pillar administration

Superannuation Administration Corporation trading as

Pillar Administration

Annual Report 2007/08

supporting your business

31 October 2008

Mr Joe Tripodi MPMinister for Finance,Minister for Infrastructure,Minister for Regulatory Reform,Minister for Ports & Waterways,Level 31, Governor Macquarie Tower1 Farrer PlaceSYDNEY NSW 2000

Dear Minister,

This is the ninth annual report of the Superannuation Administration Corporation, which trades as Pillar Administration. We have pleasure in submitting it 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 the Corporation’s primary business of superannuation administration was conducted profitably within a competitive environment.

The financial statements for 2007/08 which form part of the Annual Report have been submitted to and certified by the Auditor-General of New South Wales.

Yours sincerely,

Dr Col Gellatly Mr Peter BeckChairman Chief Executive Officer


ContentsPart A – The BusinessThe Business in Brief ......................................................................A1

Organisation Chart ........................................................................A2

The Chairman’s Message ................................................................A3

The Chief Executive Officer’s Review ................................................A4

Summary of Goals and Achievements ...............................................A6

Administration Snapshot .................................................................A10

Our People and Our Community .......................................................A12

Ensuring our Capacity to Meet Client Needs.......................................A15

Part B – Detailed Corporate InformationCorporate Governance ....................................................................B1

The Board ....................................................................................B2

Management .................................................................................B7

Executive Remuneration .................................................................B9

Equal Employment Opportunity Information ......................................B12

Consumer Response ......................................................................B13

Freedom of Information ..................................................................B14

Compliance with Specific Policies .....................................................B26

Additional Financial Related Data .....................................................B28

Other Corporate Information ...........................................................B30

Part C – Audited Financial StatementsIndependent Auditor’s Report ..........................................................C1

Directors’ Declaration for the Year ended 30 June 2008 ......................C3

Income Statement for the Year ended 30 June 2008 ..........................C4

Balance Sheet as at 30 June 2008 ...................................................C5

Statement of Changes in Equity for the Year ended 30 June 2008 ........C6

Cash Flow Statement for the Year ended 30 June 2008 .......................C7

Notes to the Financial Statements for the Year ended 30 June 2008 ......C8


Part A – The BusinessContents

The Business in Brief ........................................................................A1

Organisation Chart ..........................................................................A2

The Chairman’s Message ..................................................................A3

The Chief Executive Officer’s Review ..................................................A4

Summary of Goals and Achievements .................................................A6

Administration Snapshot ...................................................................A10

Our People and Our Community .........................................................A12

Ensuring our Capacity to Meet Client Needs.........................................A15

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Pillar Annual Report 2007/08

The Business in BriefThe Superannuation Administration Corporation trading as Pillar Administration:

provides superannuation administration and related services in both the public and private sectors;

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

is governed by a Board of Directors that reports to Shareholding Ministers appointed under the State Owned Corporations Act 1989 (NSW), and to a Portfolio Minister.

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

to be a successful business;

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 Administration (ABN 80 976 223 967) 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 Administration (Pillar) presently provides such services to the trustees of superannuation funds.

Those funds include both defined benefit and accumulation funds for individuals who are in the workforce, in both the public and private sectors, and those who have retired. Pillar has an Australian Financial Services Licence (AFS Licence No. 245591) and is licensed to provide general product advice to members of the superannuation funds under its administration, and to deal in superannuation products.

The services provided include:

collecting and processing member and employer contributions;

maintaining member, accounting and other fund records;

processing claims and paying benefits including pensions;

processing investment elections;

answering member and employer enquiries through a Contact Centre and a Member Interview service, in accordance with contractual and Licence obligations;

managing and developing fund websites that provide 24 hour-a-day information on member accounts;

issuing member statements and literature;

assisting employers;

keeping trustees informed of details of administration activities and performance;

interacting with custodians and other service providers;

superannuation consultancy services for trustees; and

where required, corporate services and fund secretariat services.

As at 30 June 2008 Pillar administered superannuation funds that had approximately 1.78 million members (including members receiving superannuation pensions) and total fund assets of over $56 billion.

Pillar has approximately 650 employees and operates from the following locations:

Sydney: at 83 Clarence St;

Illawarra: at 5 Old Springhill Rd, Coniston (Pillar’s National Service Centre);

at the Corporate Centre, Bridge Rd, Coniston; and

at 16 Gladstone Ave, Wollongong.

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The Chairman’s Message

Dr Col Gellatly

The 2007/08 year has been a challenging year for Pillar but also a year in which the Corporation has been successful in consolidating its position as the third largest provider of superannuation administration services in Australia. For Pillar to do this is quite an achievement during a period when significant legislative changes had to be implemented and at a time of growing expectations of trustees and fund members about the services and responsibilities of fund administrators.

Despite the additional workload involved with legislative change and increased member interest in superannuation, Pillar made a profit in 2007/08 and part of our business planning involves ensuring that the acquisition of each new client contributes to increased profitability.

In 2007/08 Pillar was appointed to administer the superannuation business, including a master-trust and an eligible rollover fund, of a well-known financial services company. The take-on of this business will occur in 2008/09. Furthermore, during the year Pillar successfully completed the transition of the administration of a retail superannuation fund.

During the year the Board and the various Board Committees met regularly. The new Productivity & IT Committee, whose charter involves overseeing management’s effective use of technology and quality, process and productivity improvements, commenced its work. The Board also amended the name of the Audit Committee to the Audit & Risk Management Committee to reflect the increased emphasis on risk management by the Corporation.

Pillar is a major employer in the Illawarra region and prides itself on its strong client focus and the competence of its people. Pillar now employs over 600 people in its Coniston and Wollongong offices and approximately 650 people overall.

In November 2007 Pillar bade farewell to its Chief Executive Officer (CEO), Peter Cormack. Peter served as CEO from July 2004 and prior to that had been Pillar’s General Manager–Operations. On behalf of the Board and staff I would like to thank Peter for his hard work and contribution to Pillar’s growth and success and wish him all the best in his future endeavours.

I also welcome Pillar’s new CEO, Peter Beck to the organisation. Peter has a long and distinguished record in the financial services sector and brings highly valued experience and knowledge of the industry to Pillar.

In the 2008/09 year, the Board expects that Pillar will continue to achieve productivity gains, which will help it to win new business whilst maintaining high standards of service to existing clients. The continued success of Pillar can only be achieved with the active engagement of staff so, on behalf of the Board, I would like to thank all staff for their efforts and hard work in the past year.

Dr Col GellatlyChairman

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The Chief Executive Officer’s Review

Mr Peter Beck

The 2007/08 year began with the commencement of legislative changes to superannuation that occurred when the Federal Government’s Simpler Super/Better Super initiatives took effect at 1 July 2007. This required large scale administration system changes for all funds including implementation of changes in policy, procedure and member communications. These were successfully implemented in conjunction with our trustee clients.

However, the impact of the increased workload caused by the implementation of these changes was exacerbated by an increase in demand for superannuation fund services by members, alerted by Government advertising and media coverage of the Federal Budget and the changes to superannuation. The 2007/08 year saw a substantial increase in the volume of phone calls and emails made to Pillar by members enquiring about their superannuation, along with substantial increases in member transactions. Further, a number of Pillar’s trustee clients made changes to the products and services their funds offered, and the number of fund members and employers also increased.

All of this placed a considerable demand upon Pillar to continue to achieve high levels of efficiency and effectiveness and to satisfy member and trustee clients whilst still complying with the strict legislative and regulatory requirements involved with superannuation. Pillar employed more resources and used technology more effectively to process the increased volumes of work and to ensure adequate capacity for 2008/09.

In the highly competitive superannuation administration marketplace, the smooth absorption of new business is extremely important to Pillar’s continued profitability and growth. To this end, Pillar has continued to standardise the technology platforms that it uses. Pillar uses multiple systems in the administration of its superannuation funds and this both provides flexibility for the further take-on of new business and avoids over-reliance on a single supplier.

A continuing focus is on productivity through people, process and technology. Speed of transaction processes and ease of system use have been amongst Pillar’s information technology (IT) strengths for a number of years and during this year we have implemented on-line web functionality for members of a number of superannuation funds. New technology has been deployed to improve the process of scanning forms sent from members and employers to update the details to our administration systems. Business processes have been and will continue to be reviewed with the aim of improving the flow of work throughout the organisation and making our processing more efficient.

Compliance with legislative requirements and trustee policies is a high priority within Pillar. Pillar has a dedicated Compliance team that maintains a very strong focus on ensuring that there is full compliance with the increasingly complex provisions of superannuation legislation. Pillar also maintains a regime of strong internal controls. This regime includes six-monthly assurance audits on the effectiveness of controls over key areas of interest to clients. These regimes are part of Pillar’s overall risk management which remains a key interest for the Board and management.

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Pillar has an Australian Financial Services (AFS) Licence and must work to retain this. To this end, all personnel whose duties involve contact with superannuation fund members are required to maintain their knowledge and skills in accordance with the Australian Securities & Investments Commission’s Regulatory Guide 146. Training and the transfer of knowledge by means of employee coaching and mentoring are key drivers of Pillar’s success.

Staff turnover is significantly below industry standards. At Pillar we recognise that our people are our greatest asset and staff receive comprehensive training, access to leading-edge technology, competitive employee benefits and a flexible working environment to help them achieve an optimum balance between their work and home lives.

Because most of our staff live and work in the Illawarra, Pillar is connected to the local community. Pillar aims to be a good corporate citizen and supports the Illawarra region in a variety of ways such as: sponsoring students and programs at the University of Wollongong; supporting local charities and fund-raising activities; and providing surplus older computers to local schools.

Pillar prides itself upon being environmentally responsible and is committed to extending re-cycling initiatives and reducing energy usage. To this end, Pillar has embarked upon a sustainability program in conjunction with the NSW Department of Environment and Climate Change and Wollongong City Council.

Further details of Pillar’s achievements against its objectives are included in the next section of this Report.

I endorse the Chairman’s thanks to our staff for their hard work during the year. 2008/09 will most likely be a challenging year but I am confident that Pillar will continue its growth and success. Pillar’s vision is to secure our future through high performance. We have the people, processes and technology to deliver a secure future for our clients, our staff and our shareholders.

Peter BeckChief Executive Officer

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Summary of Goals and AchievementsThe focus for 2007/08 as set out in the Superannuation Administration Corporation’s Statement of Corporate Intent was on the following inter-related goals:

ensure that each client contributes to profitability;

retain all clients;

have an obsessive focus on processes and productivity improvement;

win new business – industry, retail, ERF and public sector;

enhance our scalable business capability;

ensure that people are skilled with a performance focus;

maintain our culture of governance and control;

partner with the local community; and

be environmentally responsible.

Performance

The following section provides brief highlights of Pillar’s performance against the above listed goals during the 2007/08 year. Elaboration on selected areas is contained in later sections. Financial information is contained elsewhere in this Annual Report at Part C - Audited Financial Statements.

Ensure that each client contributes to profitability

Pillar, with agreement from its trustee clients, started to review the fees for administration services. The aim is to more closely align the fees with the work performed by Pillar which is largely transaction based.

2007/08 saw an increasing focus on productivity measures and reducing the costs of administration, using technology where appropriate and streamlining and standardising administration processes.

Pillar achieved a post tax profit of $2.345 million for 2007/08.

Selected groups of staff have started using time recording software to help better measure the cost of administering each fund and therefore productivity.

Retain all clients

Maintenance of close relationships with clients is a key strategy. Pillar has long term contracts in place with our major public sector client and our biggest public offer fund client and the relationship with each client is on a sound footing.

