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Information Presentation

on the

National Entitlement Security Trust

NEST

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What is NEST

A national industry trust providing an independent, flexible and not for profit financial structure, for protecting employee entitlements such as:

1. Annual leave including annual leave loading,

2. Long service leave,

3. Severance; or

4. Any other entitlement. Provided that any such entitlement is included within and forms part of an employee’s relevant industrial agreement.

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An industry trust is a legal arrangement established by industry stakeholders with specific rules and objectives. These rules and objectives are defined within a document called a Trust Deed.

• Industry trusts are not a new concept and have operated successfully across a number of industries for many years.

• Industry trusts currently provide superannuation, severance funds, long service leave funds and employee insurance benefits.

What is an industry trust

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NEST operates in conjunction with each employer’s industrial agreement to provide an independent and transparent vehicle for funding employee entitlements.

Employers only contribute entitlements, in accordance with and only to the extent of specifically agreed provisions contained within an industrial agreement.

NEST does not determine the level, extent and type of employee entitlement contributions.

How NEST operates

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NEST has two simple objectives which are entrenched within it’s trust deed. The Trustee manages NEST to achieve these objectives.

Objective 1: To protect employee entitlements.

Objective 2: To distribute income from the investment of NEST contributions to it’s employer and employee members as the case may be.

The NEST objectives

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NEST governance

NEST Nominees Pty LtdCorporate Trustee

Employee DirectorsEqual voting rights

and powersIndependent Chairperson

Casting vote onlyEmployer DirectorsEqual voting rights

and powers

NATIONAL ENTITLEMENT SECURITY TRUST

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NEST has the flexibility to protect entitlements in a variety of formatswhich include:

Future Entitlements protected by:1. Ongoing monthly contributions by Employers into the trust.

2. Contributions are calculated in accordance with accrual rates determined by an employee’s relevant industrial agreement.

Past Entitlements protected by:1. Staged transfer of existing accrued liability.

2. NEST as a beneficiary of a bank guarantee on behalf of it’s members

NEST applications

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The current investment manager for NEST is the ING Group.

ING rank as one of the worlds largest fund managers with 800 billion in funds under management.

The specific fund chosen for NEST is the ING/ANZ Enhanced Cash Fund with a Standard and Poors credit rating of AA.

This investment is asset backed by Australian residential mortgages and bank securities.

Investment of NESTcontributions

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Contribution flow chart

Employers contribute into NEST

Employers receive a tax deduction for the contribution

Contributions are invested into the ING/ANZ

Enhanced Cash Fund

Net investment returns can be distributed to Employers

Net investment returns offset future contributions and

Reduce labor on cost

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ClaimsFlow Chart Model 1

Employer contributes Into NEST

Funds are held in trust and placed with an investment manager

Employee claims their entitlements from their

employer

Employer claims reimbursement from administrator for anamount no greater than the total contribution received by NEST

from the employer on behalf of the specific employee

Employer pays claim toEmployee at the current rate

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ClaimsFlow Chart Model 2

Employers contribute Into NEST

Funds are held in trust and placed with an investment manager

Employer is relieved of anyfurther obligation towards

the entitlement,to the extent of the contribution made

Trust pays the employee for an amount no greater than the total contribution received by NEST from the employer

on behalf of the specific employee. Trust provides the Employeewith all necessary statutory documentation

Employee claims directly from the Trust

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• Employers do not pay any fees or charges in addition to contributions for employee entitlements.

• Administration fees are paid from investment income only.

• The capital of the trust (contributions) cannot reduce in dollar value.

• Equal employer and employee board representation with joint decision making.

Operating principles

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• Contributions into NEST are tax deductible at the time of making the contribution.

• NEST complies with all the requirements of the new FBT legislation to be an FBT exempt fund.

• Contributions into NEST form the capital of NEST and are therefore not taxable as trust income.

• Payments to employees by the trust will be subjected to normal PAYE tax provisions.

Taxation

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NEST is administered by Coverforce Pty Ltd who specialises in the administration of industry funds.

NEST has an efficient and transparent administration provided through B2B internet based administration systems specifically developed for NEST which:

•Simplify the administration process•Provide transparency•Provide flexibility•Protect privacy

Administration

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Claim for entitlements

View and print monthly

contributionstatement

Accountbalances

Employee details and

transactions

16Drill down to view

Specific employee contribution detail

Monthly Contribution detail

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NEST offers a realistic and sensible solution to protecting employee entitlements.

NEST does not aim to provide a quick fix solution but a method of providing employers with a vehicle for funding their employee entitlement obligations over a realistic time frame.

The trust fund model offers tangible benefits for both employers and employees.

Conclusion