annual report 2015/2016 - parliament of nsw · 2017-09-04 · statement of cash flows for the year...

2015/2016Annual Report

We have an opportunity to build a business that’s improving operational efficiency, responsive to customers and provides a platform for growth”

ContentsPart A - Our BusinessOur year in review A3

Our business A4

Our strategy A6

Key administration highlights A8

Business Transformation Program A10

Risk management at Pillar A12

Our people A18

Organisational development A20

Health and wellbeing A22

Environmental sustainability A23

Pillar in the community A24

Pillar in the superannuation industry A26

Part B - Our Corporate InformationCorporate governance B2

The Board B3

Our Directors B4

Our Executive Management team B8

Access to government information held by Pillar B11

Member response B13

Disclosure and privacy B14

Other corporate information B16

Part C - Our Audited Financial StatementsIndependent Auditor’s Report C2

Directors’ Declaration for the Year ended 30 June 2016 C4

Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2016 C5

Statement of Financial Position as at 30 June 2016 C6

Statement of Changes in Equity for the year ended 30 June 2016 C7

Statement of Cash Flows for the year ended 30 June 2016 C8

Notes to the Financial Statements for the year ended 30 June 2016 C9

Part D - AppendicesAppendix 1 – Statistics about GIPA access applications D2

Response to significant issues raised by Auditor-General D5

Appendix 2 – Exemptions from Reporting requirements D6

Index of legislative compliance D9

30 October 2016

The Hon. Gladys Berejiklian MPTreasurer and Minister for Industrial Relations52 Martin PlaceSydney NSW 2000

Dear Minister,

This is the 17th Annual Report of the Superannuation Administration Corporation, trading as Pillar Administration (Pillar). We have pleasure in submitting this Annual Report to you for presentation to Parliament.

The report has been prepared in accordance with the provisions of the Annual Reports (Statutory Bodies) Act 1984 (NSW), the Public Finance and Audit Act 1983 (NSW) and relevant Government policies.

As in previous years, Pillar’s primary business of superannuation administration was profitably conducted within a competitive environment.

The financial statements for 2015/16, which form part of the Annual Report, have been submitted to and certified by the Auditor-General of NSW.

Yours sincerely,

Cathy Aston Mr Peter Brook

Chair Managing Director & Chief Executive Officer

Letter to the Minister

P I L L A R A D M I N I S T R A T I O N | O U R B U S I N E S S | A 1

A Our Business

We are trying to lift everyone’s capability across the board, because it has this wonderful effect of impacting other things that you do”

A 2 | O U R B U S I N E S S | P I L L A R A D M I N I S T R A T I O N

It has been a big year for Pillar, one of fervent activity to position ourselves for success in an industry on the cusp of significant disruption.

Over the year, Pillar’s leadership and staff have shown great imagination for what can be achieved, the determination to achieve it and the passion to ensure that what is achieved, is of the highest quality.

As well as welcoming a new fund to our stable, here’s a summary of the key highlights from the 2015/16 financial year:

Our Year in Review

Business Transformation Program

We have continued with, and delivered several critical stages of our Business Transformation Program including Project Eleanor, replatforming our registry system. We have worked with our partners and clients to progress the new operating platform and strengthening our ability to deliver a responsive, effective and flexible service offering to our clients and their members.

Organisational Development

We continued our investment in our team, delivering almost 5000 training hours across a range of disciplines, embedding change capability into our organisation and preparing the business for the post transformation operating model.

Financial Profit

We recorded a before tax profit of $3.1m while still delivering the implementation of our Business Transformation Program, and our investment in organisational development.

Operational Achievements

We have continued to deliver a high level of operations through:

• Servicing more than 1.1 million member accounts

• Transacting with more than 58,000 employers

• Replying to more than 359,000 pieces of written correspondence

• Answering around 188,000 inbound calls

• Producing over 1.9 million member mailouts

Innovation Program

We implemented a custom-designed system to drive innovation across the business. The Innovation Program, backed by an online portal and a framework of employee engagement, creates an environment that fosters idea generation, continuous improvements, calculated risk-taking and constructive questioning.

Cyber Security Team

We invested in securing our systems through the creation of a dedicated Cyber Security Team, putting us at the forefront of our industry in system security, training and monitoring.

Pillar in the Community

Employees continued to support and contribute to our local community through a variety of charities.



About PillarPillar Administration

The Superannuation Administration Corporation trading as Pillar Administration (Pillar) is one of Australia’s leading superannuation administration providers, with more than $100 billion in funds under administration across 1.1 million member accounts. We are passionate about superannuation and helping to protect the retirements of millions of Australians.

We are recognised for our experience, developed over more than 100 years of service to our clients and the community. We aim to provide nuanced services that meet the particular needs of our clients, today and into the future. We specialise in administering a range of superannuation products, including complex defined benefits schemes, accumulation, pension and income streams across public sector, industry, corporate and retail funds.

Our charter

Pillar is a New South Wales statutory State owned corporation established by the Superannuation Administration Authority Corporatisation Act 1999 (NSW).

The statutory objectives under the State Owned Corporations Act 1989 (NSW) for each such corporation are:

• To be a successful superannuation administration business by:

– operating as efficiently as comparable businesses; and

– maximising the net worth of the State’s investment.

• To exhibit a sense of social responsibility by having regard to the interests of the community in which it operates;

• Where its activities affect the environment, to conduct its operations in compliance with principles of ecologically sustainable development; and

• To exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates.

The principal functions of Pillar under the Superannuation Administration Authority Corporatisation Act 1999 (NSW), are the development, promotion and conduct of its business of providing superannuation scheme administration and related services. Pillar currently provides such services to the trustees of superannuation funds.

Our vision and values

Vision

We provide peace of mind to our clients and their members in everything we do.

Mission

Superannuation administration matters. We safeguard the future by providing expert and reliable services today.

Values

To fulfil our commitment to our clients and their members, employers and advisers, Pillar upholds four core values. These values are important to us as they express what we care about, what we share and what makes us connect with one another at Pillar.

1. We care about our customers in everything we do.

2. We are one team.

3. We are responsible for our success.

4. We are experts and innovators.

Our clients

At 30 June 2016, we administered 20 superannuation schemes, on behalf of five clients that include:

• First State Super Trustee Corporation (the trustee of First State Superannuation Scheme) (FSS);

• SAS Trustee Corporation (the trustee of the STC Pooled Fund schemes);

• Commonwealth Superannuation Corporation (the trustee of PSSap and ADF Super);

• Aon (for the Aon Master Trust and Aon ERF); and

• the Trustees of the Parliamentary Contributory Superannuation Fund (PCSF).

Our services

Administration services

The principal function of Pillar is the provision of superannuation scheme administration and related services. In essence, this includes the following services:

• Collecting and processing contributions.

• Keeping and maintaining member records.

• Providing information and advice to fund members.

• Processing claims and paying member benefits.

• Providing contact centre and member communication services.

• Preparing financial statements for the trustees of superannuation funds.

• Providing corporate services including human resources, accounting, payroll and technical support.

• Assisting clients to meet their regulatory compliance obligations.

Australian Financial Services Licence

Pillar has an Australian Financial Services Licence (AFS Licence No. 245591) and is licensed to provide financial product advice to members of the superannuation funds under its administration, and to deal in superannuation products.

Our business


C We CARE about our customers

R We are RESPONSIBLE for our success

O We are ONE team

E We are EXPERTS and innovators

Pillar Core Values


Vision Mission Values Our Strategies Outcomes



We CARE about our customers in everything we do

We are ONE team

We are RESPONSIBLE for our success

We are EXPERTS and innovators

Strengthen our existing services and deliver regulatory compliance

Pillar delivers high-quality, cost-effective, efficient and compliant services within agreed performance criteria

Deliver new products and services to meet immediate and future client needs

Pillar delivers new product and service offerings that add value to our clients and their members at an attractive cost to them and ourselves

Further develop our brand with our clients and target markets

Pillar grows its client base and is sought out for service and commentary in superannuation

Transform our workforce and culture

Pillar has an agile and motivated workforce that is client, member and solution focused, highly skilled and resilient

Improve our profitabilityPillar earns a sufficient return to reinvest in its business and provide a return to its shareholders whilst being market competitive

Our strategy

Our strategic plan

Vision Mission Values Our Strategies Outcomes



We CARE about our customers in everything we do

We are ONE team

We are RESPONSIBLE for our success

We are EXPERTS and innovators

Strengthen our existing services and deliver regulatory compliance

Pillar delivers high-quality, cost-effective, efficient and compliant services within agreed performance criteria

Deliver new products and services to meet immediate and future client needs

Pillar delivers new product and service offerings that add value to our clients and their members at an attractive cost to them and ourselves

Further develop our brand with our clients and target markets

Pillar grows its client base and is sought out for service and commentary in superannuation

Transform our workforce and culture

Pillar has an agile and motivated workforce that is client, member and solution focused, highly skilled and resilient

Improve our profitabilityPillar earns a sufficient return to reinvest in its business and provide a return to its shareholders whilst being market competitive

We are one of the leading fund administrators out there and we have a clear strategy for innovation and growth”



Key administration highlights

Pillar’s strategy

Our current competitive advantage is based on strong relationships and a nuanced service offering, including strong market perceptions of our defined benefit capabilities. The sources of this competitive advantage are not a given – they require continued attention to be maintained. Our future success requires it to be a trusted, nimble provider of a nuanced product and service offering that offers an ease of doing business.

Pillar’s success measures over the next three years include:

Market positioning

• We will be considered for all outsourcing opportunities and considered a leading provider in superannuation administration services.

Retention of existing clients

• We continue to put in place long-term agreements with all of our clients and our business transformation and new operating model will ensure that we retain these clients and also positions us to offer additional products and services.

Seeking new business opportunities

• Our business transformation ensures that it is well positioned to pursue a range of new business opportunities.

Technology platform refresh

• We continue to execute on our technology refresh and will have transitioned all clients and new business to our single registry platform.

Continued upward trend in profit

• We have a consistent track record of profitability. As the benefits of our Business Transformation Program and engagement strategy are progressively being realised, we will generate a sufficient return to facilitate reinvestment in its business, whilst continuing to improve on our shareholder’s return as well as ensuring that we remain market competitive.

Stronger Super update

The year ahead sees the extension of the SuperStream standards for rollovers and contributions to incorporate Government interactions with super funds. We will also be working closely with our clients and vendors to implement the superannuation package of reforms announced in the last Federal Budget.

Our strategy

Members and Employers of our clients’ funds - 30 June 2016

Funds under adminstration of our clients’ funds - 30 June 2016

0 0 0

0.5 0.3 50

1.0 0.6 100

$150 billion1.5 million 0.9 million

2014

2014

20142015

201520152016 2016 2016

members employers


Continuous improvement and innovation

Over the last 18 months Pillar has established an Innovation Program to begin the process of building a culture that values continuous improvement, calculated risk-taking and constructive questioning.

The program funds the implementation of innovative ideas that pass a rigorous assessment program. But we are particularly proud of our new Innovation Portal.

Custom-built to our specifications, the intranet-based system is designed to capture ideas and bring them to the workforce for discussion, improvement and consideration. The Portal is an important enabler of the innovation process – it’s not an end in itself. We have designed the Portal and bring innovation to life for Pillar’s employees.

Using the Portal, employees can generate, collaborate, submit and review ideas, as well as report on outcomes and benefits realisation. One of the primary goals of the Portal is to make the user experience simple, easy, intuitive and creative.

Across the business, ‘Innovation Champions’ are visible promoters of the system. An Innovation Committee meets regularly to assess and approve ideas for implementation.

The Innovation Program encompasses formal and structured activities to help us stay on top of industry trends and emerging customer needs.

Our Innovation Champion development program invites volunteers from across the business to participate in monthly site visits and tours with our partner organisations such as Stone and Chalk (Fintech), University of Wollongong and the Commonwealth Bank Innovation Lab.

Since our Innovation Program began, Pillar employees have been active and enthusiastic participants, generating more than 180 ideas.

More than 100 of these ideas have been approved by the Innovation Champions and the Innovation Committee and have proceeded from the ‘idea’ stage to the next stages of the development process. Approximately 70% of our ideas implemented have been identified by employees as improving their engagement in the workplace and a further 58% allows employees to better understand Pillar’s strategy, brand and values.

To date, we have implemented 46 ideas. We are in the early stages of analysing the success of these ideas through our benefits realisation assessment. We estimate that over the first 12 months of the Innovation Program we saved over $92,500 in employee hours through efficiencies gained via implemented ideas. In total, the program generated an estimated value of nearly $40,000 after expenses through ideas implemented in the first 12 months.

Our strategy

Member correspondence of our clients’ funds - 30 June 2016

0

1

2

3 million

written correspondence phone calls

member mailouts

2014 2014

2014

20152015

2015

2016 2016

2016

Our Business Transformation Program (BTP) was established to assist in the delivery of a number of our key strategies including:

• delivering new services to meet immediate and future client needs;

• strengthening our existing services and deliver regulatory compliance;

• improving our profitability.

Project Eleanor, replatforming our registry system, is a key component of our Business Transformation Program.

Additionally, our clients’ funds and their members, employers and advisers now have access to a number of improved service offerings.

During the 2015/16 financial year, our BTP progressed well, with the successful implementation of our newest fund, ADF Super. The remaining stages of the project will capitalise on the work achieved to-date and transition Pillar’s remaining clients, including our largest client First State Super, onto the new platform in addition to any new business.


The scope of the solution delivered includes:

• superannuation administration functionality;

• workflow and process management;

• digital channels (e.g. web, mobile);

• reporting capabilities; and

• integration to existing systems, e.g. general ledger.

Pillar’s executives will continue to have a high level of involvement throughout the program, reflecting the importance of this strategic project. One of the main drivers of this program is to drive efficiency throughout all aspects of our operations and this will improve our competitiveness in the administration market.

Our BTP is subject to Pillar’s Risk Management Framework and all aspects go through the five steps used to manage our risk exposure.

A 1 0 | O U R B U S I N E S S | P I L L A R A D M I N I S T R A T I O N

P I L L A R A D M I N I S T R A T I O N | O U R B U S I N E S S | A 1 1

In terms of our technology base, it’s going to be state-of-the-art. We are going to move through a digital transformation”



Risk management at Pillar

Risk Management Overview

We recognise that superannuation administration carries a high level of inherent risk. Therefore, risk management is a key focus at all levels within our organisation. This includes:

• Day-to-day process of member transactions is subject to risk-based preventative and detective control mechanism and intensive surveillance.

• IT system development and all significant business changes are supported structurally by a well-developed project management framework.

• Regulatory risks arising from the finance and superannuation industries’ complex regulatory requirements are monitored through a comprehensive compliance program.

Risk Management Framework

Pillar’s Risk Management Framework (RMF) incorporates a collection of systems, structures, policies and processes designed to identify, assess, manage, mitigate and monitor internal and external sources of inherent material risks. The RMF includes the following:

• a risk management strategy;

• a Board approved risk appetite statement, which articulates the level and type of risk that Pillar has deemed acceptable in pursuit of its strategic objectives;

• an independent and designated risk management function, with appropriate authority, expertise and reporting structure;

• risk management policies, procedures and controls to identify, assess, monitor, report on, mitigate and manage each material risk;

• clearly defined and documented roles, responsibilities and formal reporting structures for the management of material risks throughout our business operations; and

• a review process to ensure the RMF remains effective.


Diagram 1: Pillar’s Risk Management Framework

1st line

Board 2nd and 3rd lines

Board and

EGMS

Monitor risk, adjust treatments and evaluate the effectiveness of the RMF.

Establish acceptable risk levels.

Risk Appetite Statement

Risk Management Strategy (including enterprise risk and project risk registers)

Control Framework

Risk Reporting

Controls Assessment

Reviews Internal and

External Assurance Reviews

Identification, analysis and

evaluations of existing and emerging risks.