Our industry fund clients have acknowledged that Pillar has responded to the challenges of handling increased volumes of transactions and changes to their product offerings.

The ‘Simpler/Better Super’ legislative changes that came into effect from 1 July 2007 were successfully implemented on time both to the computer systems that Pillar uses to administer its superannuation funds and in the revised procedures required.

One of the complex public sector defined benefit schemes that Pillar administers was successfully converted to a new administration system during the year.

New system functionality was introduced by Pillar for a number of different funds in 2007/08, including better on-line and web-based services and the implementation of the processing of ‘salary sacrifice’ contributions for some of the public sector schemes.

Pillar assisted with new or improved product offerings, including changed insurance arrangements, for a number of clients during the year.

Pillar provided administrative support and planning to assist a trustee client with the merger of its fund and another fund, which occurred on 1 July 2008. Pillar will administer the merged fund.

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Have an obsessive focus on processes and productivity improvement

Due to the continued increase in the public’s interest in super and increasing transaction volumes, Pillar has intensified its focus on improving productivity and our processes. Controlling operating costs is imperative if Pillar is to continue to be profitable and to succeed in the competitive superannuation administration market.

A new management committee focusing specifically on operational effectiveness and quality assurance was set up in 2007/08. Its terms of reference include reviewing the operational structure, efficiency and controls of major processes. The Productivity & IT Committee, a new Board Committee, was also instituted during the year. There has also been an increased focus on measuring the cost of each function and process within Pillar.

A major focus during 2007/08 and onwards is on productivity through technology. On-line switching of member’s investment strategies was implemented for a number of industry fund clients, saving time and effort for members and for Pillar. Upgraded optical character recognition software was also implemented during the year, making the receipt and processing of forms much more efficient and less time consuming.

Pillar’s business process improvement program continues to deliver improvements and aims to reduce operational costs. For example, the moving of business analysts into operational areas so that analysis of changes required to systems can incorporate the needs of the operations staff before being passed to IT to program.

The Contact Centre introduced a program for assessing the way staff handled phone calls from members and for providing feedback to staff. This has resulted in a decrease in call handling time and reduced complaint levels.

Pillar successfully maintained its certification to the ISO 9001:2000 quality management standard in relation to the

provision of superannuation administration services.

Win new business – industry, retail, ERF and public sector

In 2007/08 Pillar was appointed, as part of an outsourcing arrangement, to administer the superannuation business of a well-known financial services company. The take-on of this business, which includes a master-trust and an eligible rollover fund, will occur in the first half of 2008/09.

Pillar also successfully completed the transition during the year of the administration of a retail superannuation fund with approximately 11,000 members.

Pillar now administers superannuation member accounts for almost 1.8 million members and is the third largest provider of superannuation administration services in Australia. Because of Pillar’s success and profile in the industry, we receive an increasing number of invitations to participate in new business tenders and expressions of interest across all superannuation market segments.

Pillar also hosts visits by industry consultants and potential clients to our National Service Centre at Coniston.

Pillar continued its sponsorship of the monthly ASFA luncheons in Melbourne and once again in 2007/08 we were the exclusive sponsor of the ASFA Melbourne trivia night.

Trivia night prize winners

Pillar was a supporting sponsor of the Investment and Financial Services Association (IFSA) conference in August 2007.

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Pillar was the exclusive sponsor of the after dinner party at the Conference of Major Superannuation Funds (CMSF) in March 2008. The theme of the party was “relaxing with your fellow superheroes at the Pillar Superhero Bar”, which promoted the “superhero” marketing theme that Pillar introduced in November 2007.

Pillar Superhero marketing theme

Enhance our scalable business capability

Pillar continued to standardise its technology platforms during the year with the aim of becoming even more efficient in its use of administration systems. Pillar uses multiple systems in the administration of its superannuation funds and this both provides flexibility for the further take-on of new business and avoids over-reliance on a single supplier.

As part of Pillar’s focus on productivity through technology, we continue to develop the use of ‘straight-through processing’ and on-line functionality wherever possible. The year saw the continued rollout to employers of electronic file contribution processing functionality – enhancing our capability to efficiently process contributions. Pillar continues to work towards the realisation of its ‘end to end automation’ program in relation to superannuation processing.

Pillar’s Contact Centre relocated during the year to a larger office in Wollongong to ensure that we have the capacity to quickly expand staff numbers to accommodate new clients and increased volumes of calls. The PABX system used by the organisation was upgraded at the same time.

The new Productivity & IT Committee of the Board has the specific responsibility for overseeing management’s enhancement of Pillar’s scalable business capability through the effective use of technology and through quality, process and productivity improvements.

Ensure that people are skilled with a performance focus

All staff whose duties involve contact with fund members are required to attain Association of Superannuation Funds of Australia (ASFA) qualifications to meet the requirements of the Australian Securities & Investments Commission’s (ASIC)’s Regulatory Guide 146. Staff who have already achieved these qualifications undergo an annual ‘refresher’ course.

During 2007/08 most Pillar staff took part in at least one training or briefing session. There were 123 different training or briefing sessions run by Pillar training staff. The types of courses provided included training on the rules, systems and processes of different superannuation funds, Anti-Money Laundering & Counter-Terrorism Financing Act briefings, human resources related sessions such as anti-bullying and harassment sessions and business letter writing courses.

Pillar provides specific leadership development training to staff who manage teams to develop their people management skills.

Pillar also strives to ensure the transfer of knowledge by way of employee coaching and mentoring. All of the training and staff development that Pillar undertakes is aimed at maintaining an experienced, skilled and satisfied workforce that will enhance our long-term competitiveness and potential for growth.

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Maintain our culture of governance and control

Pillar’s management and control arrangements are designed to ensure proper, efficient and effective processes and protect both our interests and those of our trustee clients. These arrangements include oversight by the Board and Board Committees, frequent independent audits, clear delegation of authorities, a regime of internal controls, a Compliance Program and a risk management framework.

Pillar has a comprehensive Compliance Program and a dedicated Compliance team that maintains a very strong focus on ensuring compliance with the applicable superannuation legislative and contractual obligations. All of Pillar’s operational units have responsibilities under the Compliance Program, including the comprehensive documenting of procedures.

The regime of internal controls includes six-monthly assurance audits on the effectiveness of controls over key areas of interest to clients including manual and computer process controls. There are also due diligence checks on new staff.

During 2007/08 Pillar’s risk management process was further reviewed and specified in greater detail. The process of ensuring that our risk management framework was aligned with those of our trustee clients was initiated. “Risk Management” was added to the title of the Board Committee with responsibility for overseeing risk management (now the Audit & Risk Management Committee) to indicate the increased emphasis on risk management within Pillar.

Pillar has a specific policy on the prevention of fraud and corruption, as part of an overall framework that aims at both fostering a positive corporate culture focusing on service delivery and ethical behaviour and ensuring that staff work within specified and effective controls.

In 2007/08 the Australian Prudential Regulatory Authority (APRA) conducted an extensive assessment of Pillar’s operations, including internal control and risk management, in March and April 2008 as part of the regulator’s review of superannuation administrators.

Partner with the local community

It is very important to Pillar that we connect and engage with the local community in the Illawarra where most of our staff live and work.

Pillar has continued to strengthen its relationship with the University of Wollongong through further promotion and support of the University’s graduate, scholarship and work experience programs. Management have met with University staff to look at ways to continue and strengthen the relationship over the next 12 months.

Pillar has developed an indigenous cadetship and has established networks with the University of Wollongong, local TAFEs and indigenous cluster groups with a view to providing more indigenous people with career opportunities within the organisation.

Pillar seeks to be a good corporate citizen and continues to maintain its involvement with selected local charities and provides support for local disadvantaged schools by donating surplus computers as they become available.

Be environmentally responsible

Pillar has embarked upon a sustainability program in conjunction with the NSW Department of Environment and Climate Change and Wollongong City Council, aiming for a 3 star rating by 2010. Entering this program makes good business sense for Pillar as it aligns us with our clients and their ethical base, lowers cost via reduced consumption and less waste while establishing our “licence to operate” within the community and engaging our employees in a commonly held set of environmental values and activities.

A ‘grass roots’ group has been established within Pillar to identify initiatives for reduction in the use of energy, stationery and other consumables.

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Administration SnapshotThe following graphs indicate the steady increase in transaction volumes that result from Pillar taking on additional superannuation fund clients, the recent significant changes in the superannuation industry and increased public interest in superannuation generally.

Phone calls answered

The volume of phone calls from fund members received by Pillar has increased by over 80% in the last 5 years. Given the increased public interest in superannuation and the impact of recent legislative changes, it is likely that the volume of calls will continue to increase.

Contributions allocated and lump sum benefits paid

As the number of members whose superannuation funds are administered by Pillar increases, the amounts of contributions allocated to and benefits paid from the funds consequently increase. In particular, as Pillar wins more industry fund business, the workload involved in processing contributions increases significantly. Industry funds have many small employers contributing to the funds, as opposed to public sector schemes that have fewer (and larger) employers making contributions. Further, legislative changes allowing greater ‘portability’ of members’ benefits means more benefits are ‘rolled over’ from fund to fund.

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Annual Statements produced and mailed

It is a legislative requirement that all members of the superannuation funds that Pillar administers have to be sent an Annual Statement each year (apart from those members who are classed as “lost” because we do not have a current address for them). Half-yearly statements are not legislatively required but a growing number of funds provide them to members.

Written correspondence received and answered

Written correspondence includes both letters and emails sent by superannuation fund members, requesting information and/or asking questions and requiring a written response.

Mail volumes

The graph shows the increasing volumes of mail handled by Pillar’s Document Management Unit. Items of incoming mail include letters from fund members, superannuation forms completed by members, contribution cheques and supporting documentation. Items of outgoing mail include welcome letters to new members, benefit payments and supporting documentation and correspondence to employers.

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Our People and Our Community

Developing our People

Pillar has over 600 staff working out of 3 locations in Coniston and Wollongong and approximately 50 staff located in our Sydney office.

A key focus for the business is the on-going training and development of our people, with particular focus on superannuation industry and leadership training. Superannuation training enables staff to keep abreast of regulatory and legislative changes that affect the superannuation industry. Training is also provided to maintain compliance with requirements of the Corporations Act 2001 (Cth) that are relevant to Pillar’s Australian Financial Services (AFS) Licence.

A considerable number of staff have obtained Association of Superannuation Funds of Australia (ASFA) qualifications. These qualifications are required, under our AFS Licence, for Contact Centre staff and others who have direct contact with fund members but other staff have also obtained these qualifications. All staff who have obtained the relevant ASFA qualifications have to undergo an annual ‘refresher’ course, run by Pillar’s Compliance team, in order to ensure that they maintain the requisite level of superannuation knowledge.

An on-going commitment to improve Pillar’s performance in customer service is a vital part of our ethos. The focus of the training for Pillar’s Contact Centre staff is on the management of both technically complex calls and customers with diverse needs. The training entails active communication skills, problem resolution and effective questioning techniques.

Pillar provides training courses to staff on a wide variety of topics, not just superannuation related, that cover the roles our staff carry out and the knowledge they need to have. The types of courses provided included training on the rules, systems and processes of different superannuation funds, Anti-Money Laundering & Counter-Terrorism Financing Act briefings, human resources

related sessions such as anti-bullying and harassment sessions and business letter writing courses. Pillar also provides specific leadership development training to staff who manage teams in order to develop their people management skills, and there is also a focus on employee coaching and mentoring.

We believe that our people are our competitive advantage and help to ensure our long-term competitiveness and growth. Maintaining an experienced and skilled workforce and developing our people contribute to Pillar’s strong performance culture and positive employee relations.

