Information Presentation on the National Entitlement Security Trust NEST

1. Information Presentation on theNational Entitlement Security Trust NEST

2. What is NEST A national industry trust providing an independent, flexible and not for profit financial structure, for protecting employee entitlements such as: • Annual leave including annual leave loading, • Long service leave, • Severance; or • Any other entitlement. Provided that any such entitlement is included within and forms part of an employee’s relevant industrial agreement.

3. What is an industry trust • 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.

4. How NEST operates • 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.

5. The NEST objectives 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.

6. NEST governance NATIONAL ENTITLEMENT SECURITY TRUST NESTNominees Pty Ltd Corporate Trustee Employee Directors Equal voting rights and powers Independent Chairperson Casting vote only Employer Directors Equal voting rights and powers

7. NEST applications NEST has the flexibility to protect entitlements in a variety of formats which include: Future Entitlements protected by: • Ongoing monthly contributions by Employers into the trust. • Contributions are calculated in accordance with accrual rates determined by an employee’s relevant industrial agreement. Past Entitlements protected by: • Staged transfer of existing accrued liability. • NEST as a beneficiary of a bank guarantee on behalf of it’s members

8. Investment of NEST contributions • 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.

9. Contribution flow chart Employers contribute into NEST Employers receive a tax deduction for the contribution Net investment returns offset future contributions and Reduce labor on cost Contributions are invested into the ING/ANZ Enhanced Cash Fund Net investment returns can be distributed to Employers

10. ClaimsFlow Chart Model 1 Employer contributes Into NEST Funds are held in trust and placed with an investment manager Employer pays claim to Employee at the current rate Employee claims their entitlements from their employer Employer claims reimbursement from administrator for an amount no greater than the total contribution received by NEST from the employer on behalf of the specific employee

11. ClaimsFlow Chart Model 2 Employers contribute Into NEST Funds are held in trust and placed with an investment manager Employee claims directly from the Trust Employer is relieved of any further 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 NESTfrom the employer on behalf of the specific employee. Trust provides the Employee with all necessary statutory documentation

12. Operating principles • 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.

13. Taxation • 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.

14. Administration • 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 NESTwhich: • Simplify the administration process • Provide transparency • Provide flexibility • Protect privacy

15. Account balances Claim for entitlements Employee details and transactions View and print monthly contribution statement

16. Monthly Contribution detail Drill down to view Specific employee contribution detail

22. Conclusion 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.