Treat risk to pursue upside and manage downside.

1st and 2nd

lines



As represented in diagram 1 (on the previous page), Pillar’s RMF incorporates the following three lines of defence:

Defence Line Responsibility

First line of defence:

Line management /business operations

Line management is responsible for ensuring that a suitable risk and control environment is established in day-to-day operations. This includes identifying key business risks and controls at process level, which are proactively reviewed, updated and modified to capture changes in the business environment.

The first line of defence provides management assurance and informs the second line of defence by identifying, managing and reporting on the risks in their business operations.

Second line of defence:

Oversight function

There is a designated Risk function at Pillar, responsible for the oversight of business processes and risks. This includes:

• Designing and reviewing risk management policies and procedures;

• Reviewing the RMF;

• Facilitating and challenging risk assessment processes undertaken by the first line, and providing meaningful reports on material risks to the Audit Risk Management Committee (ARMC), Executive General Managers (EGMs), clients and relevant management and staff; and

• Providing risk management training and advice across the organisation. This ensures that line management are responding to new strategic priorities and risks, and monitoring mechanisms are appropriately working to enable compliance with policies and procedures.

Third line of defence:

Internal audit and other independent assurance providers

The third line of defence provides independent, objective assurance services designed to add value and improve operational controls. These assurance activities are determined by the Board through the ARMC, in consultation with the first and second lines of defence.

It is critical that the third line of defence is independent to ensure the objective and effective assessment of the organisational internal controls, risk management and governance processes. Therefore, at Pillar we provide appropriate reporting lines for respective audit and assurance providers, including a direct report to the ARMC, as required.


All functional areas and activities are covered by Pillar’s RMF including: business strategy, client and member services, finance and accounting, human resources, information security, fraud and corruption prevention, business take-on, and system migrations. Pillar’s risk profile is continually monitored and reviewed across all these functional areas.

Client Communication

Pillar is committed to providing quality trustee engagement in relation to our risk management practices. This is achieved through ongoing communication and reporting, including:

• Risk and audit reports: Quarterly reports are issued on audit and risk activities, which include an overview of all internal audit, risk, compliance and quality reviews performed during the relevant period. In addition, Pillar performs an annual audit on the description of relevant controls over superannuation member administration services, which is completed with reference to the Guidance Statement GS007 (Audit Implication of the Use of Services Organisation for Investment Management Services).

• Client audits: The Risk team works closely with clients and their auditors to co-ordinate client-initiated audits and risk reviews. This includes internal audit, external audit, compliance, and other reviews.


• Attendance at Audit and Risk Committee and/or Trustee meetings: The Risk team and relevant EGMs attend and present at client board committee meetings and/or trustee meetings, as requested.

• Other ongoing communication: The Risk team, EGMs and relevant management and employees are available to address client queries (e.g. via email, phone or meetings). This may include partaking in regular audit and risk update meetings and risk workshops, as required.

Risk Management Process

Pillar’s risk management process is summarised in Diagram 2 (below).

The following five steps are applied to ensure that we continue to implement an effective risk management approach.

Diagram 2: Risk Management Process

1 - Establishing the Risk Context

2 - Conducting the Risk Assessment

5 - Communication and Consultation

4 - Monitoring and Review

Risk Culture

3 - Developing Risk Treatment

Plans



Step Responsibility

1.

Establishing the risk context

The risk context is established by understanding what our organisation does, on a holistic and elemental basis:

• Internal parameters: Include our organisation’s culture, governance structure, size, diversity, business functions, contractual arrangements, capabilities, internal processes, and internal stakeholders.

• External parameters: Include external factors and external stakeholders, as well as environmental conditions that would influence Pillar’s ability to achieve its objectives. These may include social, cultural, political, regulatory, economic and competitive factors.

2.

Conducting a risk assessment

The Risk Assessment process involves the following steps:

• Identify the risks: By noting down all possible risk events, even if there are controls in place designed to reduce these risks.

• Analyse the risks: By looking at the likelihood and consequences of the risk event, before the effectiveness of internal controls has been taken into account.

• Evaluate the risks: By prioritising the risks according to their combined likelihood and consequence rating.

3.

Developing risk treatment plans

This involves developing and implementing action plans to eliminate risks or reduce them to an acceptable level. Overall, the aim is to identify ways to mitigate the risk by:

• Reducing the likelihood of the risk occurring: By preventative maintenance, audit and compliance programs, supervision, contract conditions, policies and procedures, testing, training of employees, technical controls and quality assurance programs.

• Reducing the consequences of the risk occurring: Through contingency planning, contract conditions, disaster recovery and Business Continuity Plans (BCP), off-site back-up, public relations, emergency procedures and employee training.

In some cases, the risk may be accepted, avoided, or transferred (through insurance and or fixed contracts).

4.

Monitoring and reviewing the risk and control environment

Line management (i.e. risk and action owners) is required to monitor and review risks and the effectiveness of controls by:

• Ensuring that controls are effective and efficient in both design and operation.

• Obtain further information to improve risk assessment.

• Analysing and learning lessons from risk events, including near-misses, changes, trends, successes and failures.

• Detecting changes in the external and internal context, including changes to risk criteria and to the risks, which may require revision of actions plans and priorities.

• Identifying emerging risks.



5.

Engaging effective communication and consultation practices

Our risk management process incorporates internal audit procedures and external audit arrangements to ensure compliance with the RMF. Our communication and consultation approach includes:

• Internal Audits: Independent assurance providers (currently KPMG Australia) are engaged to provide internal audit reviews. The Internal Audit Plan is developed annually in consultation with the EGMs, key process owners/line managers and clients, as required. The Internal Audit Plan is approved by the ARMC.

• Compliance Assessment Reviews (CARs): The Risk function undertakes an annual CAR plan that incorporates a program of risk based reviews.

• External Audit: An independent assurance review on the integrity of Pillar’s financial statements is performed annually. The Annual Report is published on the Pillar website.

• Other assurance providers: Management may also engage assurance providers to assist in various advisory and audit requirements (e.g. IT Security Reviews, Risk Culture Engagements). These will be determined at the business unit level and approved by the relevant EGM.

Underpinning Pillar’s RMF and process is a risk-aware culture. All employees across Pillar are encouraged to take a proactive role in applying effective risk management practices, in all aspects of their work.


Monitoring legislative compliance and data quality

Pillar recognises that an important part of achieving its strategic direction is to ensure that the superannuation services it provides meet all relevant compliance obligations.

To meet this strategic outcome, Pillar maintains a Superannuation Compliance Management Framework. This Framework is supported operationally by a specialist Compliance business unit, with the responsibilities of that unit including:

• assessment of compliance risks in line with Pillar’s RMF;

• setting of organisational compliance objectives;

• detailing the superannuation requirements with which all Pillar employees must comply;

• monitoring the superannuation compliance environment to ensure that Pillar has complete and timely information necessary to meet compliance requirements;

• monitoring and assessing the extent that Pillar is taking appropriate actions to ensure compliance through an ongoing compliance assessment program;

• ensuring that effective processes exist for the reporting and rectification of breaches.

The Compliance business unit also includes a team of Data Quality analysts, whose role is to ensure that an overall data quality program of work is formulated, implemented and effectively managed. The program of work aims to continually improve the quality of our data and includes:

• execution of a number of data quality test scripts;

• investigation of the causes of all input, output and data quality issues and undertaking the appropriate corrective measures;

• setting of data quality benchmarks and reporting against those benchmarks.

Business Continuity Management

Our comprehensive Business Continuity Management Framework (BCM Framework) mitigates the potential impact that an unscheduled disruption may have on our business activities, the services of our clients and the peace of mind of their members.

• Our BCM Framework provides Business Resumption Plans and a Disaster Recovery Plan that promotes the most efficient methods of returning business to normal.

• Our recovery documentation and practises are tested bi-annually, both from an information technology perspective, and a business one. Results are then consolidated and reported to our Executive Committee and our clients.

• Data is also backed-up daily to a dedicated replication system located at our offsite recovery facility.

Insurance

As long as Pillar is a State owned corporation, it is a member of the NSW Treasury Managed Fund (TMF) and has cover in accordance with the TMF’s Statement of Cover. The TMF Statement of Cover provides cover for professional indemnity and public liability, directors and officers cover, property and motor vehicles cover and Workers Compensation cover. This cover is provided by the TMF on an occurrence basis.


Employees

Pillar employs around 700 people, the majority of whom are based in Coniston in the Illawarra region. Pillar is proud to be one of the Illawarra’s largest employers and actively participates in the community life of the area.

Our strategy is to strengthen our business through investment in our employees. Our aim is to achieve an engaged, diverse and capable workforce who are actively involved in our workplace, in the business and in the wider community. A variety of initiatives have been implemented or continued from previous years to help us achieve this aim.

Multiculturalism

The Illawarra is recognised as a culturally diverse region, which is comprised of residents from a wide range of multicultural backgrounds. Our workforce reflects the community of the Illawarra region.

Pillar is committed to the Principles of Multiculturalism, as set out in section 3 of the The Multicultural NSW Act 2000.

Pillar has ongoing strategic initiatives in relation to these principles including:

• a strong commitment by the CEO and the Executive Committee to the Principles of Multiculturalism;

• promoting an understanding of multiculturalism within Pillar;

• offering flexible working hours, subject to business needs being met;

• ensuring access to information services; and

• ensuring equality of opportunity based on merit within Pillar.

In the 2015/16 year Pillar continued to meet its performance indicators in relation to the above-mentioned initiatives. Some of the ways in which the initiatives have been (and will continue to be) implemented are set out below.

Recruitment and Selection Process

Pillar has a well-structured and defined recruitment and selection process incorporating best practice methodologies and online recruitment tools. Pillar’s recruitment and selection processes strengthen our merit selection, and increase the skills of managers in making sound selection decisions.

Flexibility

Pillar offers a high degree of flexibility to our employees, many of whom, in particular parents of young or school age children, take advantage of the flexibility in working hours that we offer. Pillar has a formal Working from Home Policy, which provides an additional element of flexibility for our employees.

Diversity

Pillar strives to build a workforce that reflects the diversity of our society. A diverse workforce is one that recognises and embraces the diverse skills and perspectives that people bring to an organisation through their gender, origin, ethnicity, disability, age, and religious beliefs. By valuing different people and different approaches, we are more innovative and ultimately able to deliver better services. The merit principle is applied to all recruitment, selection, promotion, training and other employment-related opportunities. Recently in March we celebrated Harmony Day with the aim of spreading this year’s key message: ‘Our Diversity is our strength’.

We have a significant multicultural and linguistically diverse workforce and direct, measurable benefits arise from the substantial number of multilingual employees who are able to assist in member services by performing interpreter functions and who also are sensitive to cultural issues of fund members from different backgrounds.

It should also be noted that no substantiated complaints have been made to Pillar that ethnicity has been a barrier to employment or development opportunities.

Respect for the rights of people with disabilities

Pillar is committed to treating all employees fairly and with respect. Integral to this is Pillar’s respect for the rights of people with disabilities and appreciation of their needs, particularly in accessing the services that Pillar provides and in pursuing employment and career advancement opportunities within Pillar.

We believe that any employee or client fund member with a disability should have the same access as other people to our services. Pillar provides flexible communication options to cater for employees and client fund members with specific needs. When providing customer service we attempt to meet any special needs of fund members on a case-by-case basis.

Our people


Table A: Trends in the Representation of Workforce Diversity Groups*

Workforce Diversity Group Benchmark or target

2014 2015 2016

Women 50.0% 69.0% 65.8% 67.8%

Aboriginal people and Torres Strait Islanders 2.6% 0.3% 0.3% 0.2%

People whose first language spoken as a child was not English

19.0% 21.7% 23.5% 22.2%

People with a disability N/A 2.5% 2.0% 2.1%

People with a disability requiring work-related adjustment

1.5% 0.0% 0.0% 0.0%

Table B: Trends in the Distribution of Workforce Diversity Groups*

Workforce Diversity Group Benchmark or target

2014 2015 2016

Women 100 73 75 78

Aboriginal people and Torres Strait Islanders 100 N/A N/A N/A

People whose first language spoken as a child was not English

100 107 107 101

People with a disability 100 N/A N/A N/A

People with a disability requiring work-related adjustment

100 N/A N/A N/A

* Employee numbers as at 30 June.

NOTES

1. A Distribution Index of 100 indicates that the centre of the distribution of the Workforce Diversity group across salary levels is equivalent to that of other staff. Values less than 100 mean that the Workforce Diversity group tends to be more concentrated at lower salary levels than is the case for other staff. The more pronounced this tendency is, the lower the index will be. In some cases the index may be more than 100, indicating that the Workforce Diversity group is less concentrated at higher salary levels.

2. The Distribution Index is not calculated where Workforce Diversity group or non-Workforce Diversity group numbers are less than 20.

Our people

Industry-related training

Employees at all levels are keen to undertake training and development to ensure industry knowledge is relevant and up-to-date. Approximately 300 employees have maintained their regulatory ASFA146 qualifications by conducting quarterly refresher courses via eLearning and assessed by a Registered Training Organisation (RTO). The Pillar Board and Senior Executive teams were also provided with a two month training program to ensure their client, product and industry knowledge was current.

Business Transformation Program training

The upcoming business transformation initiative, the System Integration project, also known as our Business Transformation Program, has seen the focus on mandatory system and procedural training through both classroom and eLearning modules. All training solutions have included assessments to ensure our training content meets business needs and that our employees have met relevant training requirements. Training attendance, assessment pass rates and participant evaluation scores have achieved an average of over 95%. Approximately 200 classroom training sessions have been conducted and almost 5000 training hours held between March and July 2016 for our Business Transformation Program.

Organisational development

Defined Benefits

Our customised client specific Defined Benefits programs were built in partnership with ASFA and are now in place. A 10-day classroom program was held over three months with the focus on learning the end-to-end Defined Benefits processes and rules that are specific to the client they service. Successful graduates from the program receive dual qualifications – a Certificate IV in Financial Services and a Certificate IV in Superannuation. Our in-house training team provides the training, maintains the course content and formally assesses all assignments on behalf of ASFA (RTO). Approximately 100 employees have successfully graduated from these programs since its launch and this number is expected to double over the next 12-18 months.

Capability Framework

Pillar has a new Capability Framework which provides a common and consistent description of the capabilities (skill, knowledge and abilities) required of all employees. The framework will help Pillar to effectively design jobs to meet business needs and therefore aid the recruitment and selection process. The Framework will help to identify the most effective ways to target learning and development activities to help employees succeed in their current and future roles.


Personal Attributes

Business Enablers

Relationships

People Management

Results

Occupation Specific

Capability Framework

eLearning

Many programs are available via a suite of eLearning modules, developed in-house. The majority of these modules are industry and compliance related and form part of our annual eLearning calendar which is mandatory for all employees to complete.

This blended approach to learning provides flexibility for employees and can act as a prerequisite for other classroom training courses. Our strategic plan for the year ahead is to digitise more of our system and procedural-related training sessions.

Leadership training

A successful leadership program, ‘Leading through Change’, was held for the management team that was customised to each of the three management levels at Pillar.

The training content was customised and facilitated by a selection of external ‘best in class’ global training providers to ensure that leaders were equipped with the latest leadership training trends, research and methodologies in an ever-changing and dynamic business environment.

In alignment with the transformational changes we faced this year, the leadership program focused on two key

learning areas. The first was Change Management and the ADKAR model of change, ensuring that

our people managers were fully equipped with the tools and know-how to both manage and

drive change across the business.

The seven-day classroom training resulted in over 95% attendance and almost 100% positive participant evaluation scores were received from the 100 managers that attended the training.

Business procedures

Our new business procedures management system ‘Compass’ has made significant improvements for all operational procedures. It includes an automatic peer review process and annual reminder to update procedures. Procedure updates are live and provide a full auditable trail for internal and client tracking if required, ensuring governance requirements are in place and management dashboards are readily available.