One of our staff of whom we are all extremely proud of is Brendan Dowler.

Brendan Dowler in action

Brendan has been a regular member of the Australian men’s Wheelchair Basketball team (nicknamed the ‘Rollers’) since 2001, and has played over 100 games in that time. Since his first major tournament in 2001 he has represented Australia at two World Championships and at the 2004 Athens Paralympics. The team finished 3rd at the last World Championships and won the silver medal at the 2004 Paralympics.

In September 2008, Brendan represented Australia at the 2008 Beijing Paralympic Games and was part of the Rollers team

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that won the gold medal, beating defending champions Canada 72-60. Everyone at Pillar offers their congratulations to Brendan on this amazing achievement.

An initiative for staff that Pillar continued this year was the ‘Healthy Lifestyle’ week, held during September 2007. This health and wellbeing initiative included activities such as Red Cross Blood Bank donations, free health checks, massages, stretching classes and the grand finale on the Friday was the soccer & touch football corporate challenge between the National Service Centre and Coniston Corporate Centre buildings. Following this a healthy lunch was provided for all staff.

Pillar issued an Employee Attitude survey to staff in 2008. The results of this survey will be used in the development of initiatives to enhance the organisation’s culture, performance and focus on client service.

Support for our Community

Pillar seeks to be a good corporate citizen and, given the location of three of its offices in Coniston and Wollongong, aims to actively support the Illawarra region.

Pillar has continued to strengthen its relationship with the University of Wollongong through further promotion and support of the University’s graduate, scholarship and work experience programs. We employed one of the two 3rd year students who completed the 2007/08 Work Experience Scholarship program. Pillar’s IT division is looking for 2 graduate analyst programmers from the University of Wollongong and will look to graduates of the University for other IT positions as they become available.

During the year, the University’s ‘Dean’s Scholars Program’ gave a 1st year Commerce student the chance to have a short-term vacation work placement at Pillar. We have also developed an indigenous cadetship with a view to providing indigenous people with career opportunities within the organisation. The development of the cadetship has involved Pillar establishing networks with the University of Wollongong, TAFE colleges in the Wollongong area and indigenous ‘cluster’ groups. Our first recipient of the cadetship,

Nyssa Murray, continued her work placement at Pillar during the year. Nyssa started at Pillar in June 2007 and is studying a Bachelor of Commerce full time at the University of Wollongong and will complete a 12 week work placement for each year of her degree.

Pillar staff have taken part in all of the University of Wollongong’s career days over the past 12 months, including the annual Illawarra Graduate Career’s Fair held at the University. The Career’s Fair provides a variety of opportunities for students to meet with employers and discuss graduate employment opportunities available within the Illawarra. Pillar IT staff also took part in an University information night for Year 12 students and their parents.

Pillar management have recently met with University staff to look at ways to continue and strengthen the relationship over the next 12 months.

Pillar has been involved during the year with the LUCY mentoring program developed by the Office for Women (OFW) and the NSW Department of Premier & Cabinet. This program aims to encourage the development of women, who given the right opportunities and support will become our future leaders. Over a period of weeks mentors and students worked together on a small work-related project while also attending some larger group sessions to meet and learn from other program participants. Senior Pillar staff have provided mentoring and support for two female university students through this program. Both young women spent time at Pillar during the year.

Nyssa Murray

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In 2007/08 Pillar maintained its involvement with local charities and fund-raising events. Some examples of this support include:

A team of dedicated walkers from Pillar again participated in the NSW Cancer Council’s annual Relay for Life in October 2007, taking turns walking around Beaton Park in Wollongong. They raised over $1,700 for the NSW Cancer Council.

Pillar, together with two of our trustee clients, sponsored a team of 15 riders from Coniston and Sydney in the 26th Multiple Sclerosis ‘Sydney to the Gong’ bike ride

in November 2007. The riders collected over $1,400 for this worthy cause, raising money and awareness of those people who suffer from multiple sclerosis.

Pillar was a ‘silver sponsor’ of the Canberra Mothers Day Classic, which was held to raise funds for breast cancer research, in May 2008.

During the month of June 2008, the Sydney Children’s Hospital celebrated ‘Gold Week’. A total of $1,617 was donated to the hospital after a mufti day gold coin collection by Pillar staff and a contribution of $808 from the Corporation.

Pillar again sponsored a hole at the Super Review Charity Golf Day held at Manly Golf Club in February 2008. We also entered a team in the event.

During the year, Wollongong Hospital’s Neurosciences Ward was the recipient of a donation of over $15,000 raised from various staff fund-raising activities plus a $5,000 donation from the Corporation. The Neuroscience ward is a 36 bed unit which provides acute patient care to people experiencing a variety of neurological conditions such as meningitis, brain tumours, head injuries, multiple sclerosis and Parkinson’s disease.

Pillar’s Web Services team provided support to Coniston Public School by helping in the re-design and development of the School’s web-site. Surplus computers (which were no longer in use) were donated to local public primary schools (Lindsay Park, Figtree, Mount Pleasant, and Kemblawarra). Further support was provided by Pillar to Warrawong High School’s Computer Lab throughout the year.

As part of its commitment to the environment and sustainability, Pillar, along with a number of other organisations based in the Illawarra, signed up to the Sustainability Advantage Program, an initiative of the NSW Department of Environment and Climate Change. By committing to this initiative Pillar anticipates it will meet its strategic sustainability goals, as set out below:

Aligning Pillar with the carbon neutral (by 2020) goal of the NSW Government;

Understanding our environmental ‘footprint’ by June 2009 and developing policies, targets and processes to reduce it by 5% per annum;

Developing, by March 2009, systems to effectively monitor and report progress in reducing our environmental footprint;

Engaging the entire staff to adopt the principles of sustainability and empower them to develop “grass roots” initiatives;

Reducing polluting emissions from our activities by reducing the number of journeys to work by car by 10% in 3 years; and

The sustainability program is to be cost neutral over time.

Pillar golf team

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Ensuring our Capacity to Meet Client Needs

Our Systems

Pillar operates within a business sphere of low margins with high volume transaction processing which requires stable, robust, secure and sophisticated administration systems to meet the demands of its clients. In the past year, Pillar continued its investment in information technology to enhance the computer system facilities that are used in the administration of superannuation funds.

Pillar has enhanced its systems performance capacity in recent years through the upgrading of servers and improved network capability, system functionality, internet connections and access security. This has resulted in Pillar having better and more secure system facilities for clients and our staff and more effective deployment of software across the organisation.

A continuing focus of Pillar has been on productivity through technology and the 2007/08 year saw the extension of our capability for processing web-based and on-line transactions. Pillar commenced the standardisation of the administration forms that it uses to enable increased use of optical character recognition (OCR) functionality in the processing of forms received from members and employers. We have also integrated the workflow, OCR and Contact Centre systems and implemented further improvements in workflow and scanning capability software, allowing more real-time ‘straight-through processing’, reducing manual overheads and improving data quality.

These achievements helped to ensure that ease of use and speed of transaction process continue to be administration strengths for Pillar. The ‘straight-through’ processing system has been re-designed for increased usage by Pillar’s member and employer user base, with increased use of automated ‘end-to-end’ administration transactions through-put exceeding 95% for some funds. The use of ‘straight-through’ processing and systems integration allows Pillar to achieve high

levels of customer and member satisfaction as employers and members are able to complete their enquiries or data transfers in minimum time while ensuring better provision of service and the highest levels of security of information. It also provides Pillar with a greater ability to continue to take on new business as it is won.

Pillar has continued to standardise the technology platforms that it uses. Our integrated administration systems solution through the full administration cycle from new member to final benefit payment has been applied to the administration systems solutions for our two latest trustee clients. Pillar’s web-based system solutions have been tailored to seamlessly interact with the administration platforms that we use.

Pillar aims to achieve the highest levels of security across all of its networks and systems. The Infrastructure team (part of the Information Technology division) retained its ISO 9001 accreditation in 2007/08 and has aligned its information security processes with the AUS/NZ 27001:2005 information security standard.

We carry out continuous systems risk assessments and regularly review the system access security profiles of staff, with the results provided to the appropriate Board Committees.

Pillar has a fully integrated Contact Centre that uses new technology for real-time reporting and new workforce management tools that enable the management team to make pro-active decisions. The Contact Centre also uses customer relationship management (CRM) functionality that enables all contacts between members and the Contact Centre to be recorded and hence analysed and reported. Statistics such as member interactions with a fund, grouped by age, employer, postcode or account balance, are becoming crucial to member retention and growth strategies for superannuation funds. Pillar’s ability to report this information to trustees is important to our strategy for growth.

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The 2007/08 year also saw the installation of a new PABX system for the Contact Centre. The new system incorporated voice over internet protocols (VOIP) and improved integrated voice recording (IVR) functionality.

Pillar’s information technology facilities and its enhanced systems performance capability has enabled it to successfully implement a number of substantial changes that, because of either legislative requirements or trustee requests, had to be made to the superannuation administration systems that we use. The implementation of the ‘Simpler Super/Better Super’ legislative changes for all of Pillar’s superannuation fund clients, culminating in the rollout of the extensive system changes from 1 July 2007 onwards, involved up to 9 months of planning, documenting of specifications, programming, updating and testing. The successful outcome indicates that Pillar’s system facilities and capabilities are stable, robust, secure and sophisticated.

Extensions to the product offerings of our trustee clients that have been or are being implemented by Pillar including insurance changes and the provision of income stream products and Eligible Rollover Funds (ERFs).

Risk Management

Superannuation administration carries with it a high level of inherent risk and risk management continues to be a key area of interest for the Board and management. Areas of particular interest during 2007/08 included risks associated with:

Pillar’s key operational priority - the day to day processing of fund member’s instructions and accounts, which are subject to intensive surveillance;

business expansion - which affects all areas of the organisation and is supported structurally by a well developed project management framework;

regulatory risk – which arises from the finance and superannuation industries’ complex regulatory requirements including, on behalf of trustee clients, risks associated with: the Superannuation Industry (Supervision) Act 1993 (Cth) and

associated Regulations; the Anti-Money Laundering & Counter-Terrorism Financing Act 2006 (Cth) and associated Rules; and in relation to Pillar alone: the Corporations Act 2001 (Cth) and associated Regulations (these apply to Pillar as an Australian Financial Services License holder); and

risk management itself – the need to ensure that risk management processes are complete and effective.

In relation to the latter, the risk management process was further reviewed and specified in greater detail during the year and the policy tightened to ensure clarity of the key requirements. As in previous years, consistency of the policy and processes with the Australian and New Zealand Risk Management Standard (AS/NZS 4360) was maintained.

Pillar’s risk profile is reviewed by all levels of management, each with a different focus from strategic to operational detail:

the Executive Committee, under the Board’s direction, is responsible for business risk management from a high level perspective;

the CEO, assisted by the Company Secretary, is responsible for ensuring risk management throughout the organisation is effective and complies with Pillar’s policy; and

individual senior executives, their direct reports and other risk specialists have responsibilities at greater levels of detail covering the divisional, sub-divisional or other component level.

All functional areas and activities are covered by risk management including: client and member services; finance and accounting; human resources; information security; fraud and corruption prevention; business take-ons; and system migrations.

The risk of disasters is addressed by a comprehensive Business Continuity and Disaster Recovery Plan. This is regularly tested and includes arrangements for an alternative computer system and processing site that allows the maintenance of the main business functions in the event of a disaster.

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Compliance with Superannuation Law and Contractual Obligations

Superannuation in Australia is highly regulated and subject to an extensive legislation and policy framework. This framework has undergone consistent and substantial change over a number of years.

