November 2001 Volume 82 Number 11 "serving the protectors"
Police Super Update
By Micheal Hogg

Investment Performance for the Financial Year 2000/2001

Funds SA is a statutory body established under the Superannuation Funds Management Corporation Act 1995. Funds SA is responsible for the management and investment of the fortnightly employee (member) superannuation contributions to the Pension and Lump Sum Scheme Divisions of the Police Superannuation Fund and the employer (SAPOL) contributions to the Employer Contribution Account.

Superannuation contributions (employee and employer) are invested by Funds SA in the following investment classes and allocations:

• International Shares 38%
• Australian Shares 34%
• Property 8%
• Inflation Linked Bonds 13%
• Fixed Interest Bonds 5%
• Cash 2%

Investment Returns

For the 12 months to 30 June 2001, Funds SA achieved investment returns (net of fees) for the Police Superannuation Fund (Pension and Lump Sum Scheme Divisions) of 3.2% pa. These returns are lower than those achieved in recent years due to the poor conditions in investment markets over the past year. Investment markets can be volatile in the short term and it is therefore more meaningful to consider returns over longer periods.

The table below shows that, over five years, both schemes have generated returns well in excess of the rate of inflation and are therefore on track to satisfy the schemes’ investment objective of providing an average return of 4.5% per annum in excess of the rate of inflation over an investment time horizon of eight years. The following table shows the investment returns (net of fees) achieved by Funds SA in respect of the Fund for each of the past five years and the average return for the five-year period, compared to the rate of inflation.

FUND INVESTMENT RETURNS
SCHEME	1997	1998	1999	2000	2001	5 years to 2001
PENSION	20.6%	12.8%	9.5%	16.9%	3.2%	12.5%
LUMP SUM	20.2%	12.0%	10.3%	17.0%	3.2%	12.4%
INFLATION	0.3%	0.7%	1.1%	3.2%	6.0%	2.2%

Funds SA’s approach to investment focuses on diversification by spreading investments over a broad range of asset classes as shown above. Further diversification is achieved by allocating funds to a range of specialist fund managers carefully selected for their different and complementary investment styles. As at 30 June 2001, Funds SA had contracts with 17 major external fund managers.

Funds SA does not take short term, tactical views on the performance of the different asset classes, but instead focuses on long-term asset allocations designed to produce superior returns within the agreed risk profile.

Full details on Funds SA’s investment strategy can be obtained by contacting Funds SA. Phone: 8204 2355. Fax: 8204 2366. Web site: www.funds.sa.gov.au E-mail: ceo@funds.sa.gov.au

Crediting Rates to Member’s Accounts

At the end of each financial year, the Police Superannuation Board is required to declare rates of return to be credited to the contribution accounts of members of the Pension and Lump Sum Scheme Divisions of the Police Superannuation Fund.

The Board, in conjunction with Funds SA, has determined an appropriate smoothing policy for end-of-financial-year crediting rates to alleviate the significant fluctuations in actual rates of return from year to year. The smoothing policy for determining the end of financial year crediting rate is based on the average of investment returns (net of fees) achieved for the Police Superannuation Fund (Pension and Lump Sum Scheme Divisions), by Funds SA over the previous three years.

For the financial year 2000-2001, the Board declared crediting rates for the Pension and Lump Sum Scheme Divisions of 9.8 per cent and 9.9 per cent respectively. The following table shows crediting rates declared by the Board over the past five years.

CREDITING RATES
SCHEME	1997	1998	1999	2000	2001
PENSION	10.7%	13.5%	14.3%	13.0%	9.8%
LUMP SUM	10.1%	12.6%	14.0%	12.9%	9.9%

Member Information

For information regarding superannuation contact the Police Superannuation Office. Group information sessions can be arranged upon request. Phone: 8204 2964 or 8204 2965 Fax: 8204 2303.

admin@policesuper.sa.gov.au

PASAweb   Index & Search   Top of Page   Comments   Email to Editor

The Police Journal Online is an official publication of the Police Association of South Australia and is published monthly. Editors of kindred publications can seek permission from the Editor to re-publish any Police Journal Online article. Copyright 2001  The Police Association of South Australia sustance