Organisational development

What I love about Pillar is the way everybody is there to help each

other out”


Workplace wellness – My Wellness Program

Pillar aims to lead by example by creating a workplace culture and environment that values, supports and promotes programs and policies that improve the physical and mental health and wellbeing of our people. A healthy workplace is one where employers and employees work together to support and promote good health.

Effective workplace wellness programs have shown to have significant benefits to both employees and businesses and consistently show positive returns on investment.

Research shows there are many measurable benefits to organisations and employers in implementing workplace health programs, including increased productivity, reduced absenteeism, improved employee engagement and reduced workers compensation costs.

Over the past year our Wellness Committee has encouraged participation in a number of activities from walking groups and meditation to supporting R U OK? and Red Apple Days. Employees were offered the opportunity to undergo a free flu vaccination which aims to reduce the incidence of unplanned leave due to illness and participation in this program continues to increase.

Our Wellness Committee produces a bi-monthly ‘My Wellness Newsletter’ which provides a range of health and wellness activities and information.

Pillar proudly sponsored the Victor Chang Cardiac Research Institute (a not-for-profit charity) to bring its mobile heart health testing unit to Pillar. Testing was conducted by registered nurses and 80 employees were given the opportunity to undertake blood pressure, total cholesterol and blood sugar testing.

Pillar offers all employees free gym membership and a comprehensive Employee Assistance Program (EAP) which is designed to improve health and general wellbeing as well as supporting a more productive workforce.

Mental Health First Aid (MHFA) is the help provided to a person who is developing or experiencing a mental health problem, or who is in a mental health crisis, until appropriate professional treatment is received or the crisis resolves.

Mental health first aid strategies are taught in evidence-based training programs authored by MHFA Australia and conducted by accredited MHFA instructors. Under the Mental Health First Aid Skilled Workplaces Initiative, Pillar Administration was awarded a Gold Large Workplaces badge in March 2016 as more than 10% of our employees hold a current Mental Health First Aid Certificate.

Workplace health and safety In order to identify and communicate workplace health and safety issues to management, an active Health and Safety Committee meets every two months within Pillar. We have 13 assigned Health and Safety Representatives representing all business areas across our Sydney and Coniston sites.

Workers Compensation

During the 2015/16 financial year four Workers Compensation claims were submitted to Pillar’s insurer.

Pillar was not subject to any prosecutions under the Work, Health & Safety Act 2011 (NSW) in 2015/16.

Health and wellbeing


Since I started here, I’ve made

great friends and great working relationships”

Energy efficient air conditioning upgrade

Pillar prides itself on being environmentally responsible and is committed to reducing energy usage.

Our National Service Centre building in Coniston is currently having the heating ventilation and air conditioning system replaced, which should see a 50% reduction in electricity consumption over that used by the old air conditioning system.

The new system will provide a high technology solution with an in-house control interface, considerably lower maintenance and operating costs and improved comfort and air quality.

Waste reduction and purchasing plan

Pillar is committed to waste reduction and recycling and aims to comply with the NSW Government’s Waste Reduction and Purchasing Policy. Pillar prides itself on being environmentally responsible and is dedicated to recycling initiatives.

Practices consistent with waste reduction and sustainability are firmly established within Pillar’s processes. Pillar continues to try to reduce its use of paper products and, through e-business initiatives, the need for other organisations to use paper as well.

Key elements of Pillar’s actions in these areas are that:

• information technology and other technologies as appropriate are used to the optimum extent to reduce paper needs in Pillar, bearing in mind cost and quality criteria;

• office consumables with recycled content are purchased where these are readily available and meet cost and quality criteria;

• paper and cardboard waste that meets recycling criteria, and toner cartridges are placed in designated containers for recycling; and

• other suitable materials are recycled as advised.

Environmental sustainability


Pillar in the community

I’m proud to be a part of Pillar and all the things we

do for the Illawarra community”


Employees are encouraged to recycle and reduce waste where possible and would be aware that Pillar’s actions and programs reflect corporate practices that have been in place for some time.

New employees are made aware of the practices as part of the standard induction program.

Pillar is proud to be a respected employer in the Illawarra and actively participates in the community. Set out below are examples of how our employees contribute to our local community.

Barnardo’s Gifts for Kids

Once again in 2015/16 Pillar employees showed their support of the Barnardo’s Gifts for Kids. Pillar employees have been supporting this charity for many years and this year was no different with employees donating presents to kids who face extreme homelessness, poverty, neglect and abuse.

Cancer Council - Relay for Life

Pillar employees and family members participated in the Illawarra’s Relay for Life over the weekend of 19-20 September 2015. Team Pillar included 29 employees and family members who walked laps around Beaton Park in honour of a loved one, to show how proud they were to have survived cancer or simply because they wanted to make a difference. Following the Hope Ceremony at sunset the team enjoyed a meal together which everyone contributed towards.

Harmony Day

Pillar celebrated Harmony Day in March 2016 which is a special celebration of Australia’s multiculturalism, by inviting employees to bring along a plate of food to share with their team members. With more than 22.3% of our workforce speaking a first language other than English, this proved to be a special celebration.

Mission Australia Recycling Bin

Since July 2012, a Mission Australia recycling bin has been located in the Pillar car park in Coniston for employees to donate unwanted clothing. These donations have assisted underprivileged and homeless individuals and families in the Illawarra, particularly in the cooler winter months.

Salvation Army Blanket/Coat Appeal

In July 2015, the Salvation Army sent out an appeal to the local community to assist in replenishing their stocks of blankets, coats and jumpers. Pillar employees were given the opportunity to support this appeal and as usual, gave most generously.

Employee donations

During the year, our employees donated $10,745 to a variety of charities through participation in various activities including raffles, barbeques and ‘mufti-days’.

Some of the charities for which funds were raised during the year include:

Coastrek - Fred Hollows Foundation

The Fred Hollows Foundation is working towards ending avoidable blindness in Indigenous Australia and in the developing countries around the world. In March 2016 a team of four employees (including their partners) competed in the annual 50km Sydney Coastrek challenge from Coogee in the south, to Balmoral Beach in the north, to raise funds for the Fred Hollows Foundation. The team raised approximately $3,500 including donations from a Pillar ‘mufti-day’.

Inaugural Walk-a-thon - The Illawarra Cancer Carers

The most important aspect of the Illawarra Cancer Carers is the care and support they give to cancer patients who attend the Cancer Care Centre in the Wollongong Hospital, those hospitalised in Ward C7 – Oncology and other areas treating or helping cancer patients.

In June 2016, Pillar’s Social & Wellness Committees joined forces to host Pillar’s first ever Walk-a-thon for the Illawarra Cancer Carers.139 employees, paid a $5 registration fee, donned their exercise gear and walked around dedicated paths in both Sydney and Coniston. The Coniston finish line was the BBQ area in the car park where the Social Committee provided a great barbeque lunch for a gold coin donation all of which was donated to the Illawarra Cancer Carers.

Legacy

Legacy provides services to Australian families suffering financially and socially after the incapacitation or death of a spouse or parent during or after their defence force service. Poppies were sold for Anzac Day with all proceeds donated back to Legacy.

Wollongong Homeless Hub

In March 2016, representatives from Pillar presented a cheque for $700 to the Wollongong Homeless Hub after winning $1,000 in “The Eleanor Story” competition with their entry of a desk calendar. To continue that support, on 1 June 2016, for a gold coin donation employees were encouraged to wear a beanie, scarf, shawl or wrap to work to support the Wollongong Homeless Hub’s ‘Wrap Up Homelessness’ campaign. Donations raised help to support people of all ages across the Illawarra who are in crisis with shelter, food, clothing and much more.

The amounts our employees raised for charities during 2015/16 are shown right.

Pillar in the community


Corporate events and sponsorships

Pillar continues to sponsor selected events to maintain its profile in the superannuation industry.

This year our sponsorships included:

• The Association of Superannuation Funds in Australia (ASFA) National Conference held in Brisbane in November 2015.

• Conference of Major Superannuation Funds (CMSF) held in Adelaide in March 2016.

• Chant West Super Fund Awards held in Sydney in May 2016.

• ASFA Superfunds Magazine ‘Out and About’ photo page.

We believe these promotional activities, along with advertising in certain industry publications, continue to strengthen our brand and profile within the superannuation industry.

Pillar in the superannuation industry

P I L L A R A D M I N I S T R A T I O N | C O R P O R A T E I N F O R M A T I O N | B 1

B Our Corporate

Information

B 2 | C O R P O R A T E I N F O R M A T I O N | P I L L A R A D M I N I S T R A T I O N

Enabling legislation

The State Owned Corporations Act 1989 (NSW) (SOC Act), provides for the establishment and operation of Government enterprises as State owned corporations. It sets out, amongst many other items, the objectives of State owned corporations, the powers of Ministers and provisions for reporting.

The Superannuation Administration Authority Corporatisation Act 1999 (NSW) established the Superannuation Administration Corporation as a statutory State owned corporation, defines the business of the Corporation and sets out special provisions for the management of the Corporation which supersede provisions in the SOC Act.

The Memorandum and Articles of Association for the Corporation were effective from 26 July 1999, the date of establishment of the Corporation and was executed by the then Premier and by the Treasurer as Shareholding Ministers.

The trading name of Superannuation Administration Corporation is Pillar Administration (‘Pillar’).

Changes in legislation relating to Pillar

There were no substantive changes affecting Pillar to either the governing legislation of Pillar, the Superannuation Administration Authority Corporatisation Act 1999 (NSW), or the SOC Act in 2015/16.

Changes in legislation related to the administration of superannuation funds are reported in the Annual Reports of Pillar’s clients.

On 9 December 2015, the Hon. Gladys Berejiklian, MP, Treasurer and Minister for Industrial Relations, announced that the NSW Government intended to sell Pillar. Subsequent to this announcement, the Superannuation Administration Corporation (Pillar) (Authorised Transaction) Act 2016 (NSW) (‘Pillar Act’) was passed by Parliament and assented to on 19 May 2016.

The Pillar Act authorises the transfer of Pillar assets to the private sector or to any public sector agency and includes a two year employment guarantee for those current Pillar employees covered by a relevant award. The Pillar Act also provides that a new owner of Pillar will have to maintain its member service operations in the Illawarra region for at least 10 years.

External advisers have been appointed by the NSW Government to support the sale of Pillar.

Accountability to the NSW Government

Pillar is accountable to the NSW Government. Oversight is carried out via a Portfolio Minister (section 20I of the SOC Act) and two Voting Shareholders of Pillar (section 20H of the same Act).

As required by NSW legislation, Pillar prepares an Annual Report, Half Yearly reports, and an annual Statement of Corporate Intent, all of which are tabled in Parliament. Pillar also provides Quarterly Performance Reports to the Portfolio Minister and the Shareholding Ministers.

Pillar’s annual financial statements are audited by the Auditor-General.

The Portfolio Minister

In terms of s. 20I of the SOC Act, the Portfolio Minister at 30 June 2016 was the Hon. Gladys Berejiklian, MP, Treasurer and Minister for Industrial Relations.

The Shareholding Ministers

In terms of s. 20H of the SOC Act, the Voting Shareholders of Pillar as at 30 June 2016 were:

• The Hon. Troy Grant, MP, Deputy Premier, Minister for Justice and Police, Minister for the Arts and the Minister for Racing; and

• The Hon. Gladys Berejiklian, MP, Treasurer, Minister for Industrial Relations.

Corporate governance


The Board

Finance Information Technology Operations Administration

ServicesOrganisational

Change

Managing Director &

CEO

Executive Office

Communications

Steering Committees

Board Committees

Board of Directors

Business Development Risk Compliance Human

Resources

Fund accounting

IT support & control

Member Services

Future state division

Organisational change

Business development &

engagement

Organisational risk

managementCompliance Human

Resources

Facilities management

IT maintenance & improvement

Shared Services

Organisational development Marketing Internal Audit Data quality Health & safety

Transaction accounting

IT development

Workflow management PMO Product &

innovationBreaches & resolution Recruitment

Corporate & project

accountingIT operations Fund

Operations

Payroll IT security

Commercial accounting

Data and business

intelligence

Legal

Company Secretarial

Organisational chart


Our Directors

Previous board positions include as non-executive director of Reach Ltd (HK), Hong Kong CSL Ltd, TelstraClear NZ Ltd and Beijing Australia Telecommunications Technical Consulting Svs Limited (China).

Previous executive roles included Executive Director, Marketing and Digital Business at Telstra Corporation; Finance Director, Telstra International (Hong Kong); and Managing Director, Mobitel Pvt Ltd (Sri Lanka).

Cathy was appointed to the Board of Pillar on 16 June 2014 and appointed as Chair of the Board from 9 October 2015 for a three year term.

Peter Brook

M. Mgmt, (MGSM), ACA, B. Comm. (Finance & Systems) (UNSW), GAICD, GAIST

Managing Director and Chief Executive Officer

Peter has over 28 years’ experience with senior management roles across diverse and complex organisations within financial services.

Peter was a Senior Partner in Grant Thornton and became the National Chairman of the Insolvency and Recovery practice. He later moved into senior executive roles working for MLC and Challenger (Chief Financial Officer of the Asset Management and Life Insurance group and an Executive Director in four ASX listed asset management funds).

Peter later moved onto ASX listed Alinta Energy where he was an Executive Director and Chief Financial Officer. Immediately prior to Pillar, Peter was the Chief Financial Officer for State Super Financial Services.

Peter was appointed as Chief Executive Officer on 30 May 2013 and his employment contract has no expiry date.

Peter Berckelman

B.Ec LLB (Macquarie University)

Chair of the HR and Remuneration Committee and Chair of the Audit and Risk Management Committee

Peter has had over 26 years’ experience in banking and finance, both in Australia and overseas. He has held senior positions in Barclays Bank and UBS Australia, specialising in financial risk management.

Prior to moving into banking, Peter spent three years in a major Australian law firm.

Under the Superannuation Administration Authority Corporatisation Act 1999 (NSW), Pillar’s Board has statutory authority to manage Pillar and is accountable to the Shareholding Ministers.

The Pillar Board is to consist of at least three and no more than six Non-Executive Directors and the Chief Executive Officer. The Chair of the Board is a Non-Executive Director.

The former Chair of the Pillar Board, Nicholas Johnson, ceased to be Chair on 26 June 2015. Until a new Chair was appointed, the provisions of clause 12 of Schedule 8 of the SOC Act enabled Directors present at a Board meeting to elect a Director to preside at the meeting. Cathy Aston was elected as the Presiding director at all Board meetings from the commencement of the 2015/16 financial year until she was formally appointed as the Chair of the Board on 9 October 2015.

The Board meets regularly, usually monthly, and monitors corporate performance and key issues through formal processes at Board meetings such as reports from management and questions to management from Directors, through discussions with stakeholders and through various informal means open to the Directors.

Each of the Non-Executive Directors of Pillar was appointed to the Board by the Voting Shareholders pursuant to clause 15.2 of the Memorandum and Articles of Association of Pillar.

The Non-Executive Directors bring to the Board qualifications, skills and experience in, or relevant to, the superannuation and finance industries, private and public sector management, information technology, legal, employment and industrial relations. The current Directors of Pillar are listed below, with the date and term of appointment listed and an outline provided of each Director’s professional background.

Cathy Aston

B.Ec (Macquarie University), M. Comm. (UNSW), TFASFA, GAICD, FFin

Chair

Member of the Audit and Risk Committee and the Productivity and Information Technology Committee

Cathy is an experienced executive and non-executive director of digital and telecommunications businesses.

She has a broad commercial background with senior roles in finance, marketing, strategy and business improvement.

Cathy is currently a non-executive director of Southern Phone, Financial Services Institute of Australasia (FINSIA) and the Australian Brandenburg Orchestra, an Advisory Board Member of Avanseus Holdings (Singapore) and Member of the AICD Illawarra Committee.