Pillar has a comprehensive Compliance Program that sets out the basis by which Pillar ensures compliance with the full range of superannuation legislative and contractual matters required to be undertaken in the administration of superannuation funds. The overriding objectives set out in the Compliance Program are:

1. The correct and timely performance of all superannuation processes, in accordance with the relevant Commonwealth, State and trustee requirements.

2. The undertaking of all acts required under the conditions of its Australian Financial Services Licence.

3. The promotion of a culture of compliance within the organisation.

4. The maintenance of existing business and the winning of new business, by demonstrating the strength of the organisation’s commitment to achieving compliance.

The Compliance Program is overseen by the Board’s Superannuation Compliance Committee. The Committee is provided with a range of reports on compliance matters and holds regular meetings to discuss the reports and current and up-coming superannuation compliance matters.

As part of its Compliance Program, Pillar has a dedicated Compliance unit that is responsible for:

Determining the mechanisms, procedures and processes by which superannuation related compliance is to be achieved;

Monitoring the superannuation compliance environment to ensure that Pillar has the complete and timely information necessary to meet the compliance requirements for the superannuation schemes that it administers;

Detailing requirements with which Pillar must comply;

Determining the legislative and related issues that need to be communicated to Pillar staff and the method of that communication;

The provision of advice concerning the application of superannuation legislation within Pillar;

Ensuring that all system specifications, procedures, standard letters, forms, scheme literature, on-line reference material and training guides are in line with superannuation rules and policies;

Reporting breaches of requirements to Pillar’s Chief Executive Officer and also to the Board’s Superannuation Compliance Committee;

Ensuring that action is taken to resolve breaches and monitoring the progress of the required action.

The Compliance Program is not limited to the Compliance unit. It includes measures to ensure that all levels of staff, irrespective of their role and/or seniority, are aware of and complete their compliance responsibilities in their day to day duties.

The effectiveness of the Compliance Program can be demonstrated by the implementation of the Federal Government’s Better Super legislative changes into Pillar’s systems, processes and procedures. The Better Super initiatives effective from 1 July 2007 represented comprehensive changes to the Australian superannuation environment, and impacted every area and every role in Pillar’s operations. All new and changed compliance requirements had to be determined, specified and then implemented into administration systems, processes and procedures. All staff were fully trained on the new requirements. The implementation occurred on time and was seen as a success by our trustee clients.

Further during 2007/08, Pillar helped clients develop their programs for dealing with the requirements of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).

Pillar has continued to meet the conditions of its Australian Financial Service Licence and also successfully maintained its certification to the ISO 9001:2000 quality management standard in relation to the provision of superannuation administration services.

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Part B – Detailed Corporate InformationContents

Corporate Governance ......................................................................B1

The Board ......................................................................................B2

Management ...................................................................................B7

Executive Remuneration ...................................................................B9

Equal Employment Opportunity Information ........................................B12

Consumer Response ........................................................................B13

Freedom of Information ....................................................................B14

Compliance with Specific Policies .......................................................B26

Additional Financial Related Data .......................................................B28

Other Corporate Information .............................................................B30



Corporate Governance

Enabling Legislation

The State Owned Corporations Act 1989 (NSW) (the “SOC Act”) provides for the establishment and operation of Government enterprises as State owned corporations. It sets out amongst many other matters, 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 (“the 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.

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

Oversight of the Corporation by the NSW Government

Oversight of the Corporation by the NSW Government is carried out through a Portfolio Minister in terms of section 20I of the SOC Act and two Voting Shareholders of the Corporation in terms of section 20H of the same Act.

Legislatively required reporting, in addition to this Annual Report, includes providing a Statement of Corporate Intent each year to the Shareholding Ministers, supported by a confidential business plan, risk analysis and financial projections. This is complemented by quarterly reports on performance. The Corporation also provides this material to the Portfolio Minister.

The Corporation is subject to external audit by the Auditor-General and is also subject to the review powers of a number of other Government entities, such as the NSW Ombudsman and the Independent Commission Against Corruption.

The Portfolio Minister

The Portfolio Minister in terms of s.20I of the State Owned Corporations Act 1989 (NSW) at 30 June 2008 was:

The Hon. John Watkins, MP, Deputy Premier, Minister for Finance.

At the date of publication, the Portfolio Minister was the Hon. Joseph Tripodi, MP, Minister for Finance.

The Shareholding MinistersThe Voting Shareholders of the Corporation in terms of s.20H of the State Owned Corporations Act 1989 at 30 June 2008 were:

The Hon. Michael Costa, MLC, Treasurer; and

The Hon. John Della Bosca, MLC, Minister for Education and Training.

At the date of publication, the Voting Shareholders were:

The Hon. Eric Roozendaal, MLC, Treasurer; and

The Hon. Carmel Tebbutt, MP, Deputy Premier, Minister for Commerce, Minister for Climate Change and the Environment.

The Corporation’s BoardThe Board has statutory authority under the above-mentioned legislation to manage the Corporation and is the entity that reports to Shareholding Ministers and to which directions may be issued by the Portfolio Minister. Further details of the Board are set out in the next section of this Report.

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The Board

The Directors

The Board consists of at least three and no more than six non-executive Directors and the Chief Executive Officer. The Chairman is a non-executive Director. The Board meets at least monthly and monitors corporate performance and key issues through formal processes such as monthly reports from management, through discussions with stakeholders and through various informal means open to the Directors.

Each of the non-executive Directors of the Corporation was appointed to the Board by the Voting Shareholders pursuant to clause 15.2 of the Memorandum and Articles of Association of the Corporation. In combination, 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 and employee and industrial relations. The Directors of the Corporation are listed below, with the date and term of appointment stated for each non-executive Director, along with an outline of each Director’s professional background.

Dr COL GELLATLY, BAgEc (Hons) UNE, MComm (Hons) UNSW, PhD NCSU, AO, Chairman of the Board; was formerly the Director General of the NSW Premier’s Department, Director General of the NSW Department of Land and Water Conservation and Director General of the NSW Department of Industrial Relations, Employment, Training and Further Education. He also has extensive experience as chairman and member of numerous government committees and boards. He is currently Chair of the Redfern Waterloo Authority, a member of the Board of State Water Corporation, a member of the University of New England Council, an Administrator for Wollongong Council and a director of the NSW Rugby

League. He was awarded an AO, Officer of the General Division in the 2008 Queen’s Birthday Honours list for his services to the community as a leader in policy reform and administration in the NSW public sector. He is an ex-officio member of all the Committees of the Board.

Dr Gellatly was appointed as Chairman on 18 June 2007 for the term to 17 June 2010.

PETER BECK, Chief Executive Officer; is a successful financial services executive with experience in general management, sales, marketing, product management, customer service, operations, finance, actuarial, information services, strategic planning and mergers and acquisitions. Peter joined the Colonial group in 1981, initially as an actuary. He spent over twenty years with the group, both in South Africa and then Australia, in a variety of roles. His final role with the group (by then a part of the Commonwealth Bank) was as Managing Director, Comminsure, a position he held until 2005. Subsequently he provided consulting services to a range of clients. Mr Beck was appointed as Chief Executive Officer effective 2 April 2008.

EVE CRESTANI, Dip. Law (BAB), DPM, FAICD, Chairman of the Human Resources & Remuneration Committee; is a professional director and business consultant with a background in law and management. She sits on various financial services boards and board committees. Eve is the Chairman of Mercer Investment Nominees Limited, a director of Australian Unity and Booking.com, a member of the Disciplinary Tribunal of the Australian Securities Exchange and is Chairman of the Compliance Committees of Invesco and NavraInvest. Eve consults on strategically significant projects in Australia and Asia and

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is a professional mentor to senior executives. In the latter role she helps senior executives develop as leaders. Eve is also a member of the Superannuation Compliance Committee.

Ms Crestani was first appointed to the Board on 16 October 2001 and was subsequently re-appointed for the term 16 October 2007 to 15 October 2008.

NOEL DAVIS, LLB, AAII, Chairman of the Superannuation Compliance Committee; is a barrister practising in Sydney. He has had extensive experience in superannuation, life insurance and tax issues for more than 30 years. Noel is a part-time member of the Superannuation Complaints Tribunal. He is a director of Trust Company Superannuation Services Limited and is chairman of its Audit, Risk and Compliance Committee. He is also a director of Count Financial Limited, a public financial planning company and is chairman of its Risk and Compliance Committee. Noel is the author of “The Law of Superannuation in Australia”, a loose leaf book and is the editor of the “Australian Superannuation Law Bulletin”. Noel is also a member of the Audit & Risk Management Committee.

Mr Davis was first appointed to the Board on 16 October 2001 and was subsequently re-appointed for the term 16 October 2007 to 15 October 2008.

GLENYS ROPER, BA, LittB, FAICD, FAIM, Chairman of the Productivity & IT Committee; has top level experience in the public and private sectors. In the Commonwealth Government she was Chief Executive of the IT office, Executive Director in the government privatisations office and Chief Executive of the Australian Mint. In 1996 her work at the Mint won her the Channel Nine/Louis Vuitton award

for leadership and achievement. Glenys is Managing Director of Roex Management, providing advice and business development assistance in the IT and government sectors. She is a director on a number of boards and chairs a range of governance committees in the government sector. Glenys is also a member of the Audit & Risk Management Committee and the Human Resources & Remuneration Committee.

Ms Roper was first appointed to the Board on 16 October 2001 and was subsequently re-appointed for the term 16 October 2006 to 15 October 2008,

PHILIP SMALL, BEc (Syd), MSc (Lond), FCPA, Chairman of the Audit & Risk Management Committee; has been involved in the insurance and banking software industry since 1985 and has a detailed knowledge of the market in the Asia Pacific region. He has held a number of senior management positions as a technology executive and was President of Computer Science Corporation (CSC)’s Financial Services Group in Asia Pacific, a position he held until 2001. Prior to CSC, Philip worked for Continuum and was responsible for their operations in Asia Pacific between 1993 and 1996. Prior to this, he worked for Paxus Corporation where he headed up their European division from 1988 to 1993 and led their expansion to become the leading provider of insurance software in Europe. Philip is a Director of FINEOS Corporation, an Irish software company. He also advises a number of other software and technology companies. Philip is also a member of the Superannuation Compliance Committee.

Mr Small was first appointed to the Board on 25 February 2005 and was subsequently re-appointed for the term 25 February 2008 to 24 February 2011.

During the 2007/08 year Peter Cormack left the Board as at the date of his resignation as CEO of the Corporation on 30 November 2007. Mr Cormack had been CEO and a Board member since 17 July 2004.

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Frequency of and Attendance at Board Meetings

The Board met ten times during 2007/08. The number of meetings attended by each Director is set out below.

Director Possible number

Number attended

Dr Gellatly 10 9*

Ms Crestani 10 9

Mr Davis 10 9*

Ms Roper 10 10

Mr Small 10 10

Mr Beck 3 3

Mr Cormack 4 4

* Two Directors were absent with leave granted for one Board meeting each.

Board Committees

During the year the Board was assisted by the following Committees composed of non-executive Directors:

the Audit & Risk Management Committee, which establishes accounting policies, focuses on the adequacy of the administrative, operating, risk and financial controls and oversees the work of the internal auditor;

the Human Resources & Remuneration Committee, which provides high level oversight of human resources policies, strategies and remuneration;

the Productivity & Information Technology (IT) Committee, which assists the Board in meeting its strategic objectives to enhance the Corporation’s scalable business capability through the effective use of technology and quality, process and productivity improvements; and

the Superannuation Compliance Committee, which oversees the Corporation’s Compliance Program in relation to superannuation administration.

