New Zealand Harbours Superannuation Plan

1. New Zealand Harbours Superannuation Plan An update June 2012

2. Origins of the Plan • Cash accumulation scheme established in 1985 by the employers and unions in the New Zealand Harbour Industry • Aim was to provide a better and more flexible means of saving for retirement than membership of the National Provident Fund • Original union was Harbour Workers which amalgamated to form Rail & Maritime Transport Union in 1995

3. Benefit entitlements • Retirement, withdrawal, death or disability, ill-health and resignation benefits provided for members and their dependants • Retirement – total of member and employer accounts; assistance with annuity purchase decision if required • Death or Total and Permanent Disablement – total of member and employer accounts plus an age-dependent multiple of salary • Ill Health or Retrenchment – total of member and employer accounts • Resignation – total of member and employer accounts

4. Contribution details • Member generally contributes minimum percentage of earnings (defined as basic salary plus overtime and bonus) directly from pay • Member can be at nil contribution if employer agrees to additional contributions • Member can make additional voluntary lump sum or regular contributions • Employer generally contributes $1 for each $1 contributed by the member to a maximum percentage of earnings • Employer Superannuation Contribution Tax is deducted from employer contributions at the appropriate rate • Net contributions are credited to the member account and to the employer account in the name of the member

5. Investment overview • The Scheme is invested in a balanced mix of assets comprising NZ and Offshore equities and bonds, properties, and cash. • Trustees: • Set proportion of funds in each asset class • Set investment objectives/policy and monitor performance. • Select and review investment managers. • Investment objectives • Minimum real rate of return after tax of 2.5% p.a. • An average return compared to the balanced funds in the MJW investment survey. • The assets of the KiwiSaver Scheme will be invested with the assets of the Superannuation Scheme.

6. Fund managers • AMP Capital Investors New Zealand: • Owned by large Australian parent company, $11.7 billion of managed funds. • Actively manages 23% of Plan assets in their NZ shares, NZ bonds and Property funds. • OnePath (NZ) Limited: • Fully owned subsidiary of ANZ National Bank, $7.0 billion of managed funds. • Actively manages 15% of Plan assets in their Global shares fund. • TOWER Asset Management Limited: • Operating division of TOWER limited, $4.0 billion of managed funds. • Actively manages 27% of Plan assets in their Global shares, Global bonds and Property funds. • Tyndall Investment Management Limited: • Owned by Nikko Investment Asset Management, $3.4 billion of managed funds. • Actively manages 5% of Plan assets in their Option Fund and Multi-manager Multi-strategy Hedge fund.

7. Recent Plan investment results The table below shows the annual returns credited to members after investment fees but before tax rate, with a comparison to inflation.

8. Governance of the Plan (1) • The Plan has its own Trust Deed • A maximum of nine Trustees, up to four appointed by the Rail and Maritime Transport Union, up to four appointed by a unanimous decision of the remaining Trustees and a Chairman who is appointed unanimously by the Trustees • Current Trustees are: • Chairman: David Stevens (ex-NBNZ) • From Union: Wayne Buxton, Hal Upton, Dion Young • Appointed by Union: Roy Cowley (ex-Deloitte) • Appointed by Trustees: David Sharman (Chief Financial Officer, Port Taranaki), Sara Lunam (Corporate Services Manager, Port of Tauranga)

9. Governance of the Plan (2) • Independent Plan managed by its own Trustees • Trustees make decisions based on the needs of the industry and their members • The Plan has own relationship with its advisers • Operated on a “not for profit” basis with costs kept to minimum • No shareholder return on capital requirements • Long and established history

10. Regular information to members • Annual Report as at 31 March year end • Financial Statements as at 31 March year end • Member Benefit Statement as at 31 March year end • Chairman’s newsletter each quarter • Website with Plan and Member information – www.harbourssuper.org.nz • Administrator or Plan Secretary can be contacted at any time, for information such as: • Estimate of current benefits • Copy of current Investment Statement • Copy of current Prospectus, Trust Deed

11. Includes KiwiSaver • KiwiSaver - a voluntary, work-based savings initiative • With automatic enrolment of new employees • Allowing employees to opt out • Otherwise, requiring employee and Employer contributions • Accumulating money (locked in) until entitlement to New Zealand Superannuation - currently age 65 - after 5 years membership • But allowing earlier withdrawal for first home purchase, hardship, serious illness or emigration, all of which are subject to tightly prescribed rules

12. KiwiSaver has Government incentives • $1,000 tax-free kick-start contribution • Employee contribution addition (up to $1,040 annually) • Up to $5,000 towards an employees first home • IRD involvement for contributions

13. But employees can opt out • Every new employee has 8 weeks to opt out of KiwiSaver, but can’t opt out in first 12 days • An opt out is not carried forward to subsequent new employments • Opting out requires filling out either: • an opt out form (in the information pack) and giving it to the Employer or to IRD, or • an online form at the KiwiSaver website • Employer must notify IRD of opt outs received, on a monthly basis • No further KiwiSaver contributions are made once the opt out takes effect

14. Contributions to Plan • Employees contribute usually at 6% or 7% of salary/wages • Employers contribute at matching 6% or 7% of salary/wages • 2% of employee contributions can go to KiwiSaver Scheme to meet employee KiwiSaver contribution requirement • 2% of Employer contributions can go to KiwiSaver Scheme to meet Employer KiwiSaver contribution • Employee KiwiSaver contributions attract government rebate up to $1,040 each year – added to employee balances

15. Advisers involved with the Plan • Auditor Deloitte • Solicitor Johnson Lawrence • Administration Manager Melville Jessup Weaver • Plan Secretary Leonie Stieller • Insurer Sovereign • Investment adviser Melville Jessup Weaver

16. Member Benefits from Plan

17. Regular information to members • Annual Report as at 31 March year end • Financial Statements as at 31 March year end • Member Benefit Statement as at 31 March year end • Chairman’s newsletter each quarter • Website with Plan and Member information – www.harbourssuper.org.nz • Administrator or Plan Secretary can be contacted at any time, for information such as: • Estimate of current benefits • Copy of current Investment Statement • Copy of current Prospectus, Trust Deed

18. Preferred KiwiSaver provider • For the Harbours KiwiSaver Scheme • Trustees do recommend using the Plan as the Preferred Provider • Employer may choose another preferred KiwiSaver scheme • If a Preferred Provider is chosen, only that KiwiSaver Scheme information is provided to employees • Regardless, employees may choose another KiwiSaver Scheme

19. Other information • Harbours Plan (for information about the present Plan) – www.harbourssuper.org.nz • Sorted (for information about your finances and KiwiSaver) – www.sorted.org.nz • Inland Revenue (for information about KiwiSaver) – www.kiwisaver.govt.nz

20. Dialogue with members • Always keen to receive feedback and ideas about the Plan. • Presentations or meetings can be arranged, including question and answer sessions.