Patricia Azarias

B.A. (Hons) (Sydney University), M.A. (Oxon), Master of Public Affairs (Princeton University)

Chair of the Audit and Risk Management Committee and Member of the Human Resources and Remuneration Committee (until 30 June 2016)Patricia is an economist. She has served as director of the Internal Audit Division of the United Nations in New York, as Regional General Manager, Business and Private Banking, National Australia Bank, Director General, NSW Ministry of Urban Infrastructure Management, and Director of the Public Accounts Committee, NSW Parliament.

Until 30 June 2016, Patricia was a member of the Board of SBS Television and Radio and Chair of the Audit and Risk Committee of the Sydney Harbour Foreshore Authority. She is a Board member of the South East Sydney Local Health District and a member of the Audit and Risk Committee of the NSW Treasury.

Patricia was appointed to the Board of Pillar on 1 July 2013 and her term as a Director expired on 30 June 2016.

Nigel Smyth

B. Eng (Electronic Systems) (Ulster University)

Chair of the Productivity and Information Technology Committee and Member of the Audit and Risk Management Committee (until 30 June 2016)Nigel has 25 years’ of IT and operations experience in the investment banking industry. Nigel retired from Macquarie Group in 2013 where he was Chief Information Officer and Head of Market Operations. He was with the Macquarie Group for 14 years and prior to that held senior IT and operational roles with Deutsche Bank, NatWest Markets and JP Morgan in London and New York.

Nigel is a Board member of the Inspire Foundation the charity behind the youth mental health website reachout.com and a director of a yacht club.

Nigel was appointed to the Board of Pillar on 1 July 2013 and his term as a Director expired on 30 June 2016.

Our Directors

Peter was appointed to the Board of Pillar on 14 July 2014 for a three year term.

Peter was appointed as Chair of the Audit and Risk Management Committee after the term of the previous Chair expired on 30 June 2016.

Nancy Milne

OAM, LLB, (Sydney University), FAIDC

Member of the Audit and Risk Management Committee and Member of the HR and Remuneration Committee

Nancy has extensive experience as a chair and non-executive director. She also has significant experience on audit and risk committees both as a member and chair. She has practised as a lawyer for over 30 years, including as a partner in three legal firms specialising in insurance, risk management and commercial dispute resolution.

Nancy was also involved in leadership roles and contributed to strategic planning in the legal sector. She has strong strategic risk management skills and a deep understanding of the financial services regulatory environment. In 2008, Nancy was awarded the Order of Australia Medal for services to the legal sector particularly as an insurance lawyer and to the community.

Nancy has had significant experience as a director of companies, both listed and unlisted and has been involved in a variety of corporate transactions. Nancy is also currently a director of ALE Property Group Limited, State Insurance Regulatory Authority and Chair of the Securities Exchange Guarantee Corporation. Previous board roles include State Super Financial Services Australia Limited, Australian International Dispute Centre, Novion Property Group, Australand, Greenstone Limited, Munich Reinsurance Australasia, Crowe Horwath and Zurich Financial Services Australia.

Nancy is Fellow of the Australian Institute of Company Directors (AICD) and a member of the NSW Council of the AICD and the AICD’s Law Committee.

Nancy was appointed to the Board of Pillar on 15 December 2014 for a three year term.


Board changes during 2015/16

During the 2015/16 financial year the following changes were made to the Board and to the Audit and Risk Management Committee (ARMC):

Cathy Aston was appointed on 9 October, 2015 as Chair of the Board for a three year term.

Patricia Azarias’ term as a Director and as Chair of the ARMC expired on 30 June 2016.

Nigel Smyth’s term as a Director and as Chair of the Productivity and Information Technology Committee expired on 30 June 2016.

Board Committees

During the year, the Board was assisted by the following Board Committees composed of Non-Executive Directors. All Directors who are not members of a committee have the right to attend meetings of all committees. The Chief Executive Officer and Managing Director is invited to all Board committee meetings. The Board determines the membership of the Board Committees. If the committees are unable to meet, committee matters are submitted to the Board for consideration.

The Board maintains close oversight of key business processes, and is assisted by the following three committees:

The Audit and Risk Management Committee

During the last financial year all of Pillar’s Directors sat as members of the ARMC. The ARMC focuses on the adequacy of Pillar’s RMF and the associated operating and financial controls, accounting policies and oversees the work of the contracted internal auditor firm KPMG. In addition, the committee oversees Pillar’s Compliance Program in relation to the regulatory and policy requirements for superannuation administration.

The Human Resources and Remuneration Committee (HRRC)

The HRRC provides high-level oversight of human resources policies, strategies and remuneration.

Productivity and Information Technology Committee (PITC)

The PITC focuses on the effective use of technology, quality, process and productivity improvements are dealt with by the full Board. In addition, a number of working committees have been set up to oversee IT initiatives such as our Business Transformation Program.

Membership of Board Committees

The Board determines the membership of the Board Committees. Individuals who are not members of the Board may be included, however, Executives or Executive Directors of Pillar are excluded from Committee membership.

Membership is reviewed annually to consider the need for fresh perspectives while maintaining continuity and retention of knowledge and skills. Directors who are not members of a particular Board Committee are permitted to attend meetings of that Committee.

Invitees to Board Committee meetings may include:

• Pillar Executives as appropriate; and

• Other persons providing reports or information to the Committee.

Responsibilities and activities of Board Committees

All Board Committees consider any matters relating to their objectives and any matters referred by the Board. The Board Committees seek to ensure new Committee members are adequately inducted and that all members are informed about any changes relevant to their roles including changes in statutory requirements and accounting standards, or guidelines affecting financial reporting.

The Committees review their performance annually with attention directed to how well the responsibilities contained in their relevant Charters have been met. The individual Committee Charters are reviewed regularly and amendments are subject to Board approval.

Frequency and attendance at Board meetings

During the year, the Board met on thirteen (13) occasions and the ARMC met on eight occasions (8). The number of meetings attended by each Director is listed on the next page.

Our Directors


Director Number of Board

meetings attended

Number of Board

meetings held

Number of ARMC

meetings attended

Number of ARMC

meetings held

Cathy Aston

Chair

(appointed as a Director on 16 June 2014 and appointed as Chair of the Board from 9 October 2015 until 8 October 2018)

13 13 8 8

Peter Brook


(appointed 13 May 2013)

13 13 6 8

Peter Berckelman

(appointed as a Director on 14 July 2014)

12 13 7 8

Nancy Milne

(appointed as a Director on 15 December 2014)

11 13 7 8

Patricia Azarias

Chair of the ARMC

(appointed 1 July 2013 until 30 June 2016)

11 13 8 8

Nigel Smyth

(appointed as a Director on 1 July 2013 until 30 June 2016)

10 13 6 8

Frequency and attendance at Board meetings

Our Directors



After consultation with the Voting Shareholders, the Managing Director and Chief Executive Officer (CEO) of Pillar is appointed by the Non-Executive Directors.

Peter Brook was appointed as Managing Director and Chief Executive Officer effective 30 May 2013 and his employment contract has no expiry date.

Structure

The Pillar executive management team make up the Executive Committee (EC). The EC has an interest in all facets of Pillar, both strategically and operationally. The EC has reporting arrangements in place, ensuring it receives timely information about any matter warranting consideration or awareness.

During the year the Executive Committee generally meet at least fortnightly.

The managers who comprised the Executive Committee as at 30 June 2016 and a brief profile of each manager are set out below.

Peter Brook


Peter’s profile is in ‘Our Directors’.

Gerard Giesekam

B. Comm. (Accounting and Finance) (UNSW), CPA/CA Finance

Executive General Manager - Finance and Company Secretary

Gerard has over 20 years’ commercial experience in the financial services industry. Gerard commenced his career with Ernst & Young and has held senior finance roles with AMP, KAZ Group, Telstra and Link Market Services. His most recent role prior to joining Pillar was as CFO of Australian Administration Services (AAS).

Primary responsibilities include fund and transactional accounting, facilities management and property, corporate accounting, payroll, legal and pricing.

Our Executive Management team

Chris Woodward

Dip. Superannuation Mgmt (Macquarie University), Executive MBA (AGSM/UNSW)

Executive General Manager - Business Development and Client Engagement

Chris has been with Pillar for over 26 years and has performed many roles within the organisation over that time. Chris’ experience is predominantly in business administration and client management. He is currently responsible for Business Development and Client Engagement within Pillar.

Primary responsibilities include client advocacy, client engagement, business development, new products and services, marketing, industry engagement, innovation and research and development.

Chris has taken on sponsorship of Pillar’s Business Transformation Program.

Chris Richards

Executive General Manager - Operations

Chris has been with Pillar for over 10 years and has performed many roles within the organisation over that time. Chris’ experience is predominantly in direct administration management and client services.

Chris has over 25 years’ experience in the superannuation industry and has worked in senior leadership positions for a number of third party superannuation administrators, including Towers Perrin and Russell Investments, as well as in-house corporate superannuation administration at BHP Billiton.

Stuart Watson

B. Ec. (Macquarie University), Certificate IV in Compliance Management – GRC Institute (Macquarie University)

Executive General Manager - Risk

Stuart has over 20 years’ experience in a broad range of roles across the superannuation industry. Stuart has spent 10 years working for a number of third party superannuation administrators, including Towers Perrin,


AMP and Aon Consulting in senior leadership positions in fund administration, client services and technical business functions.

Before joining Pillar, Stuart spent eight years at the Australian Prudential Regulation Authority, in a number of senior technical and management roles in the frontline supervision division.

Kathryn Hawkins

Executive General Manager - Information Technology

Kathryn has over 10 years’ experience in information technology as an executive with direct experience in the financial services sector (banking, superannuation, and insurance) manufacturing, health and community services. Before joining Pillar, Kathryn spent four years as Chief Information Officer for ME Bank.

In addition, Kathryn has over 30 years’ experience in various senior positions across a range of industries including manufacturing with BHP and Mitsubishi, financial services with Bank SA, Lend Lease and Adelaide Bank. Kathryn was also the Principal Consultant with Tower Technology.

Kathryn commenced in her position at Pillar on 27 July 2015.

Barry Dench

B. Bus (Banking & Finance) (Charles Sturt University), M. Mgmt (MGSM)

Executive General Manager – Administration Services

Barry brings to Pillar more than 15 years’ experience in managing successful business units in the global custody, fund administration and asset management areas. Recent experience has been focussed on managing outsourced operations and developing highly effective relationships with a number of successful investment managers and superannuation funds.

Before joining Pillar, Barry was Head of New Zealand at BNP Paribas Securities Services.

Barry commenced in his position at Pillar on 16 February 2016.


Nicki Bowman

B. Ec, LLB (Hons) (University of Sydney)

Executive General Manager - Organisational Change

Nicki began her career as a commercial lawyer in a top 10 law firm, then held senior in-house roles at BHP Billiton and BlueScope Steel before moving into executive roles in the manufacturing and financial services industries. Nicki is also an experienced non-executive director of both listed and not-for-profit entities.

Throughout her career Nicki has been involved in significant business transformation and improvement projects including mergers and acquisitions, organisational redesign and cultural change.

Nicki commenced in her position at Pillar on 2 May 2016.

Julie Stuart

B. Comm. (Human Resources & Industrial Relations) (Western Sydney University)

Executive General Manager – Human Resources

Julie brings to Pillar more than 18 years’ senior-level human resources experience both in Australia and overseas.

Julie is a specialist in talent management and has extensive experience in organisational change management, leadership development, culture, and driving HR projects in major commercial businesses.

Before joining Pillar, Julie was Chief People Officer at Salmat Limited.

Julie commenced in her position at Pillar on 9 May 2016.

B 1 0 | C O R P O R A T E I N F O R M A T I O N | P I L L A R A D M I N I S T R A T I O N

Numbers and remuneration of Pillar’s senior executives

2015

Band and salary range Male Female Total Average Remuneration

Band 4 $430,451 – $497,300 0 0 0 0

Band 3 $305,401 – $430,450 1 0 1 $426,063

Band 2 $242,801 – $305,400 1 0 1 $253,406

Band 1 $170,250 – $242,800 4 2 6 $219,459

6 2 8

The table below shows remuneration levels and numbers of senior executive staff by salary band and gender.

2016

Band and salary range Male Female Total Average Remuneration

Band 4 $441,201 – $509,750 0 0 0 0

Band 3 $313,051 – $441,200 1 0 1 $426,063

Band 2 $248,851 – $313,050 1 2 3 $264,003

Band 1 $174,500 – $248,850 4 1 5 $216,043

6 3 9

4.23% of Pillar Administration employee related expenditure in 2015/16 was related to senior executives.


P I L L A R A D M I N I S T R A T I O N | C O R P O R A T E I N F O R M A T I O N | B 1 1

Pillar is an agency covered by the Government Information (Public Access) Act 2009 (NSW) (the GIPA Act). Under the GIPA Act, an agency must release “government information” unless there is an overriding public interest against disclosure. Government information is considered to be anything contained in a record held by a government agency, or held on behalf of an agency by a government contractor or by the State Records Authority.

Pillar holds information that is classed as “government information” about:

• itself as a corporation – such as information relating to its business operations, financial situation and dealings, staff and structure and property and equipment.

• the superannuation funds and schemes that it administers on behalf of the trustees of those funds – such as employer and employee membership details; including detailed information about the members of each of the superannuation funds, such as their name, date of birth, employer, address, tax file number, contributions and entitlements.

Open access information about Pillar

The GIPA Act obliges an agency to proactively release “open access information” (as defined in the GIPA Act). Pillar’s “Open Access Information” can be obtained by any member of the public by downloading it from our website www.pillar.com.au (under “Access to Information”).

Alternatively, access can be requested by:

Phoning the Pillar Information Officer on 1800 779 068; or

Writing to:

Information Access Co-ordinator Pillar Administration PO Box 1229 Wollongong NSW 2500

Access to other information about Pillar, may require that a formal application be made under the GIPA Act. Typically, such information may be of the type that is costly to make available or where the decision about access may have to be formally made because of the nature of the information sought. Formal applications should be made on the applicable form available in the section “Access to Information” on Pillar’s website. An application fee of $30 must be paid and a processing fee of $30 an hour may be applicable. Discounts of the processing fees are available for pensioners, full-time students and for those in financial hardship.

Access to government information held by Pillar

Open access information about Pillar, which is not publicly available

Under section 14 of the GIPA Act there is a public interest consideration against disclosure of information if disclosure of the information could reasonably be expected to have one or more of the following effects:

• Undermine competitive neutrality in connection with any functions of an agency in respect of which it competes with any person or otherwise place an agency at a competitive advantage or disadvantage in any market.

• Reveal commercial-in-confidence provisions of a government contract.

• Diminish the competitive commercial value of any information to any person.

• Prejudice any person’s legitimate business, commercial, professional or financial interests.

Pillar operates in a highly competitive commercial environment and the disclosure of commercially sensitive information about Pillar could adversely affect its commercial interests. Pillar is committed to being as transparent as possible and discloses a significant amount of information about itself in its annual reports, on its website and in other documents that are tabled in Parliament.

However, there is some open access information about Pillar the disclosure of which it considers could reasonably adversely affect Pillar’s commercial interests, such as some internal policy documents and details about Pillar’s commercial contracts. Pillar has weighed up the public interest considerations for and against disclosure of the relevant open access information and on balance, believes that the public interest considerations against disclosure outlined in clause 4 of section 14 of the GIPA Act outweigh the public interest considerations for disclosure of the relevant information. Therefore, there are some documents about Pillar that are open access information but in relation to which Pillar believes that there is an overriding public interest against disclosure.