Membership of Board Committees

The Board determines the membership of the Board Committees. Persons who are not members of the Board may be included; however executives or executive Directors of the Corporation are excluded from Committee membership. The Chairman of the Board does not chair a Board Committee.

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:

executives of the Corporation as appropriate;

other persons providing reports or information for 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, 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 and updated annually subject to Board approval.

The membership of each of the existing Committees and the activities of each in 2007/08 are outlined below.

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The Audit & Risk Management CommitteeAt 30 June 2008, the members of the Audit & Risk Management Committee were:

Mr Philip Small (Chairman); Mr Noel Davis; Ms Glenys Roper; and Dr Col Gellatly (ex officio member).

The Board amended the name of the Audit Committee to the Audit & Risk Management Committee during 2007/08 to reflect the increased emphasis on risk management by the Corporation.

The meetings of the Committee are attended by representatives of management, external auditors and internal auditors. On occasions the Audit & Risk Management Committee met with external and internal auditors without management being present.

The Committee met six times during 2007/08. The activities of the Committee included:

approving the Audit Plan and oversight of its implementation;

assurance reporting to clients’ Audit Committees;

monitoring implementation of audit recommendations;

matters related to the statutory accounts such as policy issues and matters raised by external auditors;

monitoring the currency of the Corporation’s internal controls;

monitoring the maintenance of the Corporation’s Risk Management Policy and Risk Registers;

monitoring the adherence to the Corporation’s Fraud and Corruption Prevention Strategy;

reviewing the Corporation’s Business Continuity Plan and Disaster Recovery Plan;

reviewing the Corporation’s Delegations of Authority;

reviewing the process for the alignment of administration fees with the largely transaction based tasks performed by the Corporation; and

reviewing various aspects of the Corporation’s administration services including system access security.

The Human Resources & Remuneration Committee

At 30 June 2008 the members of the Human Resources & Remuneration Committee were:

Ms Eve Crestani (Chairman); Ms Glenys Roper; and Dr Col Gellatly (ex officio member).

The Committee met five times during 2007/08. The activities of the Committee included:

performance and salary reviews of executive staff;

monitoring the process for performance and salary review of non-Award staff;

monitoring the progress of Award negotiations;

executive succession planning; reviewing the Corporation’s learning and

development plans and monitoring the annual review of the Corporation’s Training Plan;

monitoring Human Resources issues such as recruitment, staff turnover and occupational health and safety;

approving Human Resources policies including the recruitment and selection policy;

monitoring the effectiveness of the Corporation’s Equal Employment Opportunity policies and management plan;

approving the revision of the Corporation’s Employee Code of Conduct; and

monitoring the resourcing needs for handling potential and actual new clients.

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The Productivity & Information Technology Committee

As at 30 June 2008 the members of the Productivity & Information Technology (IT) Committee were:

Ms Glenys Roper (Chairman); Mr Philip Small; and Dr Col Gellatly (ex officio member).The Committee effectively replaced the discontinued Information Technology Governance Committee.

The Committee met nine times during 2007/08. The activities of the committee included:

oversight of the Corporation’s quality, process and productivity improvement programs and measuring of results;

assessing the adequacy of resources and information for productivity programs;

reviewing the Corporation’s IT strategy, proposed investments and associated risks and advising the Board on adequacy of resources to meet strategic objectives;

monitoring IT projects against original budget, scope and schedule;

ensuring that management has documented arrangements with stakeholders for agreed levels of service, standards of performance and remedies for non-performance corroborated by documented agreements with vendors regarding support arrangements; and

reviewing and developing key performance indicators relating to the application of IT in the Corporation.

The Superannuation Compliance Committee

At 30 June 2008 the members of the Superannuation Compliance Committee were:

Mr Noel Davis (Chairman); Ms Eve Crestani; Mr Philip Small; and Dr Col Gellatly (ex officio member).

The Committee met six times during 2007/08 and its activities included:

oversight of the on-going operation of the Compliance Program and organisational arrangements for compliance;

monitoring actual compliance performance;

monitoring the progress made towards resolving any breaches of legislative or trustee requirements;

monitoring the Corporation’s specific compliance with the requirements of its Australian Financial Services Licence;

oversight of the Corporation’s actions in response to and compliance with changed legislative requirements;

monitoring the Compliance Assessment function within the Corporation; and

monitoring the timeliness and accuracy of the Corporation’s resolution of complaints received in relation to its provision of administration services.

B6



ManagementThe Chief Executive Officer

The Chief Executive Officer (CEO) of the Corporation is appointed by the non-executive Directors after consultation with the Voting Shareholders.

Mr Peter Cormack, who had been CEO from 17 July 2004, resigned effective 30 November 2007. Mr Peter Beck was appointed as CEO effective from 2 April 2008.

The Executive Structure

The senior management positions in the Corporation make up the Executive Committee. The positions that as at 30 June 2008 comprised the Executive Committee and the occupants of those positions during 2007/08 are set out below.

Position Occupant Period employed during year

Chief Executive Officer Mr Peter Cormack

Mr Peter Beck

Up to 30 November 2007 (resigned)

From 2 April 2008

General Manager - Finance & Administration Mr Eric Lo Whole year

General Manager - Information Technology & Business Systems Ms Fiona Abercrombie Whole year

General Manager - Projects & Transition Mr John Trent Up to 4 December 2007

(resigned)

General Manager - Marketing & Business Development Mr Mark Luciano Whole year

General Manager - Human Resources

Manager – Human Resources

Ms Mandy Varley-Mason

Mr Dave Allen

Up to 15 January 2008 (resigned)

From 31 March 2008

Company Secretary Ms Jane Byrne Whole year

Manager – Public Sector Business Mr Patrick McGoulrick Whole year

Manager – Private Sector Business Mr Christopher Woodward Whole year

Manager – Compliance Mr Bill Morris Whole year

Manager – Contact Centre Ms Marion Fryer

Ms Antonietta Martino

Up to 21 September 2007 (resigned)

From 3 December 2007

During the 2007/08 year the Executive Committee met at least monthly for information sharing and the consideration of key issues facing management.

Note: The Organisation Chart of the Corporation (hereafter in Part B referred to as Pillar), including the main functions of the organisational divisions is set out in this Annual Report in Part A – The Business.

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Other Committees

To assist with monitoring, decision-making and organisational functioning, Pillar has various specific purpose committees. As at 30 June 2008 these included:

the Operational Effectiveness and Quality Assurance Review Committee: chaired by the Manager – Compliance and comprised of senior managers including the CEO, this committee’s terms of reference include reviewing the operational structure, efficiency and controls of major processes;

the Project Priority & Management Committee: comprised of all Executive Committee members with other managers co-opted as required, with the purpose of approving and monitoring on-going management of all major project work within Pillar;

the Management Committee: comprised of senior and middle management staff, who share information, particularly in relation to the general operations of Pillar;

the Fraud & Corruption Prevention Committee: comprised of all Executive Committee members, with the purpose of monitoring incidents of suspected fraud or corruption or circumstances that may lead to fraudulent acts and to consider and implement strategies to decrease the likelihood of fraudulent practices; and

the Occupational Health & Safety Committee: composed mainly of non-managerial staff, with the purpose of monitoring occupational health and safety issues.

The Joint Consultative Committee

The Joint Consultative Committee provides a forum for discussion between management and the representatives of employees and employee associations. Its meetings are generally held every three months and it draws its membership from amongst Pillar’s executive group, employee representatives and representatives of the Public Service Association.

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Executive RemunerationExecutives with Remuneration Packages over $219,701

During the 2007/08 year actual remuneration in excess of $219,701 (equivalent to the minimum remuneration package for Senior Executive Service Level 5 executives) was paid or payable to the following three executives (currently employed by Pillar at 30 June 2008):

Mr Peter Beck, Chief Executive Officer; Mr Eric Lo, General Manager - Finance & Administration; Ms Fiona Abercrombie, General Manager - Information Technology & Business Systems.

Performance statements for the executives listed above are provided below as required by the Annual Reports (Statutory Bodies) Regulation 2005 (NSW).

Performance Statements

Name: Peter Beck

Position: Chief Executive Officer

Remuneration package paid or due and payable for year: $350,000

Performance pay: None in relation to the 2007/08 financial year.

Period: 2 April 2008 – 30 June 2008

Performance Targets Achieved: Tasks set by the Board for the Chief Executive Officer (CEO) and achieved successfully in the applicable period in 2007/08:

Provide effective strategic leadership of Pillar; Retain existing clients and grow the business by the

addition of new clients in selected markets; Ensure that the business remains profitable; Ensure that Pillar’s Compliance Program, business

processes and procedures continue to meet the obligations of the organisation’s Australian Financial Services Licence;

Continue to provide high quality services to clients, at the agreed standards, in what is a continually changing, challenging and complex legislative environment;

Lead, coach and skill staff to meet ongoing business requirements and provide development opportunities for individuals wherever possible;

Manage key stakeholder relationships; and Actively engage with the local community in which

Pillar operates in the Illawarra.

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Executive Remuneration (continued)

Name: Eric Lo

Position: General Manager - Finance & Administration


Performance pay:$13,000 paid during 2007/08 for contributing to the improved organisation performance during the 2007/08 financial year.

Period: 1 July 2007 – 30 June 2008

Performance Targets Achieved: Tasks set by the CEO for the General Manager - Finance & Administration and achieved successfully in 2007/08:

Manage the accounting, taxation and finance functions for both Pillar and its clients;

Meet statutory and taxation reporting requirements; Manage profit performance and forecasted returns for

shareholders; Implement Australian equivalents to International

Financial Reporting Standards (AIFRS) for the reporting of both Pillar and its clients;

Continue process improvements to enhance operational effectiveness and cost efficiency; and

Perform due diligence reviews on new business and major transactions.

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Executive Remuneration (continued)

Name: Fiona Abercrombie

Position: General Manager - Information Technology & Business Systems


Performance pay:$9,000 paid during 2007/08 for contributing to the improved organisation performance during the 2007/08 financial year.

Period: 1 July 2007 – 30 June 2008

Performance Targets Achieved: Tasks set by the CEO for the General Manager - Information Technology & Business Systems and achieved successfully in 2007/08:

Ensure appropriate governance across all aspects of Information Communications and Technology (ICT), including disaster recovery planning;

Manage risk, compliance, integrity and security across Pillar’s Information Technology (IT) systems;

Cost management and productivity improvements across ICT;

Mitigate supplier risk and manage vendor agreements;

Business acceptance and implementation of all ICT solutions;

Ensure effective IT plans are in place to meet existing and new business requirements; and

Deliver technology & communication solutions to meet business requirements for clients.

Number of Executive Officers

The following figures disclose the number of executive officers employed at the close of the year with an annual remuneration package equal to or greater than the minimum remuneration package for Senior Executive Service Level 1 executives ($141,250).

Date Female Male

30 June 2008 2 6

30 June 2007 2 5

Note: These figures include Information Technology managers.

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Equal Employment Opportunity Information

Equal Employment Opportunity (EEO) Achievements

Pillar is an equal opportunity employer that has integrated Equal Employment Opportunity (EEO) practices into all areas of the workplace, thereby creating an environment where staff are valued and have the opportunity to contribute and develop to their fullest potential. The merit principle is applied to all recruitment, selection, promotion, training and other employment-related opportunities.

Pillar’s EEO strategy for the upcoming year includes continual encouragement for persons with disabilities and persons of Aboriginal & Torres Strait Islander background to apply for positions. An example of the strategy in practice is Pillar’s development of an indigenous cadetship with a view to providing indigenous people with career opportunities within the organisation.

