ended 30 June 2021

2021 $’000

2020 $’000

Opening balance of member benefits 3,272,208 3,777,756

Member contributions 37,609 36,155

Employer contributions 510,598 541,086

Transfers from other superannuation funds 37,501 91,567

Transfers to other superannuation funds (204,805) (302,533)

Income tax on contributions (78,269) (82,350)

Net after tax contributions 302,634 283,925

Benefits to members or beneficiaries (342,066) (536,258)

Death and disability benefits credited to member accounts 13,805 18,497

Insurance premiums charged to members (15,910) (15,172)

Net benefits allocated comprising:

- Net investment income 701,827 (240,873)

- Net administration fees (12,124) (15,667)

Closing balance of members benefits 3,920,374 3,272,208

Page 23: Essential Super - CommBank

21Essential Super Annual Report 2021

Page 24: Essential Super - CommBank

Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL) is the issuer of interests in Commonwealth Essential Super ABN 56 601 925 435 (Essential Super). Colonial First State (CFS) is Superannuation and Investments HoldCo Pty Limited ABN 64 644 660 882 and its subsidiaries which include CFSIL. Commonwealth Bank of Australia ABN 48 123 123 124 (the Bank) holds a significant minority interest in CFSIL. The Bank provides certain distribution and administrative services to CFSIL. This document may include general financial product advice but does not consider your individual objectives, financial circumstances or needs. You should read the Product Disclosure Statement (PDS) and the Reference Guide for Essential Super carefully and consider whether the information is appropriate for you before making any decision regarding this product. Download the PDS and Reference Guide at commbank.com.au/essentialsuper-documents or call us on 13 4074 for a copy. An investment in Essential Super is via a superannuation trust and is therefore not an investment in, deposit with or other liability of the Bank or its subsidiaries. Where we mention ‘we’, ‘us’ or ‘our’, we mean CFSIL. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. CFSIL is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

CBA5104 261121

Call us on 13 4074

Email us on [email protected]

Visit commbank.com.au/essentialsuper


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