Access to government information held by Pillar

Review of the information made publicly available by Pillar

In June 2016, Pillar reviewed the type of information that it makes publicly available. The review took into account the information that Pillar already has made available on its website and the open access information, including various corporate policy documents and reports that are tabled in Parliament, which are publicly available and accessible via Pillar’s website. The conclusion of the review was that Pillar believes that it has made publicly available all of the government information that should, in the public interest, be publicly available and that can be made publicly available without posing unreasonable costs on Pillar or adversely affecting its commercial interests. We believe that there is considerably more publicly available information about Pillar than is the case for our competitors.

Member access to their superannuation file

Any member of a NSW public sector superannuation scheme can apply for access to part or all of the information held in the superannuation file that Pillar maintains in relation to their scheme membership. Pillar requires that the application be formally made under the GIPA Act (on the applicable form available in the section “Access to Information”) on Pillar’s website or by contacting Pillar. An application fee of $30 must be paid and processing fees of $30 an hour may apply (although the first 20 hours of processing is free of charge). Reductions of the processing fees are available for pensioners, full-time students and for those in financial hardship.

Agency Information Guide

Pillar’s Agency Information Guide is available under section “Access to Information” on Pillar’s website www.pillar.com.au. The Agency Information Guide was reviewed and updated in June 2016.

Applications for access to information

During the 2015/16 year there were:

• 307 formal applications for information (under the GIPA Act) received by Pillar, (including withdrawn applications, but excluding invalid applications).

• 328 applications processed.

• 26 applications were in progress as at 1 July 2015 and there were 5 applications still in progress as at 30 June 2016.

• 24 applications refused, in whole or in part, because the application was for information for which there is a conclusive presumption of overriding public against disclosure (categories referred to in Schedule 1 of the GIPA Act). Of those applications, all 24 were only refused in part.

Please refer to Appendix 1 for statistical information about applications for access under the GIPA Act.


Complaints made about Pillar

During the year, there were no complaints made to Pillar which were not related to the superannuation funds and schemes it administers.

Pillar reports details of complaints received, in relation to the funds it administers. Reports are provided directly to the fund.

Complaints made by fund members

By arrangement with its public sector trustee clients SAS Trustee Corporation (STC) and the Trustees of the Parliamentary Contributory Superannuation Fund (PCSF), Pillar’s Annual Report includes statistics on complaints it received relating to the NSW public sector superannuation schemes. A breakdown by category is listed below.

The number of complaints received from STC scheme members decreased from 59 in 2014/15 to 51 in 2015/16. At 30 June 2016, there were 109,980 STC scheme members (including pensioners).

There was one complaint for PCSF in 2015/16. At 30 June 2016 there were 316 PCSF members and pensioners.

For reporting purposes, the definition of a complaint is “a written or oral expression of dissatisfaction which requires a response”. All complaints are analysed to determine if there is a systemic cause and if that is the case, corrective and preventive action is implemented. Employees and managers are encouraged to recognise and highlight complaints that show the need for changes to scheme literature, standard letters, systems, procedures and practices.

Disputes and appeals

The dispute and appeal processes for the public sector schemes, which are formally exempt from compliance with the provisions of the Superannuation Industry (Supervision) Act 1993 (Cth) are administered by the Trustees of the public sector schemes and are covered in their Annual Reports.

If dissatisfied with the decision by the STC following the dispute process, an appeal may be lodged with the Industrial Court of NSW.

Complaint category

Complaints for STC

Complaints for PCSF

Application of policy 21 0

Administrative issues 30 1

Investment 0 0

Insurance 0 0

Incorrect data from external provider

0 0

Total 51 1

Member response

There’s a sense of pride working at Pillar”


Public interest disclosures (PID)

Section 31 of the Public Interest Disclosures Act 1994 (NSW) (‘the Act’), provides that each public authority, including Pillar, as a State owned corporation, must prepare an annual report on the authority’s obligations under the Act for submission to the Minister responsible for the authority, with a copy to the Ombudsman.

The report can be included in the Annual Report for the authority. The information to be reported is set out in the Public Interest Disclosures Regulation 2011 (NSW).

The information for the 2015/16 year is as follows: Pillar has a Public Interest Disclosures Policy. The Policy demonstrates Pillar’s commitment to supporting and protecting employees who report wrongdoing, including wrongdoing by Pillar management or employees.

Public interest disclosures (PIDs) in 2015/16

Made by public officials performing

their day-to-day functions

Under a statutory or other legal

obligation

All other PIDs

Number of public officials who made PIDs to Pillar in 2015/16

0 0 0

Number of PIDs received in total in 2015/16

0 0 0

Of the PIDs received, the number were primarily about:

0 0 0

– Corrupt conduct 0 0 0

– Maladministration 0 0 0

– Serious and substantial waste 0 0 0

– Government information contravention

0 0 0

– Local government pecuniary interest contravention

0 0 0

Number of PIDs finalised in 2015/16 0 0 0

Disclosure and privacy

The Public Interest Disclosures Policy was reviewed and updated in January 2015 and re-launched to Pillar employees, with employees being reminded about the existence of the Policy and the protections under the Act for a person making a public interest disclosure. Senior managers are tasked with the responsibility of ensuring that their employees are aware of Pillar’s policies, including the Public Interest Disclosures Policy. All policies are easily accessible to employees on the Pillar intranet.

Periodic reminders about the Public Interest Disclosures Policy are emailed to all Pillar employees. Furthermore, Pillar’s Code of Conduct contains specific reference to the Public Interest Disclosures Policy.


Disclosure and privacy

Privacy Policy

Pillar’s Privacy Policy sets out its commitment to best practice privacy standards and its objective of compliance with the requirements of the Privacy Act 1988 (Cth) and the Australian Privacy Principles contained therein. The Privacy Policy and Pillar’s procedures in relation to privacy were reviewed and updated in March 2014 to ensure compliance with the amendments to the Privacy Act 1988 (Cth) that took effect at that time.

Pillar is contractually obligated to comply with the Privacy Management Plan of STC. This Privacy Management Plan sets out the requirements of the Privacy and Personal Information Protection Act 1998 (NSW), that Pillar, as the administrator of the schemes, is indirectly obligated to comply with, although as a State owned corporation Pillar is exempt from the NSW privacy legislation.


Grants to non-government organisations

There were no grants made to non-government organisations by Pillar in 2015/16.

Overseas visits

There were no overseas trips by representatives of Pillar in 2015/16.

Expenditure on consultants during 2015/16 financial year

Pillar incurred expenditure of $10,436,775 during the 2015/16 financial year, largely due to our investment in Project Eleanor. These services included:• IT consulting services;• consulting services;• professional services;• market intelligence services;• strategic planning and advisory services;• test managers;• taxation consulting services;• business analysts.

Details of the production of this Annual Report

The estimated external costs of this Annual Report are to be no greater than $8,345 with 30 copies of the report being printed.

This report will be available on the Pillar website at www.pillar.com.au soon after it is submitted to the NSW Parliament in late November 2016. The report will also be available in hard copy (only 30 copies).

Exemptions from reporting requirements

As a NSW State owned corporation, Pillar competes for superannuation administration business with private sector organisations, and has been determined by NSW Treasury to be an “in competition” entity for annual reporting purposes for financial years including and after the 2011/12 year.

Accordingly, Treasury has granted to Pillar various “in competition” annual reporting exemptions, pursuant to section 7(2) of the Annual Reports (Statutory Bodies) Act 1984 (NSW) and clause 17 of the Annual Reports (Statutory Bodies) Regulation 2015 (NSW).

Please refer to Appendix 2 of this Report for details of the exemptions and any relevant conditions.

Other corporate information

C Our Audited

Financial Statements

C 2 | A U D I T E D F I N A N C I A L S T A T E M E N T S | P I L L A R A D M I N I S T R A T I O N

SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION)

P I L L A R A D M I N I S T R A T I O N | A U D I T E D F I N A N C I A L S T A T E M E N T S | C 3




Pursuant to Section 41C of the Public Finance and Audit Act, 1983, in the opinion of the Directors of Superannuation Administration Corporation (trading as Pillar Administration):

(a) the financial statements:

(i) exhibit a true and fair view of Superannuation Administration Corporation’s financial position, financial performance and cash flows for the year ended 30 June 2016; and

(ii) comply with Australian Accounting Standards (which include Australian Accounting Interpretations), the requirements of the Public Finance and Audit Act 1983 and the Public Finance and Audit Regulation 2015.

(b) there are reasonable grounds to believe that the Corporation will be able to pay its debts as and when they fall due.

(c) we are not aware of any circumstances at the date of this declaration that would render any particulars included in the financial statements to be misleading or inaccurate.

Signed in accordance with a resolution of the Board of Directors

Cathy Aston Peter Brook

Chair Managing Director & CEO

Superannuation Administration Corporation Superannuation Administration Corporation

Date: 14 September 2016

Directors’ DeclarationFOR THE YEAR ENDED 30 JUNE 2016



Statement of Profit or Loss and other Comprehensive Income

FOR THE YEAR ENDED 30 JUNE 2016

Note 2016 $’000

2015 $’000

Continuing Operations

Revenue

Operating activities 2(a) 99,354 108,423

Investment income 2(a) 153 295

Expenses

Employee related expenses 2(b) (62,718) (65,919)

Depreciation and amortisation expense 2(b) (2,269) (1,970)

Occupancy expenses (3,026) (3,470)

Information technology expenses (9,076) (9,329)

Member communications expenses (3,068) (3,039)

Contractors’ expenses (10,330) (16,019)

Consultancy expenses (1,424) (1,203)

Travel expenses (431) (390)

Other expenses 2(b) (4,033) (3,894)

Profit before income tax 3,132 3,485

Income tax benefit / (expense) 3(a) (249) 916

Profit for the year from continuing operations attributable to shareholders of the corporation 2,883 4,401

Other comprehensive income for the year net of tax Items that may be reclassified subsequently to profit or loss

Gain on revaluation of land and buildings net of tax 698 -

Total other comprehensive income for the year 698 -

Total comprehensive income for the year 3,581 4,401

The accompanying notes form an integral part of this Statement of Profit or Loss and Other Comprehensive Income.



Statement of Financial PositionAS AT 30 JUNE 2016

Note 2016 $’000

2015 $’000

ASSETS

Current Assets

Cash and cash equivalents 16(a) 4,240 17,159Trade and other receivables 4 15,383 12,359Other current assets 5 3,956 3,798Total Current Assets 23,579 33,316

Non-Current Assets

Property, plant and equipment 6 16,979 14,382Intangible assets 7 20,811 695Deferred tax assets 3(c) 7,322 6,152Total Non-Current Assets 45,112 21,229

Total Assets 68,691 54,545

LIABILITIES

Current Liabilities

Trade and other payables 8 13,110 11,532Provisions 9 12,706 12,174Finance lease liability 11 349 -Total Current Liabilities 26,165 23,706

Non-Current Liabilities

Deferred tax liabilities 3(d) 910 781Provisions 9 2,549 3,071Finance lease liability 11 599 -Total Non-Current Liabilities 4,058 3,852

Total Liabilities 30,223 27,558

Net Assets 38,468 26,987

Equity

Contributed equity 10 13,900 6,000Asset revaluation reserve 10 4,341 3,643Retained earnings 10 20,227 17,344Total Equity 38,468 26,987

The accompanying notes form an integral part of this Statement of Financial Position.



Statement of Changes in EquityFOR THE YEAR ENDED 30 JUNE 2016

Note Contributed equity

$’000

Asset revaluation

reserve$’000

Retained earnings

$’000

Total equity

$’000

Balance at 1 July 2015 10 6,000 3,643 17,344 26,987

Profit for the year - - 2,883 2,883Other comprehensive income, net of tax

- 698 - 698

Total comprehensive income for the year

- 698 2,883 3,581

Transactions with owners in their capacity as owners:

Dividend to equity holders - - - -Contribution of equity 7,900 - - 7,900

Balance at 30 June 2016 13,900 4,341 20,227 38,468

Note Contributed equity

$’000

Asset revaluation

reserve$’000

Retained earnings

$’000

Total equity

$’000

Balance at 1 July 2014 10 6,000 3,643 12,943 22,586

Profit for the year - - 4,401 4,401Other comprehensive income, net of tax

- - - -

Total comprehensive income for the year

- - 4,401 4,401

Transactions with owners in their capacity as owners:

Dividend to equity holders - - - -

Balance at 30 June 2015 10 6,000 3,643 17,344 26,987

NSW Treasury has exempted Pillar from dividend obligations for the 4 years from 2015 to 2018. Dividend per share was Nil for 2016 (2015: Nil).

The accompanying notes form an integral part of this Statement of Changes in Equity.



Note 2016 $’000

2015 $’000

Cash Flows From Operating Activities:

Receipts from customers (inclusive of GST) 108,735 113,313Payments to suppliers and employees (inclusive of GST) (107,513) (109,849)Income tax paid (3,205) -Interest received 160 301Government grant received 5,000 7,000Net cash flows from operating activities 16(c) 3,177 10,765

Cash Flows From Investing Activities:

Payments for property, plant and equipment (3,612) (2,676)Payments for intangible assets (20,384) (280)Net cash flows used in financing activities (23,996) (2,956)

Cash Flows From Financing Activities:

Dividends paid - (1,385)Contribution of equity 7,900 -Net cash flows from/(used in) financing activities 7,900 (1,385)

Net (decrease) / increase in cash and cash equivalents (12,919) 6,424

Opening cash and cash equivalents 17,159 10,735

Closing cash and cash equivalents 16(a) 4,240 17,159

The accompanying notes form an integral part of this Statement of Cash Flow.

Statement of Cash FlowsFOR THE YEAR ENDED 30 JUNE 2016

Corporate Information

Superannuation Administration Corporation (the Corporation), trading as Pillar Administration is a Statutory State Owned Corporation established on 26 July 1999 under the Superannuation Administration Authority Corporatisation Act, 1999 (“the Act”). It is domiciled in NSW Australia and its registered office address is at Level 16, 1 Margaret Street, Sydney, NSW 2000.

The Corporation provides superannuation scheme administration services and related services in both the public and private sectors. The Corporation operates under the commercial disciplines of the NSW Government’s Commercial Policy Framework and accordingly the Board of Directors has determined the Corporation as a for-profit entity for the purpose of the preparation of the financial statements.

These financial statements for the financial year ended 30 June 2016 have been authorised for issue in accordance with a resolution of the Board of Directors on 14 September 2016.

1. Significant Accounting Policies

(a) Basis of Preparation

The financial statements are general purpose financial statements, which have been prepared in accordance with Australian Accounting Standards including the requirements of the Public Finance and Audit Act 1983 and the Public Finance and Audit Regulation 2015.

The financial statements have been prepared on an historical cost basis using the accrual method of accounting and do not reflect current values of assets except where noted.

The accounting policies adopted in preparing the financial statements have been consistently applied from year to year unless otherwise stated.

All amounts are rounded to the nearest one thousand dollars and are expressed in Australian currency.

(b) Statement of Compliance

The financial statements and notes comply with Australian Accounting Standards, which include Australian Accounting Interpretations.

Use of judgements and estimates

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events management believe to be reasonable under the circumstances. The resulting accounting judgements and estimates will not always equal the related actual results.

Going Concern Assumption

The financial statements have been prepared on a going concern basis which assumes that repayment of debts will be met, as and when they fall due, without any intention or necessity to liquidate assets.

Whilst the current liabilities exceeds the current assets by $2.6 million at 30 June 2016 and projected cash deficit of $17.3 million at 30 September 2017, the Board of Directors have determined the going concern assertion is valid for the 30 June 2016 financial statements on the following bases:

• The ‘Come and Go’ facility of $5.0 million is guaranteed by the Government

• Customer prepayment arrangements have been agreed upon to the extent of $14.0 million

Provision for impairment of receivables

The provision for impairment of receivables assessment requires a degree of estimation and judgment. The level of provision is assessed by taking into account the ageing of receivables, historic collection rates and specific knowledge of individual debtors financial position (refer to Note 4).



Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2016

1. Significant Accounting Policies (continued)

(b) Statement of Compliance (continued)

Income tax

Significant judgment is required in determining the provision for income tax. The corporation recognises liabilities for anticipated tax based on the corporation’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determinations are made.

Other provisions

As discussed in note 1 (g), long service leave benefits are measured at the present value of expected future payments for services provided by employees using the actuarial assessment. The values of the short and long term employee incentive schemes are dependent on the individual staff and the organisation as a whole achieving specific performance conditions. Refer to note 9 for further details.

Estimation of useful lives of assets

The corporation determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or other events. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

(c) Income Tax

The Corporation is subject to notional taxation in accordance with the State Owned Corporations Act 1989. An “equivalent” or “notional income tax” is payable to the NSW Consolidated Fund through the Office of State Revenue. Taxation liability is assessed according to the National Tax Equivalent Regime (NTER) of the NSW Treasury (and any transitional provisions which apply). The NTER adopts as far as practicable the Commonwealth Income Tax Assessment Acts 1936 and 1997 (as amended) as the basis for determining taxation liability and tax-effect accounting. The liability method of tax-effect accounting is adopted.

The charge for current income tax expenses is based on the profit / (loss) for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date.

Deferred tax is accounted for using the balance sheet liability method in respect to temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability settled. Deferred tax is recognised as an expense or income in the Statement of Profit or Loss and Other Comprehensive Income.

Deferred tax assets are recognised to the extent that it is probable that sufficient future taxable amounts will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the corporation will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

The Corporation is entitled to claim a non-refundable tax credit in relation to R&D costs incurred each year. The Corporation recognises the non-refundable credit against income tax expenses and provision for income tax liabilities as permitted by AASB 112 Income Taxes. The credit is recognised in the year in which the Income Tax Return is submitted to and approved by the ATO.

(d) Property, Plant and Equipment

Acquisitions and Capitalisation

All items of computers and other plant and equipment acquired are recorded at the cost of acquisition. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to the acquisition. Acquisitions that do not meet the following asset recognition criteria are expensed.

C 1 0 | A U D I T E D F I N A N C I A L S T A T E M E N T S | P I L L A R A D M I N I S T R A T I O N




(d) Property, Plant and Equipment (continued)

An asset will be recognised in the Statement of Financial Position when and only when:

• it is probable that the future economic benefits embodied in the asset will eventuate; and

• the asset possesses a cost or other value that can be measured reliably.

The materiality test also applies to the asset recognition criteria. The threshold value for physical assets follows the NSW Treasury Guidelines for Capitalisation of Expenditure in the NSW Public Sector. In general, a physical asset costing less than $5,000 is not capitalised unless it is part of a group of assets which exceed $5,000 in total.

Expenditure incurred to restore or maintain the future economic benefits that were expected from the original standard of performance of an asset are not capitalised.

Property

The Corporation’s policy is to have an independent valuation of the land and building every three years, with annual appraisals being made by the directors. The land and buildings are shown at fair value.

Fair value of property is determined based on the best available market evidence, including current market selling prices for the same or similar assets. Where there is no available market evidence, the asset’s fair value is measured at its market buying price, the best indicator of which is depreciated replacement cost.

When revaluing property, any balances of accumulated depreciation at the revaluation date in respect of those assets are credited to the asset accounts to which they relate. The net asset accounts are then increased or decreased by the revaluation increments or decrements.

Revaluation increments are credited directly to revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement in respect of that class of asset previously recognised as an expense in profit or loss, the increment is recognised immediately as revenue.

Revaluation decrements are recognised immediately as expenses in profit or loss, except that, to the extent that a credit balance exists in the revaluation reserve in respect of the same class of assets, they are debited directly to the revaluation reserve.

Plant and equipment

Plant and equipment are measured on the fair value basis, less depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flow or future economic benefits which will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to present values in determining recoverable amounts.

Disposals

The profit or loss on disposal of assets is calculated as the difference between the carrying amount of the asset at the time of disposal and the proceeds on disposal and is recorded in the Statement of Profit or Loss and Other Comprehensive Income in the year of disposal.

Depreciation

Items of property, plant and equipment are depreciated on a straight-line basis over their estimated economic useful lives, making allowances where appropriate for residual values. The estimates of economic useful lives are reviewed annually, taking into account commercial and technical obsolescence. The expected economic useful life of computers is 4 years.

Other plant and equipment is depreciated over their estimated useful lives using the straight-line method, making allowances where appropriate for residual values. The expected economic useful life of other plant and equipment ranges from 3 to 10 years.

The depreciable amount of the building, excluding freehold land, is depreciated on a straight line basis over the estimated economic useful life to the economic entity commencing from the time the asset is held ready for use. The expected useful life of the building is 40 years and the asset is depreciated at a rate of 2.5%.

P I L L A R A D M I N I S T R A T I O N | A U D I T E D F I N A N C I A L S T A T E M E N T S | C 1 1




(e) Financial Assets and Financial Liabilities

For the purpose of these financial statements, a financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments give rise to positions that are financial assets or liabilities. These include both primary instruments (such as receivables, payables and equity securities) and derivative instruments (such as financial options, foreign exchange transactions, forward rate agreements and interest rate and currency swaps).

All classes of instruments are initially recorded at cost and are subsequently carried at fair value at reporting date. Financial instruments are subsequently measured at amortised cost using the effective interest rate method. Any impairment loss occurring on financial instruments is treated as an expense in the period in which it occurs.

(f) Intangible Assets

Acquisitions and Capitalisation

All items acquired are recorded at the cost of acquisition. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to the acquisition. Acquisitions that do not meet the following asset recognition criteria will be expensed.

Intangibles work in progress and those with an indefinite useful life are tested annually for impairment.

An asset will be recognised in the Statement of Financial Position when and only when:

• it is probable that the future economic benefits embodied in the asset will eventuate; and

• the asset possesses a cost or fair value that can be measured reliably.

The materiality test also applies to the recognition criteria of intangible assets.

During the year $20.1 million of system development costs were capitalised. These costs are associated with the Corporation’s new administration software, which are now providing economic benefits. The expected economic useful life of the new administration software is 10 years.

Intangible Assets Sensitivity Analysis

The value in use model is used to test for impairment of the Corporation’s intangible asset (new administration software).

Management’s key assumptions in estimating the future cash flow projections include:

• discount rate of 8.22% based on commercial business lending rate;

• project costs of $22 million;

• benefit realisation of $64 million (estimated present value 2016: $38 million).

The model uses future cash flows over the next 10 years to 2027 on the basis of expected contracts with the customers.

The impacts of the value of the intangible asset due to changes in key assumptions are:

Assumption Used

Impact of Change in Assumption ($’000)

+1% -1%

(i) Discount rate (%) 8.22% (3,453) 3,759

(ii) Expected benefit cash inflows ($’000) 58,930 656 (655)

(iii) Budgeted project cash outflows ($’000) (20,303) (187) 188

The Corporation’s intangibles are carried at $20 million at 30 June 2016. The recoverable amount was greater than this amount by $18 million, therefore there is no impairment at 30 June 2016.





(f) Intangible Assets (continued)

New Business Take-on Costs

Where the costs of taking on a new client are included in the overall pricing terms, they are capitalised and amortised over the life of the initial contract term. The asset is measured as the reasonable costs that are directly related to and specifically incurred in the process of setting up the new business. Overhead costs and other administration costs are not capitalised. The Corporation adopts the cost method, such that the take-on asset is carried at cost less a charge for amortisation, adopting the initial term of the contract as the useful life of the asset, subject to accumulated impairment losses.

The Corporation undertakes annual impairment reviews, such that the asset is never greater than the net present value (NPV) of the future cash flows relating to the new business over the initial term of the contract. The NPV is calculated as the total revenues (revenues associated with both take-on costs plus ongoing administration costs) less the total costs (take-on costs plus ongoing administration costs). Where an impairment loss has been charged in a prior year(s) and circumstances have changed, the asset is adjusted to reflect the revised economic conditions in the business (due to either reduced costs or increased revenues), such that the NPV of future cash now indicates that the impairment charge should be reduced or reversed.

Software

Software is measured at cost, less amortisation and impairment losses.

Carrying Amounts

The carrying amount of intangibles is reviewed annually by directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flow or future economic benefits which will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to present values in determining recoverable amounts.

Disposals

The profit or loss on disposal of assets is calculated as the difference between the net book value of the asset at the time of disposal and the proceeds on disposal and is recorded in the Statement of Profit or Loss and Other Comprehensive Income in the period of disposal.

Amortisation

Items of software are amortised on a straight-line basis over their estimated economic useful lives. The estimates of economic useful lives are reviewed annually, taking into account commercial and technical obsolescence. The expected economic useful life of software ranges from 2 to 4 years.

(g) Employee Benefits

Annual Leave

Annual leave is not expected to be settled wholly before 12 months after the end of the reporting period in which the employees render the related services. As such, it is required to be measured at present value in accordance with AASB119. Actuarial advice obtained by Treasury has confirmed that using the normal annual leave plus annual leave entitlements accrual while taking leave can be used to approximate the present value of the annual leave liability. The Corporation has assessed the actuarial advice and determined the effect of discounting to be immaterial. Expenses for non-accumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable.

Long Service Leave

Liabilities for long service leave are not expected to be settled wholly within 12 months after the end of the reporting period. They are recognised as part of the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees to the end of the reporting period using the projected unit credit method. Consideration is given to expected future salaries and wages levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds, with terms to maturity and currency that match, as closely as possible, the expected future cash outflows, in accordance with NSW Treasury policy.

Regardless of when settlement is expected to occur, liabilities for long service leave and annual leave are presented as current liabilities in the Statement of Financial Position if the entity does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period.





(g) Employee Benefits (continued)

Superannuation

Contributions are made by the Corporation to an employee superannuation fund and are charged as expenses when incurred. The Corporation transferred all its staff superannuation entitlements in the defined benefit plans to NSW Treasury in 2005. The unfunded superannuation liability of the Corporation is now assumed by the Crown Entity.

The obligations are presented as current liabilities in the Statement of Financial Position if the entity does not have an unconditional right to defer settlement for at least 12 months after the reporting date, regardless of when the actual settlement is expected to occur.

Short Term Incentive Scheme

The short term incentive scheme is directly related to individuals who have achieved a specific minimum outcome in their individual scorecard results. The pool of funds is dependent on the annual profit of the corporation. An amount of $300,000 has been set aside as at the reporting date (2015: $800,000).

(h) Rounding

All values reported in the financial statements have been rounded to the nearest thousand dollars.

(i) Financial Liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

(j) Cash and Cash Equivalents

For the purpose of the Statement of Cash Flows, cash includes cash on hand and deposits held at call with banks.

(k) Revenue Recognition

Revenue is recognised when it is probable that the economic benefit will flow to the Corporation, and revenue can be reliably measured.

Administration fees and other revenue are recognised as revenues when services have been provided and it is probable that economic benefits will transfer to the Corporation.

Project revenue is recognised when services have been provided, measured on the percentage completed and on an accrual basis.

Interest is recognised on an accrual basis.

All revenue is stated net of the amount of applicable goods and services tax (GST).

(l) Government Grant

The Corporation received a $5m conditional Government grant in September 2015 (2015: $7m) to continue to fund a project to move to a single standardised registry platform. This grant is initially recognised as deferred revenue and transferred to profit or loss on a systematic basis as revenue to match the expenses of the single standardised registry platform.

(m) Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Corporation prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid in line with agreed terms. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised at their fair value.

(n) Trade and Other Receivables

Trade receivables and other receivables are recorded at amounts due, less any impairment. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Corporation will not be able to collect all amounts due according to the original terms of the receivables.





(n) Trade and Other Receivables (continued)

The amount of the impairment loss is recognised in the Statement of Profit or Loss and Other Comprehensive Income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expense in the Statement of Profit or Loss and Other Comprehensive Income.

(o) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of associated goods and services tax (GST), except:

(i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an item or as part of an item of expense; or

(ii) for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of the receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows with the amount of associated goods and services tax.

(p) Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Corporation as lessee are classified as operating leases. Payments made under operating leases (net of any incentive received from the lessor) are charged to profit or loss on a straight-line basis over the period of lease.

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.

(q) Lease Incentives

Lease incentives for leased property are accounted for as a liability and are amortised on a straight line basis over the lease term in accordance with AASB Interpretation 115 Operating Leases – Incentives. These costs have been capitalised as part of leasehold improvements and are amortised over the term of the lease.

(r) Make Good Provision

The Corporation is required to restore the leased premises of its office building to the original condition at the end of the lease. A make good provision has been recognised at the present value of the estimated expenditure.

(s) Impairment of Assets

Assets are reviewed for impairment at each reporting date and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and the value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely dependent on the cash flows from other assets of the groups of assets (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of previous impairment losses at each reporting date.





(t) New Accounting Standards Issued but not yet Effective

The AASB has issued new and amended accounting standards and interpretations that have mandatory application dates for future reporting periods. We have reviewed all of the new accounting standards, and the following are those that are expected to affect the corporation:

AASB 9 Financial Instruments

The revised AASB 9 incorporates the IASB’s completed work on Phase 1 of its project to replace IAS 39 Financial Instruments: Recognition and Measurement (AASB 139 Financial Instruments: Recognition and Measurement) on the classification and measurement of financial assets and financial liabilities. In addition, the IASB completed its project on derecognition of financial instruments.

The Standard includes requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments. AASB 9 (issued in 2009) only included requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB’s project to replace IAS 39 (AASB 139).

AASB 15 Revenue from Contracts with Customers

This standard is applicable to annual reporting periods beginning on or after 1 January 2017. The standard provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity’s statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity’s performance and the customer’s payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgments made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The Corporation will adopt this standard from 1 July 2017 but the impact of its adoption is yet to be assessed by the Corporation.

AASB 16 Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. To the extent that the entity, as lessee, has significant operating leases outstanding at the date of initial application, right-of-use assets will be recognised for the amount of the unamortised portion of the useful life, and lease liabilities will be recognised at the present value of the outstanding lease payments. Thereafter, earnings before interest, depreciation, amortisation and tax (‘EBITDA’) will increase because operating lease expenses currently included in EBITDA will be recognised instead as amortisation of the right-of-use asset, and interest expense on the lease liability. However, there will be an overall reduction in net profit before tax in the early years of a lease because the amortisation and interest charges will exceed the current straight-line expense incurred under AASB 117 Leases. This trend will reverse in the later years. There will be no change to the accounting treatment for short-term leases less than 12 months and leases of low value items, which will continue to be expensed on a straight-line basis.

Management have reviewed these standards and no material impact is expected on the financial statements. The changes are expected to be relating to disclosures in the financial statements.

(u) Dividends

NSW Treasury has exempted Pillar from dividend obligations from the 2015 financial year, for 4 years.

(v) Share Capital

Superannuation Administration Corporation was incorporated under the Superannuation Administration Authority Corporations Act 1999 (NSW) with issued capital of $6 million, representing two fully paid $3 million ordinary shares.





(v) Share Capital (continued)

Current shareholders are the Hon Troy Grant, MP, Deputy Premier, Minister for Justice and Police, Minister for the Arts and Minister for Racing, and the Hon Gladys Berejiklian, MP, Treasurer and Minister for Industrial Relations as appointed by the State Owned Corporations Act 1989 (NSW) on behalf of the NSW Government. The holder of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Corporation.

NSW Government has contributed further equity funding of $7,900,000 during the 2016 financial year.

(w) Comparative Information

Where relevant, comparative amounts are restated to conform to the current reporting period’s presentation. This could arise as a result of the requirements of new or revised Australian Accounting Standards and Australian Interpretations, a voluntary change in accounting policy or a reclassification of items presented.