Statistical Information for EEO Groups

Table A. Trends in the Representation of EEO Groups

% of Total Staff

EEO GROUP Benchmark or Target 2005 2006 2007 2008

Women 50% 64% 65% 67% 69%

Aboriginal people and Torres Strait Islanders 2% 1% 1% 0.8% 0.7%

People whose first language was not English 20% 19% 19% 21% 20%

People with a disability 12% 3% 3% 2% 3%

People with a disability requiring work-related adjustment 7% 0.2% 2.6% 0% 2.9%

Table B. Trends in the Distribution of EEO Groups

Distribution Index

EEO GROUP Benchmark or Target 2005 2006 2007 2008

Women 100 72 71 70 70

Aboriginal people and Torres Strait Islanders 100 n/c n/c n/c n/c

People whose first language was not English 100 102 98 98 92

People with a disability 100 n/c n/c n/c n/c

People with a disability requiring work-related adjustment 100 n/c n/c n/c n/c

NOTES

1. A Distribution Index of 100 indicates that the centre of the distribution of the EEO group across salary levels is equivalent to that of other staff. Values less than 100 mean that the EEO 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 EEO group is less concentrated at lower salary levels. The Distribution Index is automatically calculated by the software provided by ODEOPE.

2. n/c = Not Calculated. The Distribution Index is not calculated where EEO group or non-EEO group numbers are less than 20.

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Consumer Response

Complaints

There was just one complaint made to Pillar during 2007/08 that was 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 trustees of the funds and schemes.

Public Sector Superannuation Schemes

By arrangement with its public sector trustee client, SAS Trustee Corporation, Pillar’s Annual Report includes statistics on complaints it received relating to the NSW public sector superannuation schemes. There were 148 individual complaints about particular situations recorded for the year ended 30 June 2008 applicable to the public sector schemes that Pillar administers. A statistical breakdown by category is shown below.

Category of Complaint Number of Complaints

Application of policy 9

Administrative issues 139

Investment 0

Insurance 0

Incorrect data from external provider 0

Total 148

Note: The number of public sector scheme members (including pensioners) as at 30 June 2008 was 142,959.

There was one complaint received in 2007/08 in relation to an administration issue concerning the NSW Parliamentary Contributory Superannuation Fund.

The definition of a complaint for reporting purposes is “a written or oral expression of dissatisfaction which requires a response”. Managers review the handling of complaints on a sample basis and this includes follow-up contact with the person who complained. All complaints are analysed to determine if there is a systemic cause and if that is

the case, corrective and preventive action is implemented. Staff 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.

The Superannuation Complaints Tribunal (SCT) is the independent tribunal set up by the Commonwealth Government to deal with complaints made to all superannuation funds that are subject to the provisions of the Superannuation Industry (Supervision) Act 1993 (Cth).

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Freedom of InformationFreedom of Information (FOI) Statement of Affairs

Every agency covered by the Freedom of Information Act 1989 (NSW) is required by the Act to publish an annual Statement of Affairs. The Statement has to describe the structure and functions of the agency, the categories of documents held and how to obtain access to the documents.

Structure and functions of Pillar

The Superannuation Administration Corporation, trading as Pillar Administration, was created as a statutory State owned corporation with effect from 26 July 1999 by the Superannuation Administration Authority Corporatisation Act 1999 (NSW). The Freedom of Information Act 1989 (NSW) includes statutory State owned corporations in its definition of an agency.

Pillar’s structure, functions and statutory objectives are set out in this Annual Report at Part A – The Business. The functions of Pillar only affect those members of the public who are members or beneficiaries of the superannuation schemes that Pillar provides administration and related services for.

Documents held by Pillar

Pillar holds the following policy documents, some on behalf of the SAS Trustee Corporation (STC), which is also an agency to which the Freedom of Information Act 1989 (NSW). Pillar administers various NSW public sector superannuation schemes for STC.

The documents listed below are available free of charge upon request.

All STC Schemes Policy Register. This document contains policies covering various matters affecting STC schemes.

State Authorities Superannuation Scheme (SASS) Policy Register. This document contains policies made by STC under the State Authorities Superannuation Act 1987 (NSW).

State Superannuation Scheme (SSS) Policy Register. This document

contains policies made by STC under the Superannuation Act 1916 (NSW).

Police Superannuation Scheme (PSS) Policy Register. This document contains policies made by STC under the Police Regulation (Superannuation) Act 1906 (NSW).

State Authorities Non-contributory Superannuation Scheme (SANCS – Basic Benefit) Policy Register. This document contains policies made by STC under the State Authorities Non-contributory Superannuation Act 1987 (NSW).

Pillar’s Conflicts of Interest Policy. Pillar’s Equal Employment Opportunity

Policy Statement. Pillar’s Fraud & Corruption Prevention

Policy. Pillar’s Privacy Policy. Pillar’s Protected Disclosures Policy. Pillar’s FOI Statement of Affairs and

Summary of Affairs.

Note: No policy document relating to FSS Trustee Corporation (FTC) is listed above. FTC was incorporated as a proprietary company limited by shares and registered under the Corporations Act 2001 (Cth) on 1 May 2006 and from that date is no longer an agency to which the Freedom of Information Act 1989 (NSW) applies.

Procedures for access or amendments to documents or member records

Member records contain personal information about individual members of the various public sector superannuation schemes that Pillar administers. The information relates to personal details, employment history, contributions and benefits paid to a member or other person in respect of a member and general correspondence about the superannuation entitlements. The information is stored on computer and on microfiche and is held by Pillar on behalf of the trustee of the schemes.

A scheme member may contact Pillar’s Freedom of Information (FOI) Co-ordinator if they want to view or amend any personal information Pillar holds about them. Requests to amend personal information may directly or indirectly affect benefits payable

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from the applicable scheme, so Pillar may require proof of the amended information.

The Freedom of Information Act 1989 (NSW) provides that FOI applications must be processed within 21 days. This time period may be extended in special circumstances, for example, if there is a need to consult third parties. If this is the case, the applicant will be advised in writing.

Requests under the Freedom of Information Act 1989 (NSW) for inspection of or to obtain copies of accessible documents and/or to view member records and personal information can be made to:

The Freedom of Information CoordinatorPillar AdministrationLocked Bag 1229, Wollongong NSW, 2500Telephone (02) 4298 6478 or Facsimile (02) 4298 6688.

When prior arrangements have been made documents may be inspected between the hours of 10am and 4pm at Pillar Administration, 5 Old Springhill Road, Coniston, or at level 18, 83 Clarence Street, Sydney.

Charges for FOI applications

Nature of Application Application Fee* Processing

Charge*

Request for access to personal documents

$30 First 20 hours free, then $30 per hour

Request for access to non-personal documents

$30 $30 per hour

Application for review of decision $40 Nil

*50% reduction for financial hardship and public interest reasons

There is no fee for requests to amend a record or for a notation to be added to a personal record.

When processing an FOI application, every effort will be made to minimise the cost to the applicant. Where appropriate, the applicant will be contacted to discuss options for limiting the cost of processing the application.

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FOI Statistics 1 July 2007 to 30 June 2008

Required Information for 2007/08 (The relevant statistics for 2006/07 are also set out for comparative purposes)

Section A - New FOI Applications

How many FOI applications were received, discontinued or completed?

Number of FOI Applications

Personal Other Total

2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

A1 New 536 422 0 0 536 422

A2 Brought Forward 33 33 0 0 33 33

A3 Total to be processed 569 455 0 0 569 455

A4 Completed 536 422 0 0 536 422

A5 Discontinued 0 10 0 0 0 10

A6 Total Processed 536 432 0 0 536 432

A7 Unfinished (carried forward) 33 23 0 0 33 23

Section B – Discontinued Applications

Why were FOI applications discontinued?

Number of Discontinued FOI Applications


2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

B1 Request transferred out to another Agency (s.20)

0 0 0 0 0 0

B2 Applicant withdrew request 0 2 0 0 0 2

B3 Applicant failed to pay advance deposit (s.22)

0 8 0 0 0 8

B4 Applicant failed to amend a request that would have been an unreasonable diversion of resources to complete (s.25(1)(a1))

0 0 0 0 0 0

B5 Total Discontinued 0 10 0 0 0 10

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Section C – Completed Applications

What happened to completed FOI applications?

Number of Completed FOI Applications


2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

C1 Granted or otherwise available in full

249 169 0 0 249 169

C2 Granted or otherwise available in part

214 227 0 0 214 227

C3 Refused 0 0 0 0 0 0

C4 No documents held 73 26 0 0 73 26

C5 Total Completed 536 422 0 0 536 422

Section D – Applications Granted or Otherwise Granted in Full

How were the documents made available to the applicant?

Number of FOI Applications(granted or otherwise available in full)


2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

All documents requested were:

D1 Provided to the applicant 243 167 0 0 243 167

D2 Provided to the applicant’s medical practitioner

6 2 0 0 6 2

D3 Available for inspection 0 0 0 0 0 0

D4 Available for purchase 0 0 0 0 0 0

D5 Library material 0 0 0 0 0 0

D6 Subject to deferred access 0 0 0 0 0 0

D7 Available by a combination of any of the reasons listed in D1-D6 above

0 0 0 0 0 0

D8 Total granted or otherwise available in full

249 169 0 0 249 169

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Section E – Applications Granted or Otherwise Granted in Part

How were the documents made available to the applicant?

Number of FOI Applications(granted or otherwise available in part)


2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

All documents requested were:

E1 Provided to the applicant 205 222 0 0 205 222

E2 Provided to the applicant’s medical practitioner

9 5 0 0 9 5

E3 Available for inspection 0 0 0 0 0 0

E4 Available for purchase 0 0 0 0 0 0

E5 Library material 0 0 0 0 0 0

E6 Subject to deferred access 0 0 0 0 0 0

E7 Available by a combination of any of the reasons listed in E1-E6 above

0 0 0 0 0 0

E8 Total granted or otherwise available in full

214 227 0 0 214 227

Section F – Refused FOI Applications

Why was access to the documents refused?

Number of Refused FOI Applications


2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

F1 Exempt 0 0 0 0 0 0

F2 Deemed refused 0 0 0 0 0 0

F3 Total refused 0 0 0 0 0 0

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Section G – Exempt Documents

Why were the documents classed as exempt?

Number of FOI Applications(refused or access granted or otherwise available in part only)


2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

Restricted Documents:

G1 Cabinet documents (clause 1)

0 0 0 0 0 0

G2 Executive Council documents (clause 2)

0 0 0 0 0 0

G3 Documents affecting law enforcement and public safety (clause 4)

0 0 0 0 0 0

G4 Documents affecting counter terrorism measures (clause 4A)

0 0 0 0 0 0

Documents Requiring Consultation:

G5 Documents affecting inter-governmental relations (clause 5)

0 0 0 0 0 0

G6 Documents affecting personal affairs (clause 6)

197 223 0 0 197 223

G7 Documents affecting business affairs (clause 7)

1 2 0 0 1 2

G8 Documents affecting the conduct of research (clause 8)

0 0 0 0 0 0

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Section G – Exempt Documents (continued)

Documents otherwise exempt:



2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

G9 Schedule 2 Exempt agency 0 0 0 0 0 0

G10 Documents containing information confidential to Olympic Committees (clause 22)

0 0 0 0 0 0

G11 Documents relating to threatened species, Aboriginal objects or Aboriginal places (clause 23)

0 0 0 0 0 0

G12 Documents relating to threatened species conservation (clause 24)

0 0 0 0 0 0

G13 Plans of management containing information of Aboriginal significance (clause 25)

0 0 0 0 0 0

G14 Private documents in public library collections (clause 19)

0 0 0 0 0 0

G15 Documents relating to judicial functions (clause 11)

0 0 0 0 0 0

G16 Documents subject to contempt (clause 17)

0 0 0 0 0 0

G17 Documents arising out of companies and securities legislation (clause 18)

0 0 0 0 0 0

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Section G – Exempt Documents (continued)

Documents otherwise exempt: (continued)



2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

G18 Exempt documents under inter-state FOI legislation (clause 21)

0 0 0 0 0 0

G19 Documents subject to legal professional privilege (clause 10)

16 2 0 0 16 2

G20 Documents containing confidential material (clause 13)

0 0 0 0 0 0

G21 Documents subject to secrecy provisions (clause 12)

0 0 0 0 0 0

G22 Documents affecting the economy of the State (clause 14)

0 0 0 0 0 0

G23 Documents affecting financial or property interests of the State or an agency (clause 15)

0 0 0 0 0 0

G24 Documents concerning operations of agencies (clause 16)

0 0 0 0 0 0

G25 Internal working documents (clause 9)

0 0 0 0 0 0

G26 Other exemptions (eg clauses 20, 22A and 26)

0 0 0 0 0 0

G27 Total applications including exempt documents

214 227 0 0 214 227

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Section H – Ministerial Certificates (s.59)

How many Ministerial Certificates were issued?