2. Profit for the Year Note 2016 $’000

2015 $’000

(a) Revenue

Operating Activities

Administration fees 77,624 76,986Project revenue 19,080 21,872Government grant income - 7,000Other operating revenue 2,650 2,565Total Operating Activities 99,354 108,423

Investment Revenue

Interest revenue 153 295153 295

Total Revenue 99,507 108,718

(b) Expenses

Employee Related Expenses

Salaries and wages 48,804 54,381Redundancies 2,078 425Other employee benefits 6,077 5,481Superannuation contributions 5,759 5,632Total Employee Benefit Expenses 62,718 65,919

Depreciation and Amortisation Expense

Intangible assets 268 288Computer equipment 1,271 988Other property, plant and equipment 730 694Total Depreciation and Amortisation Expenses 2,269 1,970

Other Expenses

Communications 1,096 1,142Postage 1,163 840Insurance 532 466Printing 197 280Stationery 95 108Operating lease – minimum lease payments 671 332Loss on disposal of fixed assets 10 222Auditor’s remuneration – audit of financial statements 82 75Doubtful debts (708) (137)Sundry administration expenses 895 566Total Other Expenses 4,033 3,894




2. Profit for the Year (continued) Note 2016 $’000

2015 $’000

(c) Project expenses partly funded by Government Contributed Equity and Grants

Expenses in the profit or loss

1(l)

Employee related expenses 2,400 619Information technology expenses 308 2,396Contractors’ expenses 4,820 6,376Other expenses 173 16Project Related Expenses 7,701 9,407

3. Income Tax 2016 $’000

2015 $’000

(a) Income tax expense:

Current tax expenseCurrent income tax charge 2,108 3,386Adjustments in respect of current income tax of previous year - 14R&D claim (504) (1,961)Total current tax expense 1,604 1,439Deferred tax expenseIncrease in deferred tax assets (1,185) (1,672)Decrease in deferred tax liabilities (170) (683)Total deferred tax expense (1,355) (2,355)

Total Income Tax Expense / (Benefit) 249 (916)

(b) Numerical reconciliation of income tax expense to prima facie tax payable

Profit from operations before income tax expense 3,178 3,485Tax at Australian tax rate of 30% (2015: 30%) 953 1,046Tax effect of amounts which are not deductible (taxable) in calculating taxable income:R&D claim (504) (1,961)(Over) / Under provision of income tax in previous year (200) -Total Income Tax Expense / (Benefit) 249 (916)

(c) Deferred Tax Assets 1 July 2015

$’000

Charged to income

$’000

30 June 2016

$’000

The balance comprises temporary differences attributable to:Employee benefits 3,423 607 4,030

Accrued expenses 706 342 1,048

Other provisions 2,023 236 2,259

Total Deferred Tax Assets 6,152 1,185 7,337




3. Income Tax (continued)

(d) Deferred Tax Liabilities 1 July 2015

$’000

Charged to income

$’000

30 June 2016

$’000

The balance comprises temporary differences attributable to:Amounts recognised direct to Statement of Profit or Loss and Other Comprehensive Income:Fixed assets (783) (168) (951)

Accrued interest income 4 (2) 2

Amounts recognised directly in equity:Revaluation of property 1,560 299 1,859

Total Deferred Tax Liability 781 129 910

4. Trade and Other Receivables 2016 $’000

2015 $’000

Current

Trade receivables 13,745 13,355Less: Allowance for impairment (156) (1,069)

13,589 12,286Other receivables 1,794 73

15,383 12,359

Movements in the allowance for impairment

Opening balance at 1 July 2015 (1,069) (1,458)Additional provisions recognised (57) (468)Unused amount reversed 970 857Closing balance (156) (1,069)

5. Other Assets 2016 $’000

2015 $’000

Current

Prepayments 2,908 2,752Deposit 1,048 1,046

3,956 3,798

6. Property, Plant and Equipment Note 2016 $’000

2015 $’000

Land and Buildings:

At 1 July Gross carrying amount 1(d) 10,530 10,530Less accumulated depreciation (216) (38)Net carrying amount 10,314 10,492




6. Property, Plant and Equipment (continued) Note 2016 $’000

2015 $’000

At 30 June Gross carrying amount 1(d) 11,527 10,530Less accumulated depreciation (394) (216)Net carrying amount 11,133 10,314

If freehold land and buildings were stated at historical cost basis, the amounts would be as follows:At cost 5,091 5,091Accumulated depreciation (590) (542)

4,501 4,549Computer Equipment:

At 1 July Gross carrying amount 7,443 6,426Less accumulated depreciation (5,213) (4,225)Net carrying amount 2,230 2,201

At 30 June Gross carrying amount 8,920 7,443Less accumulated depreciation (5,445) (5,213)Net carrying amount 3,475 2,230

Plant and Equipment:

At 1 July Gross carrying amount 7,092 6,176Less accumulated depreciation (5,254) (5,254)Net carrying amount 1,838 922

At 30 June Gross carrying amount 7,467 7,092Less accumulated depreciation (5,096) (5,254)Net carrying amount 2,371 1,838

Total computers and other plant and equipment 5,846 4,068Total Property, Plant and Equipment 16,979 14,382

Movements in Carrying Amounts

Land and Buildings: 10,314 10,492Revaluation increment on land 997 -Depreciation expense (178) (178)Carrying amount at the end of the year 11,133 10,314




6. Property, Plant and Equipment (continued) Note 2016 $’000

2015 $’000

Computer Equipment:

Opening balance 2,230 2,201Additions 2,517 1,023Reclassification (1) (5)Depreciation expense (1,271) (989)Carrying amount at the end of the year 3,475 2,230

Other Plant and Equipment:

Opening balance 1,838 922Additions 1,095 1,653Disposals (10) (222)Depreciation expense (552) (515)Carrying amount at the end of the year 2,371 1,838

Valuation of Land and Buildings

The land was revalued based on the appraisal of an independent registered valuer, Opteon, dated 31 March 2016.

7. Intangible Assets Note 2016 $’000

2015 $’000

Software:

At 1 JulyGross carrying amount 26,541 26,261Less accumulated amortisation (25,846) (25,558)Net carrying amount 695 703

At 30 JuneGross carrying amount 46,925 26,541Less accumulated amortisation and impairment (26,114) (25,846)Net carrying amount 20,811 695Movements in Carrying Amounts

Balance at beginning of the year 695 703Additions 20,384 280Amortisation expense (268) (288)Carrying amount at the end of the year 20,811 695




8. Trade and Other Payables Note 2016 $’000

2015 $’000

Current liabilities

Trade payables 6,788 5,631Deferred revenue 6,007 4,112GST payable 315 1,789

13,110 11,532

9. Provisions Note 2016 $’000

2015 $’000

Current

Annual LeaveProvision at beginning of the year 4,052 3,605Provisions raised during the year 4,420 4,462Amounts used (4,396) (4,015)Carrying amount at the end of the year 4,076 4,052

Long Service LeaveProvision at beginning of the year 4,819 3,977Provisions raised during the year 1,804 1,374 Amounts used (655) (532)Carrying amount at the end of the year 5,968 4,819

Employee Incentive Scheme Provision 19Provision at beginning of the year 800 700Provisions raised during the year 300 800Amounts used (100) (238)Amounts reversed (700) (462)Carrying amount at the end of the year 300 800

Provision for RedundancyProvision at beginning of the year - -Provisions raised during the year 1,420 -Carrying amount at the end of the year 1,420 -

Declared dividend Provision at beginning of the year - 1,385Amounts used - (1,385)Carrying amount at the end of the year - -

Tax ProvisionTax Provision at beginning of the year 2,273 833Provisions raised during the year 1,589 1,440Tax paid (3,205) -Carrying amount at the end of the year 657 2,273




9. Provisions (continued) Note 2016 $’000

2015 $’000

Current (continued) Provision for Tenancy Make-GoodTenancy make-good costs at beginning of the year - 357Provisions raised during the year 55 -Amount used - (357)Carrying amount at the end of the year 55 -

Lease IncentivesUnamortised incentives at beginning of the year 230 -Provision raised during the year - 230Carrying amount at the end of the year 230 230Total Current Provisions 12,706 12,174

Non-Current

Long Service LeaveProvision at beginning of year 1,739 2,087Amount transferred (to) profit or loss during the year (271) (348)Carrying amount at the end of the year 1,468 1,739

Lease IncentivesUnamortised Incentives at beginning of year 720 -Amount transferred to current provision during the year (231) -Provisions recognised during the year - 720Carrying amount at the end of the year 489 720

Provision for Tenancy Make-GoodTenancy make-good costs at beginning of year 612 145Provisions recognised during the year - 467Amount transferred (to) / from current provision during the year (20) -Carrying amount at the end of the year 592 612

Total Non-Current Provisions 2,549 3,071Total provisions 15,255 15,245Total employee benefit provision 13,232 11,410Total employee numbers 643 728




9. Provisions (continued) Employee entitlements for annual and long service leave include short-term benefits (expected to be settled no later than 12 months after 30 June 2016) and long-term benefits (expected to be settled after more than 12 months) as follows.

Note 2016 $’000

2015 $’000

Short-term

Annual leave 3,261 3,241Long service leave 1,089 913Employee incentive scheme 19 300 800Redundancy payments 1,420 -

6,070 4,954Long-term

Annual leave 815 810Long service leave 6,348 5,646Employee incentive scheme 19 - -

7,163 6,456

10. Equity

The State Owned Corporations Act 1989 requires the Corporation to have two voting shareholders; the Treasurer and another Minister.

Shares in the Corporation as at 30 June 2016 were held by the Hon Troy Grant, MP, Deputy Premier, Minister for Justice and Police, Minister for the Arts and Minister for Racing, and the Hon Gladys Berejiklian, MP, Treasurer and Minister for Industrial Relations. The total contributed equity at balance date was 2 shares with a value of $3,000,000 each.

During the 2016 financial year, Treasury has contributed further equity funding of $7,900,000.

Note 2016 $’000

2015 $’000

Contributed Equity

Balance at beginning of the reporting period 6,000 6,000Add/less movement 7,900 -Carrying amount at the end of the reporting period 13,900 6,000

Asset Revaluation Reserve Balance at beginning of the reporting period 3,643 3,643Revaluation increment/(decrement) 1(d) 698 -Total reserves at the end of the reporting period 4,341 3,643

Retained Earnings

Balance at beginning of the reporting period 17,344 12,943Current year profit 2,883 4,401Dividend declared - -Carrying amount at the end of the reporting period 20,227 17,344




11. Capital and Lease Commitments 2016 $’000

2015 $’000

Operating Lease Commitments

Commitments in relation to operating leases contracted for at the reporting date but not provided for in the financial statements (including GST):Payable - minimum lease payments - not later than one year 2,187 2,033 - greater than one year and less than five years 3,094 3,214 5,281 5,247

Included in the lease commitments are non-cancellable leases with terms between one and a half years and five years. These leases also provide the Corporation with an option to renew for up to four years. Rent is payable monthly in advance.

Finance Lease Commitments

Committed at the reporting date and recognised as liabilities, payable (including GST):

- not later than one year 222 - - greater than one year and less than five years 820 -Total commitment 1,042 -

Representing: - finance lease liability current (note 9) 349 - - finance lease liability non current (note 9) 599 -

948 -

The finance lease commitment commenced during the year and is for a computer server. The Corporation will obtain the ownership at the end of the 5-year lease term. Lease payment is payable monthly in advance.

Capital Commitments

Committed at the reporting date but not recognised as a liability (including GST):

Property, plant and equipment 293 -




12. Related Parties

(a) Directors and Key Management Personnel

The names of the Board Members of the Corporation in office during the year ended 30 June 2016 and up to the date of signing these financial statements are as follows:

Directors:

Ms C. Aston

Ms P. Azarias (up to 30 June 2016)

Mr N. Smyth (up to 30 June 2016)

Mr P. Berckelman

Ms N. Milne

Mr P. Brook (Managing Director & CEO)

In addition to the Directors and CEO disclosed above, the names of the Key Management Personnel of the Corporation in office during the year ended 30 June 2016 and up to the date of signing these financial statements are as follows:

Mr G. Giesekam - Executive General Manager Finance and Company Secretary

Ms F. Abbas - Executive General Manager Corporate Services (up to 4 December 2015)

Mr C. Woodward - Executive General Manager Business Development & Client Engagement

Mr C. Richards - Executive General Manager Operations

Mr B. Dench - Executive General Manager Administration Services (appointed 16 February 2016)

Ms J. Fitzgerald - Executive General Manager Project Management Office (up to 6 May 2016)

Ms E. Hall-Walsh - Executive General Manager IT (appointed 15 August 2016)

Ms K. Hawkins - Executive General Manager IT (appointed 27 July 2015 and up to 28 August 2016)

Mr M. Malss - Executive General Manager IT (appointed 10 November 2014 and up to 24 July 2015)

Mr S. Watson - Executive General Manager Risk

Ms M. Damianos - Executive General Manager Change (appointed 7 December 2015 and up to 30 April 2016)

Ms N. Bowman - Executive General Manager Change (appointed 2 May 2016)

Ms K. Duffy - Executive General Manager Human Resources (Acting) (appointed 11 January 2016 and up to 5 May 2016)

Ms J. Stuart - Executive General Manager Human Resources (appointed 9 May 2016)




12. Related Parties (continued)

2016 $’000

2015 $’000

(b) Compensation of Directors and Key Management Personnel

Short term benefits – (salaries, directors fees, bonuses) 2,525 2,117Post employment benefits - superannuation 205 171Termination benefits 59 102

2,789 2,390

The Managing Director is a Board Member and does not receive a separate fee for serving as a Director.

13. Economic Dependency

The majority of the Corporation’s business revenue 63% (2015: 57%) comes from two clients.

14. Financial Instruments Risk Management

Capital Risk Management

The Corporation manages its capital to ensure it will be able to continue as a going concern while maximising the return to shareholders through optimal use of the capital. The Corporation did not have any debt for the years ended 30 June 2016 and 30 June 2015. The Corporation is required under its Australian Financial Services Licence to maintain a minimum cash level of $100,000. At no time during the current financial year was this amount breached. Daily monitoring is carried out to ensure appropriate levels are maintained.

Credit Risk (Counterparty Risk)

Credit (or Counterparty) risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation and cause the Corporation to incur a financial loss.

The Board approved Treasury Management Policy prescribes surplus cash to be invested with major Australian banks, who currently hold a AA credit rating. The other material financial asset is receivables from superannuation fund trustee clients. There is no material risk that the receivables may be impaired as the trustees are either licensed by the Australian Prudential Regulation Authority (APRA) or appointed by the NSW Government.

Liquidity Risk

Liquidity risk refers to the situation where the Corporation may not be able to meet its financial obligations when they fall due. The Corporation has steady cash inflow from contracted services with trustees and manages its liquidity by annual budgeting and rolling 3 months cash flow forecast. In accordance with Board policy the Corporation invests its surplus cash in bank deposits to ensure adequate liquidity.

The following tables summarise the past due but not impaired profile of the Corporation’s accounts receivable. Accounts receivable excludes statutory receivables and prepayments.




14. Financial Instruments Risk Management (continued)

Year ended 30 June 2016 Less than 3 months ($000)

3 months to 1 year ($000)

1-5 years

($000)

Total

($000)

Contractual Cash Flow

($000)

Accounts receivable 4,423 1,335 - 5,758 5,7584,423 1,335 - 5,758 5,758

Liquidity Risk (continued)



1-5 years

($000)

Total

($000)


($000)

Accounts receivable 3,884 272 - 4,156 4,1563,884 272 - 4,156 4,156

The following tables summarise the maturity profile of the Corporation’s financial liabilities. The carrying amount equals the cash outflows. Accounts payable excludes statutory payables and unearned revenue.



1-5 years

($000)

Total

($000)


($000)

Accounts payable 6,788 - - 6,788 6,7886,788 - - 6,788 6,788



1-5 years

($000)

Total

($000)


($000)

Accounts payable 5,631 - - 5,631 5,6315,631 - - 5,631 5,631

Interest Rate Risk

The Corporation has call deposits with banks which are influenced by the official cash rate as declared by the Reserve Bank of Australia. A movement in interest rates of 1.5% on the closing balance for the entire year would impact the profit / (loss) before tax by $178,003 (2015: $193,457).