Number of Ministerial Certificates

2006/07 2007/08

H1 Ministerial Certificates issued 0 0

Section I – Formal Consultation

How many formal consultations were conducted?

Number of Formal Consultations

2006/07 2007/08

I1 Number of applications requiring formal consultation

1 4

I2 Number of persons formally consulted 1 1

Section J – Amendment of Personal Records

How many applications for amendment of personal records were agreed or refused?

Number of Applications for Amendment of Personal Records

2006/07 2007/08

J1 Agreed in full 0 0

J2 Agreed in part 0 0

J3 Refused 0 0

J4 Total 0 0

Section K – Notation of Personal Records

How many applications for notation of personal records were made (s.46)?

Number of Applications for Notation

2006/07 2007/08

K1 Application for notation 1 0

Section L – Fees and Costs

What fees were assessed and received for FOI applications processed (excluding applications transferred out)?

Assessed Costs Fees Received

2006/07 2007/08 2006/07 2007/08

L1 All completed applications $110,000 $120,000 $15,105 $13,620

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Section M – Fee Discounts

How many fee waivers or discounts were allowed and why?

Number of FOI Applications (where fees were waived and discounted)


2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

M1 Processing fees waived in full 0 0 0 0 0 0

M2 Public interest discounts 0 0 0 0 0 0

M3 Financial Hardship discounts – pensioner or child

1 2 0 0 1 2

M4 Financial hardship discounts – non profit organisation

0 0 0 0 0 0

M5 Total 1 2 0 0 1 2

Section N – Fee Refunds

How many fee refunds were granted as a result of significant correction of personal records?

Number of Refunds

2006/07 2007/08

N1 Number of fee refunds granted as a result of significant correction of personal records

0 0

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Section O – Days Taken to Complete Requests

How long did it take to process completed applications?



2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

O1 0-21 days – statutory determination period

520 336 0 0 520 336

O2 22-35 days –extended statutory determination period for consultation or retrieval of archived records (s.59B)

16 86 0 0 16 86

O3 Over 21 days – deemed refusal where no extended determination period applies

0 0 0 0 0 0

O4 Over 35 days – deemed refusal where extended determination period applies

0 0 0 0 0 0

O5 Total 536 422 0 0 536 422

Section P – Processing Time: Hours

How long did it take to process completed applications?



2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

P1 0-10 hours 508 390 0 0 508 390

P2 11-20 hours 25 31 0 0 25 31

P3 21-40 hours 3 1 0 0 3 1

P4 Over 40 hours 0 0 0 0 0 0

P5 Total 536 422 0 0 536 422

Section Q – Number of Reviews

How many reviews were finalised?

Number of Completed Reviews

2006/07 2007/08

Q1 Internal reviews 1 1

Q2 Ombudsman reviews 0 0

Q3 ADT reviews 0 0

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Section R – Results of Internal ReviewsWhat were the results of internal reviews finalized?

Grounds on which the internal review was requested

Number of Internal Reviews


Original Agency Decision Upheld

Original Agency Decision Varied





R1 Access refused 1 0 0 0 1 0

R2 Access deferred 0 0 0 0 0 0

R3 Exempt matter deleted from documents

0 0 0 0 0 0

R4 Unreasonable charges 0 0 0 0 0 0

R5 Failure to consult with third parties 0 0 0 0 0 0

R6 Third parties views disregarded 0 0 0 0 0 0

R7 Amendment of personal records refused

0 0 0 0 0 0

R8 Total 1 0 0 0 1 0

Assessment of FOI Information

The number of FOI requests received by Pillar decreased from 536 in 2006/07 to 422 in 2007/08.

The FOI requirements have not unduly impacted upon the activities of Pillar during the year but they do occupy a significant portion of the applicable staff’s time.

No major issues arose in connection with Pillar’s FOI compliance in 2007/08. Further, there were no investigations under the Freedom of Information Act by the NSW Ombudsman in relation to Pillar, nor were there any applications to the ADT for review of any decisions of Pillar in relation to FOI, in the 2007/08 year.

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Compliance with Specific Policies

Disability Action Plan

Pillar provides flexible communication options to cater for clients and staff with specific needs. When providing customer services any special client needs are met on a case by case basis. Pillar has an action plan in place to enable it to actively seek to employ persons with disabilities.

Electronic Service Delivery

Pillar continues to meet the Government’s targets for electronic service delivery, both itself and for its major clients. This has resulted in:

all appropriate publications being available on the internet;

all appropriate high volume transactions conducted via the internet; and

all other appropriate transactions conducted via the internet.

Employee Code of Conduct

Pillar has a detailed Employee Code of Conduct. All staff are required to sign the Code of Conduct when they first join Pillar and to annually re-confirm that commitment. The Code of Conduct covers compliance with all Pillar’s policies, rules and procedures, including the following:

Conflicts of Interest policy; Fraud and Corruption Prevention policy; Respectful Workplace policy; Occupational Health & Safety

responsibilities; Privacy Policy; Protected Disclosures policy; and Other policies and guidelines covering

building security procedures, electronic messaging and media guidelines for staff, virus protection and workstation access security.

Ethnic Affairs Priorities Statement

Pillar has a continuing commitment to the principles of multiculturalism as contained in the Community Relations Commission and Principles of Multiculturalism Act 2000 (NSW).

Ethnic diversity and the principles of multiculturalism are particularly relevant to Pillar in the following broad areas:

Customer service: The ethnic diversity of Australia is reflected within the populations of members of superannuation funds that Pillar administers on behalf of trustee clients. Pillar is the main point of contact for fund members in relation to their superannuation and this has implications in relation to cultural and language differences.

Staff: Pillar is physically located in both Sydney and the greater Wollongong area and draws on an ethnically diverse population for its workforce. This has particular implications for ensuring equal employment and promotion opportunities, and respect for others regardless of gender and ethnicity.

Benefits of diversity within Pillar: Pillar and its trustee clients benefit from the highly multifaceted diversity within Pillar’s staff. We have a culturally and linguistically diverse workforce and direct, measurable benefits arise from the substantial number of multi-lingual staff who are able to assist with interpreter functions and who also are sensitive to cultural differences. Less easy to measure but profound are the benefits arising from the richness of perspectives and backgrounds that ethnic diversity brings to any workforce.

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Pillar has an Ethnic Affairs Action Plan that contains a number of on-going initiatives:

a strong commitment by the CEO and the Executive Committee to the principle of multiculturalism;

promoting understanding of multiculturalism within the organisation;

ensuring access to information services; and

ensuring equality of opportunity based on merit within Pillar.

Pillar has met its performance indicators in relation to the above-mentioned initiatives in the past year and aims to continue to do so in future.

Heritage Management

Pillar has established a Heritage and Conservation Register as required by the provisions of the Heritage Act 1977 (NSW). As at 30 June 2008, there were no items of the environmental heritage that were required to be listed by Pillar in the Register. The Heritage Council has not issued any guidelines to Pillar about any items of the environmental heritage.

NSW Government’s Action Plan for Women

The NSW Government’s Action Plan for Women focuses on a range of issues including: equitable and safe workplaces for women; the interest of women in economic reform; and access for women to education and training. Relevant policies in relation to the funds and schemes administered by Pillar are the responsibility of its trustee clients.

In relation to internal staff, Pillar’s policies and practices are intended to ensure equitable and safe workplaces and equality of opportunity.

NSW Government Energy Management Policy

Pillar is committed to the principles of the NSW Government Energy Management Policy, thereby contributing to NSW’s broad environmental outcomes whilst pursuing good business practice.

Occupational Health and Safety

An active Occupational Health and Safety Committee meets regularly within Pillar to ensure that occupational health and safety (OH&S) issues are identified and communicated to management. Members of the Committee provide OH&S advice to staff, conduct regular workplace inspections and provide reports on any remedial action required. Eight (8) Workers’ Compensation claims were submitted to Pillar’s insurers during 2007/08. There were no prosecutions under the Occupational Health and Safety Act 2000 (NSW) involving Pillar in the 2007/08 year.

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 National Privacy Principles contained therein. Additionally, Pillar is contractually obligated to comply with the Privacy Management Plan of the trustee of the NSW public sector superannuation schemes that it administers.

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 obligated to comply with, although as a State owned corporation Pillar is technically exempted from the NSW privacy legislation.

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Waste Reduction and Purchasing Plan

Pillar is committed to waste reduction and recycling and has produced a Waste Reduction and Purchasing Plan. Practices consistent with the policy are firmly established in business processes. This has reduced paper products used by Pillar and, through E-Business initiatives, by other organisations as well. The key requirements 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, as advised from time to time, and toner cartridges are placed in designated containers for recycling; and

other suitable materials are recycled as advised from time to time.

Employees are required to comply with the policy and would be aware that the policy reflects 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.

Additional Financial Related DataExpenditure on Consultants during 2007/08

Pillar’s expenditure on consultants during 2007/08 was as follows:

Approximately $47,000 to Deloitte Australia for a review of Pillar’s operations.

Grants to Non-Government Organisations

No grants to non-government organisations were made by Pillar during 2007/08.

Insurance Premiums

Pillar maintains insurance cover through a contract of coverage with the NSW Treasury Managed Fund (TMF) with the cover including professional indemnity cover for all staff, property, motor vehicle, workers’ compensation and miscellaneous matters.

Insurance premiums paid to TMF during 2007/08 amounted to $439,791 (including GST).

Major Works in 2007/08

Pillar spent approximately $544,000 during 2007/08 on a fit out of leased premises for the Contact Centre at Gladstone Avenue, Wollongong.

New Contracts in Excess of $100,000

It is Pillar’s policy to publish the names of firms who are awarded contracts with Pillar exceeding $100,000 during the reporting period. In 2007/08 Pillar awarded the following contracts of over $100,000:

Think Consulting (for management and support of external and perimeter security) - $108,000 pa;

Bravura Solutions (for licensing and on-going support of the ‘SuperB’ computer system platform) – licences $200,000 and on-going support $240,000 pa.

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Overseas Visits

There were no overseas visits by representatives of Pillar in 2007/08.

Payment Performance Indicators

Accounts paid on time within each quarter during 2007/08:

Total Accounts Paid On Time

Quarter Target Actual Target Actual

% % $ $

September 2007 100 100 5,698,824 5,698,824

December 2007 100 100 6,247,250 6,247,250

March 2008 100 100 7,100,297 7,100,297

June 2008 100 100 7,409,770 7,409,770

Total 26,456,141 26,456,141

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Other Corporate Information

Guarantee of Service

Service standards are specified within service provision contracts with Pillar’s clients.