Other Market Risks

The Corporation does not have material exposure to foreign currency or other price risks.




15. Fair Value Measurement

All assets and liabilities for which fair value is measured or disclosed are categorised according to the fair value hierarchy as follows:

- Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;

- Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly;

- Level 3 - Inputs for the assets or liability that are not based on observable market data (unobservable inputs).

Recognised fair value measurements

The following table sets out the group’s assets and liabilities that are measured and recognised at fair value in the financial statements.

30 June 2016 Note Level 1 ($000)

Level 2 ($000)

Level 3 ($000)

Total ($000)

Recurring fair value measurements

Non-financial assetsLand and buildings 6 - - 11,177 11,177Total non-financial assets - - 11,177 11,177

30 June 2015 Note Level 1 ($000)

Level 2 ($000)

Level 3 ($000)

Total ($000)

Recurring fair value measurements

Non-financial assetsLand and buildings 6 - - 10,314 10,314Total non-financial assets - - 10,314 10,314

The level 3 assets and liabilities unobservable inputs and sensitivity are as follows:

Land and buildings Rental yield 9% to 10.5% (10.22%) 1.00% change would increase/decrease fair value by $11,000

Discount rate 6% 0.6% change would increase/decrease fair value by $38,000

Valuation techniques used to determine fair values

The corporation engages external, independent and qualified valuers to determine the fair value of the corporation’s land and buildings every three years. In periods when an external valuation is not conducted, the Directors perform Level 3 valuations for land and buildings which are also approved by the Audit & Risk Management Committee




16. Cash Flow Information 2016 $’000

2015 $’000

(a) Reconciliation of Cash

Cash at bank and on hand 4,240 17,159

Call deposits with banks earn at current bank deposit rates. The effective interest rate earned for the year was 1.29% (2015: 2.29%).

(b) Financing Facilities

The Corporation has a credit facility of $5 million available. As at 30 June 2016, this facility had not been utilised (2015: $nil).

2016 $’000

2015 $’000

(c) Reconciliation of profit after income tax to net cash flows from operating activities

Profit after income tax expense for the year 2,883 4,401Non - cash flow adjustments:Depreciation expense 2,001 1,682Amortisation expense 268 288Loss on disposal of plant and equipment 10 222

5,162 6,593Changes in Assets and Liabilities:

(Increase)/decrease in assets:Receivables (2,118) (964)Other assets (157) (593)Deferred tax assets (1,169) (1,673)Increase/(decrease) in liabilities:Trade creditors 2,111 1,408Deferred revenue 1,895 2,493GST payable (1,475) 1,032Provision for employee benefits 1,822 1,041Provision for lease Incentives (230) 950 Provision for tenancy make good 35 110Provision for claims (919) 468Provision for doubtful debts 6 (857)Provision for income tax (1,616) 1,440Deferred tax liabilities (170) (683)

(1,985) 4,172Net cash flows from operating activities 3,177 10,765




17. Subsequent Events

The directors are not aware of any of the following events that have occurred prior to the signing of the financial statements:

(a) events providing additional evidence of conditions that existed at the reporting date, or events that reveal for the first time conditions that existed at the reporting date, or

(b) other events occurring after the reporting date that are to be disclosed in compliance with Australian Accounting Standard AASB 110 ‘Events After the Reporting Period’.

18. Contingent Assets And Liabilities

At reporting date and up to the signing of these financial statements there are no known contingent assets or contingent liabilities (2015: $nil).

— End of Financial Statements —




P I L L A R A D M I N I S T R A T I O N | A P P E N D I C E S | D 1

D Appendices

D 2 | A P P E N D I C E S | P I L L A R A D M I N I S T R A T I O N

Statistics about GIPA access applications 1 July 2015 - 30 June 2016

Table A: Number of applications by type of applicant and outcome*

Access granted in

full

Access granted in

part

Access refused in

full

Information not held

Information already

available

Refuse to deal with

application

Refuse to confirm/

deny whether

information is held

Application withdrawn

Media 0 0 0 0 0 0 0 0

Members of Parliament

0 0 0 0 0 0 0 0

Private sector business

0 0 0 0 0 0 0 0

Not for profit organisations or community groups

0 0 0 0 0 0 0 0

Members of the public (application by legal representative)

124 85 0 1 0 0 0 1

Members of the public (others)

72 44 0 1 0 0 0 0

* More than one decision can be made in respect of a particular access application. If so, a recording must be made in relation to each such decision. This also applies to Table B.

Table B: Number of applications by type of application and outcome

Access granted in

full

Access granted in

part

Access refused in

full

Information not held

Information already

available

Refuse to deal with

application

Refuse to confirm/

deny whether

information is held

Application withdrawn

Personal information applications*

196 129 0 2 0 0 0 1

Access applications (other than personal information applications)

0 0 0 0 0 0 0 0

Access applications that are partly personal information and partly other

0 0 0 0 0 0 0 0

* A personal information application is an access application for personal information (as defined in clause 4 of Schedule 4 to the Act) about the applicant (the applicant being an individual).

Appendix 1


Table C: Invalid applications

Reason for invalidity Number of Applications

Application does not comply with formal requirements (section 41 of the Act) 5

Application is for excluded information of the agency (section 43 of the Act) 0

Application contravenes restraint order (section 110 of the Act) 0

Total number of invalid applications received 5

Invalid applications that subsequently became valid applications 0

Table D: Conclusive presumption of overriding public interest against disclosure: matters listed in Schedule 1 to the Act

Number of times consideration used *

Overriding secrecy laws 0

Cabinet information 0

Executive Council information 0

Contempt 0

Legal professional privilege 24

Excluded information 0

Documents affecting law enforcement and public safety 0

Transport safety 0

Adoption 0

Care and protection of children 0

Ministerial code of conduct 0

Aboriginal and environmental heritage 0

* More than one public interest consideration may apply in relation to a particular access application and, if so, each such consideration is to be recorded (but only once per application). This also applies in relation to Table E.

Appendix 1


Table E: Other public interest considerations against disclosure: matters listed in table to section 14 of the Act

Number of occasions when application not successful (3)

Responsible and effective government 0

Law enforcement and security 0

Individual rights, judicial process and natural justice 120

Business interests of agencies and other persons 0

Environment, culture, economy and general matters 0

Secrecy provisions 0

Exempt documents under interstate Freedom of Information legislation 0

Table F: Timeliness

Number of Applications

Decided within the statutory timeframe (20 days plus any extensions) 326

Decided after 35 days (by agreement with applicant) 1

Not decided within time (deemed refusal) 1

Total 328

Table G: Number of applications reviewed under Part 5 of the Act (by type of review and outcome)

Decision varied Decision upheld Total

Internal review 0 0 0

Review by Information Commissioner* 0 0 0

Internal review following recommendations under section 93 of Act 0 0 0

Review by ADT 0 0 0

Total 0 0 0

* The Information Commissioner does not have the authority to vary decisions, but can make recommendations to the original decision-maker. The data in this case indicates that a recommendation to vary or uphold the original decision has been made by the Information Commissioner.

Table H: Applications for review under Part 5 of the Act (by type of applicant)

Number of Applications for review

Applications by access applicants 0

Application by persons to whom information the subject of access application relates (see section 54 of the Act) 0

Appendix 1


Table I: Applications transferred to other agencies under Division 2 of Part 4 of the Act (by type of transfer)

Number of Applications transferred

Agency - initiated transfers 1

Applicant - initiated transfers 0

Response to Significant Issues raised by the Auditor-General in the Statutory Audit Report for year ended 30 June 2016

Going Concern

The Corporation’s current liabilities exceeded the current assets by $2.6m at 30 June 2016 and projected cash flow indicated a cash deficit of $17.3 million at 30 September 2017.

The Board of Directors have determined the going concern assertion is valid for the 30 June 2016 financial statements on the following bases:

• The ‘Come and Go’ facility of $5.0 million is guaranteed by the Government;

• Customer prepayment arrangements have been agreed upon to the extent of $14.0 million.

The Auditor-General concurred with management’s assumptions.

Pillar Sale

In December 2015, the Government announced its intention to enter into agreement for the sale of the Corporation. The sale process of the Corporation is being considered by the Government and it is expected to be completed before 31 December 2016.

Information Technology Project

The Corporation’s Project includes upgrading and transitioning all back office systems to a fit for purpose platform (expected completion 2018). Release One of the project costing $20.1 million went live in August 2016. As a result of the economic benefits being provided by Release One, these costs have been capitalised in financial year 2016. The Auditor-General reviewed management’s assessment and resultant accounting treatment and concurred with this accounting treatment.

The governance structure established by the Corporation for the delivery of efficient and effective management of the project includes:

• an Independent Steering Committee reporting to the Board;

• Periodic monitoring and reporting of the governance and control framework by Internal Audit to the Audit and Risk Management Committee;

• Engagement of an external expert as a project consultant;

• Recruitment of experienced and qualified personnel in key project management roles; and

• The Finance team reporting costs-to-date against budget and milestone achievements.

The Auditor-General recommended Pillar continue to maintain its established governance framework for Project Eleanor and closely monitor its progress to completion.

Appendix 1


Appendix 2 - Exemptions from reporting requirementsPillar, as a State owned corporation that competes for superannuation administration business with private sector organisations, has been determined by NSW Treasury to be an “in competition” entity for annual reporting purposes for financial years including and after the 2011/12 year. Accordingly, Treasury has granted to Pillar various “in competition” annual reporting exemptions, pursuant to section 7(2) of the Annual Reports (Statutory Bodies) Act 1984 (NSW) and clause 17 of the Annual Reports (Statutory Bodies) Regulation 2015 (NSW).

Details of the exemptions are set out below.

Note: In the following:

ARSBA means Annual Reports (Statutory Bodies) Act 1984 (NSW).

ARSBR means Annual Reports (Statutory Bodies) Regulation 2015 (NSW).

Requirement that Pillar is exempted from Comment/Condition applicable to exemption

Budgets

• detailed budget for the year reported on (s. 7(1)(a)(iii) ARSBA);

• outline budget for next year (s. 7(1)(a)(iii) ARSBA);

• particulars of material adjustments to detailed budget for the year reported on (cl. 7 ARSBR).

Report of Operations

Summary Review of Operations (Schedule 1 ARSBR):

• narrative summary of significant operations;

• selected financial and other quantitative information associated with the administration of program or operations.

Management and Activities (Schedule 1 ARSBR):

• nature and range of activities;

• measure and indicators of performance;

• internal and external performance reviews;

• benefits from management and strategy reviews;

• management improvement plans and achievements;

• major problems and issues;

• major works in progress, cost to date, estimated dates of completion and cost overruns;

• reasons for significant delays etc to major works or programs.

Exemption is subject to a condition. The condition is that comments and information relating to the “summary review of operations” are to be disclosed in a summarised form.

Pillar has provided information in Part A about our operations.

Exemption is subject to a condition. The condition is that comments and information relating to “management and activities” are to be disclosed in a summarised form.

Pillar has provided information in Part A about our management and activities.

Research and Development (Schedule 1 ARSBR):

• completed research including resources allocated;

• continuing research and development activities, including resources allocated, unless that information could adversely affect operations.


Appendix 2 - Exemptions from reporting requirements

Human Resources (Schedule 1 ARSBR):

• number of employees by category and comparison to prior three years;

• exceptional movements in employee wages, salaries or allowances;

• personnel policies and practices;

• industrial relations policies and practices.

Consultants (Schedule 1 ARSBR):

• for each engagement costing greater than $50,000:

– name of consultant;

– title of project;

– actual cost;

• for each engagement costing less than $50,000:

– total number of engagements;

– total cost;

• if applicable, a statement that no consultants were engaged.

Exemption is subject to a condition. The condition is that the total amount spent on consultants is to be disclosed along with a summary of the main purposes of the engagements.

Pillar has provided this information in Part B.

Land Disposal (Schedule 1 ARSBR):

• list of properties disposed of during the year other than by public auction or tender that had a value of more than $5 million, including the name of person acquiring the property and the proceeds from the disposal of the property;

• details of family and business connections between the purchaser and the person responsible for approving the disposal;

• statement giving reasons for the disposal;

• purpose/s for which proceeds were used;

• statement indicating that access to the documents relating to the disposal can be obtained under the GIPA Act.


Consumer Response (Schedule 1 ARSBR):

• extent and main features of complaints;

• services improved / changes in responses to complaints / suggestions.

Exemption is subject to a condition. The condition is that comments and information relating to “consumer response” are to be disclosed in a summarised form.

There were no complaints made to Pillar during 2015/16 that were not related to the superannuation funds and schemes that Pillar provides administration services for.

Pillar reports details of the complaints received in relation to each fund or scheme that it administers to the trustee of the applicable fund or scheme. We provide information in Part B about the complaints made in relation to the public sector superannuation schemes that Pillar administers.

Payment of Accounts (Schedule 1 ARSBR):

• performance in paying accounts, including action to improve payment performance.

Statutory State owned corporations are not subject to the payment of accounts provisions in cl. 13 of the Public Finance and Audit Regulation 2010.

Time for Payment of Accounts (Schedule 1 ARSBR):

• reasons for late payments;

• interest paid due to late payments.

Statutory State owned corporations are not subject to the payment of accounts provisions in cl. 13 of the Public Finance and Audit Regulation 2010.

Report on Risk Management and Insurance Activities (Schedule 1 ARSBR)

Exemption is subject to a condition. The condition is that comments and information are to be disclosed in a summarised form.

Pillar provides information about its risk management and insurance activities in Part A. Pillar, as a statutory State owned corporation is also exempt from the requirement in Internal Audit and Risk Management Policy for the NSW Public Sector (TPP 09-05), to annually report compliance with the core requirements of the policy. It should be noted that Pillar does actually comply with the requirements of the policy.

Disclosure of Controlled Entities (Schedule 1 ARSBR):

• details of names, objectives, operations and activities of controlled entities and measures of performance.

Exemption is subject to a condition. The condition is that the names of the controlled entities are to be disclosed along with a summarised disclosure of the controlled entities’ objectives, operations and activities and measures of performance.

Pillar does not control any entities.

Investment Performance (cl.10 ARSBR)

Liability Management Performance (cl.13 ARSBR)

Appendix 2 - Exemptions from reporting requirements


Access B11

Changes to legislation B2

Charter A4

Committees B6

Complaints B13

Consultants B16

Disability Action Plan A18

Disclosure B14, D5

Discussion of activities and performance A4 – A6

Directors B4 – B5

Directors’ Declaration C4

Diversity A18

Employees’ leave entitlements C13

Executive numbers B10

Executive structure B8 – B9

Executive remuneration B10

Executive performance B8 – B9

Financial Statements (and Notes) Part C

Governance B2 – B10

Government Information (GIPA) B11 – B12

Government Information Statistics Appendix 1

Grants to Non-Government Organisations B16

Independent Audit Report C2 – C3

Insurance A17

Letter of submission A1

Management B8 – B9

Multicultural Policies and Services Program A18

Objectives A4

Organisation chart B3

Our year in review A3

Overseas visits B16

Oversight B2 – B7

Privacy Policy B15

Public Interest Disclosures B14

Report production details B16

Risk management A12 – A17

Waste Reduction & Purchasing Plan A23

Workplace health and safety A22

Index of legislative compliance

Superannuation Administration Corporation trading as Pillar Administration

ABN 80 976 223 967

AFS Licence number 245591

Address Level 16, 1 Margaret Street Sydney NSW 2000

Postal Address GPO Box 3887 Sydney NSW 2001

Telephone 02 9238 5555

Facsimile 02 9238 5272

Website www.pillar.com.au

Annual Report2015/2016