Changes in Legislation Relating to Pillar

There were no changes in 2007/08 to either the State Owned Corporations Act 1989 (NSW) or the Superannuation Administration Authority Corporatisation Act 1999 (NSW).Changes in legislation related to the administration of superannuation funds are reported in the Annual Reports of Pillar’s clients.

Publications

Publications of Pillar available for the public upon request (free of charge) are:

this ninth Annual Report of the Superannuation Administration Corporation and a limited number of previous Annual Reports;

Pillar’s Conflicts of Interest Policy; Pillar’s Equal Employment Opportunity

Policy Statement; Pillar’s Fraud & Corruption Prevention

Policy; Pillar’s Privacy Policy; Pillar’s Protected Disclosures Policy; and Pillar’s FOI Statement of Affairs and

Summary of Affairs.

Pillar assists its trustee clients with the publication of many documents for the use of fund members. These publications belong to the applicable trustee corporations and are identified in their Annual Reports.

Access

The address and phone number of each of Pillar’s principal offices are as follows:

Sydney Office

Level 18, 83 Clarence StSydney NSW 2000

Telephone: (02) 9238 5555

Coniston Office

Pillar’s National Service Centre5 Old Springhill RdConiston NSW 2500

Telephone: (02) 4298 6437

Business hours are 8.30 am to 5.30 pm.

Details of Production of Report

The estimated external costs of this Annual Report are estimated to be no greater than $4,500, with 150 copies of the Report being printed.

This report will be available on the internet soon after this Report is submitted to the NSW Parliament in late November 2008. The Internet address is http://www.pillar.com.au.

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Part C – Audited Financial StatementsContents

Independent Auditor’s Report ............................................................C1

Directors’ Declaration for the Year ended 30 June 2008 ........................C3

Income Statement for the Year ended 30 June 2008 ............................C4

Balance Sheet as at 30 June 2008 .....................................................C5

Statement of Changes in Equity for the Year ended 30 June 2008 ..........C6

Cash Flow Statement for the Year ended 30 June 2008 .........................C7

Notes to the Financial Statements for the Year ended 30 June 2008 ........C8

This page has been intentionally left blank.

Independent Auditor’s Report

SUPERANNUATION ADMINISTRATION CORPORATION (TRADING AS PILLAR ADMINISTRATION)

To Members of the New South Wales Parliament

I have audited the accompanying financial report of Superannuation Administration Corporation (the Corporation) which comprises the balance sheet as at 30 June 2008, the income statement, statement of changes in equity and cash flow statement for the year then ended, a summary of significant accounting policies and other explanatory notes.

Auditor’s Opinion

In my opinion, the financial report:

presents fairly , in all material aspects, the financial position of the Corporation as at 30 June 2008, and its financial performance and cash flows for the year then ended in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations),

is in accordance with section 41B of the Public Finance and Audit Act 1983 (the PF&A Act) and the Public Finance and Audit Regulation 2005.

My opinion should be read in conjuction with the rest of this report.

Directors’ Responsibility for the Financial Report

The Directors are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the PF&A Act. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud and error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

My responsibility is to express an opinion on the financial report based on my audit. I conducted my audit in accordance with Australian Auditing Standards. These Auditing Standards require that I comply with relevant ethical requirements in relation to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend upon the auditor’s judgement, including the assessment of risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments , the auditor considers internal controls relevant to the Corporation’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.

C1

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

My opinion does not provide assurance:

about the future viability of the Corporation, that it has carried out its activities effectively, efficiently and economically, or about the effectiveness of its internal controls.

Independence

In conducting this audit, the Audit Office has complied with the independence requirements of the Australian Auditing Standards and other relevant ethical requirements. The PF&A Act further promotes independence by:

providing that only Parliament, and not the executive government, can remove an Auditor‑General, and

mandating the Auditor‑General as auditor of public sector agencies but precluding the provision of non-audit services, thus ensuring the Auditor-General and the Audit Office are not compromised in their role by the possibility of losing clients or income.

A Oyetunji

Director, Financial Audit Services

SYDNEY17 October 2008

C2

Directors’ Declaration for the Year ended 30 June 2008

In the opinion of the Directors of Superannuation Administration Corporation (trading as Pillar Administration):

(a) the financial statements as set out in pages C4 to C23:

(i) exhibit a true and fair view of Superannuation Administration Corporation’s financial position, financial performance and cashflows; and

(ii) have been prepared in accordance with the provisions of the Public Finance and Audit Act 1983, the Public Finance and Audit Regulation 2005 and the Treasurer’s Directions.

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

Signed in accordance with a resolution of the Board of Directors

Dr. Col GellatlyChairmanSuperannuation Administration Corporation

Peter Beck Chief Executive OfficerSuperannuation Administration Corporation

Eric Lo General Manager Finance and Administration Superannuation Administration Corporation

Date: 17 October 2008

C3


Income Statement for the Year ended 30 June 2008

NOTE 2008$’000

2007$’000

Continuing Operations

Revenue 2 65,383 57,687

Depreciation and amortisation expense 2 (2,224) (2,375)

Employee benefits expense 2 (44,000) (38,499)

Occupancy expenses (2,298) (1,822)

Information technology expenses (4,032) (3,637)

Other expenses 2 (9,456) (9,313)

Profit before income tax 3,373 2,041

Income tax expense 3(a) (1,028) (718)

Profit attributable to shareholders of the corporation 2,345 1,323

The accompanying notes form an integral part of this Income Statement.

C4



Balance Sheet as at 30 June 2008

NOTE 2008$’000

2007$’000

Current Assets

Cash and cash equivalents 16(a) 8,354 6,951

Trade and other receivables 4 7,442 8,199

Other current assets 5 825 830

Total Current Assets 16,621 15,980

Non-Current Assets

Property, plant and equipment 6(a) 12,423 11,351

Intangibles 6(b) 1,742 1,201

Deferred tax assets 3(b) 2,493 1,888

Total Non-Current Assets 16,658 14,440

Total Assets 33,279 30,420

Current Liabilities

Trade and other payables 7 2,286 3,825

Provisions 8 8,131 6,345

Total Current Liabilities 10,417 10,170

Non-Current Liabilities

Deferred tax liabilities 3(c), 9 1,941 1,261

Provisions 8 643 498

Total Non-Current Liabilities 2,584 1,759

Total Liabilities 13,001 11,929

Net Assets 20,278 18,491

Equity

Issued capital 10 6,000 6,000

Reserves 11 3,743 2,900

Retained earnings 10,535 9,591

Total Equity 20,278 18,491

The accompanying notes form an integral part of this Balance Sheet.

C5


Statement of Changes in Equity for the Year ended 30 June 2008

2008$’000

2007$’000

Total equity at the beginning of the financial year 18,491 18,024

Gain on revaluation of land and buildings net of tax 842 ‑

Net income recognised direct to equity 842 ‑

Profit for the year 2,345 1,323

Dividend * (1,400) (856)

Total equity at the end of the financial year 20,278 18,491

*Note: Dividend payable - NSW Treasury has set a target of 60% (60% 2007) of the net profit from ordinary activities after income tax.

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

C6



Cash Flow Statement for the Year ended 30 June 2008

NOTE

2008$’000

INFLOWS/ (OUTFLOWS)

2007$’000

INFLOWS/(OUTFLOWS)

Cash Flows From Operating Activities:

Receipts from customers 72,058 62,290

Payments to suppliers and employees (67,024) (58,126)

Income tax paid (1,088) (784)

Income tax refunded 529 ‑

Interest received 416 252

Net cash provided by operating activities 16(c) 4,891 3,632

Cash Flows From Investing Activities:

Proceeds from sale of property, plant and equipment 3 5

Purchase of property, plant and equipment (2,635) (1,738)

Net cash used in investing activities (2,632) (1,733)

Cash Flows From Financing Activities:

Dividends Paid (856) (1,204)

Net cash used in financing activities (856) (1,204)

Net Increase In Cash Held 1,403 695

Cash at the beginning of the financial year 6,951 6,256

Cash at the end of the financial year 16(a) 8,354 6,951

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

C7


Notes to the Financial Statements for the Year ended 30 June 2008

1. SIGNIFICANT ACCOUNTING POLICIES

Superannuation Administration Corporation (SAC), 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”). SAC’s business is to provide superannuation scheme administration services and related services in both the public and private sectors. It is domiciled in NSW Australia and its registered office address is at Level 18, 83 Clarence Street, Sydney, NSW 2000.

Statement of Compliance

The financial statements form a general purpose financial report and are prepared in accordance with the Public Finance and Audit Act 1983, the Public Finance and Audit Regulation 2005 and the Treasurer’s Directions. They also comply with applicable Australian Accounting Standards, Australian equivalents to International Financial Reporting Standards (A‑IFRS) and other authoritative announcements of the Australian Accounting Standards Board and Interpretations.

The financial statements of Superannuation Administration Corporation for the financial year ended 30 June 2008 were authorised for issue in accordance with a resolution of the Board of Directors on 17 October 2008.

(a) Basis of Preparation

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 during the year unless otherwise stated.

All amounts are expressed in Australian Dollars which is the company’s functional and presentation currency.

Use of Judgements and Estimates

In the application of Accounting Standards, including A‑IFRS, management is required to make judgements, estimates and assumptions about net market values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgements. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Accounting Standards Issued, But Not Yet Effective

At the date of authorisation of the financial statements, the following Standards which are expected to be relevant to SAC were in issue but not yet effective.

The directors anticipate the adoption of these Standards will have no material financial impact on the financial statements of SAC.

AASB 8 Operating Segments replaces the requirements of segment disclosures in AASB 114 Segment Reporting. AASB 8 is applicable for annual reporting periods beginning on or after 1 January 2009.

AASB 101 Presentation of Financial Statements has been revised to update presentation in line with IAS 1. AASB 101 applies to annual reporting periods on or after 1 January 2009.

C8



1. SIGNIFICANT ACCOUNTING POLICIES (continued)

(a) Basis of Preparation (continued)

Accounting Standards Issued, But Not Yet Effective (continued)

AASB 2007‑8 Amendments to Australian Accounting Standards arising from AASB 101. AASB 2007‑8 applies to annual reporting periods beginning on or after 1 January 2009.

(b) Income Tax

SAC 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 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 balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect to temporary difference 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 income statement.

Deferred tax assets are recognised to the extent that it is probable that sufficient future taxable amounts will be available against which deductible temporary difference 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 economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(c) (i) 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 will be expensed.

An asset will be recognised in the Balance Sheet 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. The threshold value is determined and reviewed by the Audit & Risk Management Committee of the Board.

C9



(c) (i) Property, Plant and Equipment (continued)

Acquisitions and Capitalisation (continued)

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

Each class of plant and equipment is carried at fair value less, where applicable, any accumulated depreciation and/ or impairment loss.

Property

SAC’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 building is shown at fair value as at 30 June 2008 based on the valuation of an independent registered valuer, Valuers Illawarra, dated 7 July 2008. The net valuation increment was $0.84 million after allowing for $0.36 million of deferred tax liability.

Plant and equipment

Plant and equipment is 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 assets’ 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 Income Statement in the period of disposal.

Depreciation and Amortisation

Items of software and computers are amortised/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 software and computers ranges from 2 to 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 8 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 depreciated at a rate of 2.5% over 40 years.

(c) (ii) Intangibles

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.

An asset will be recognised in the Balance Sheet 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.

C10




(c) (ii) Intangibles (continued)

Acquisitions and Capitalisation (continued)

The materiality test also applies to the asset recognition criteria. In general the recognition threshold for software, considered to be an integral part of computer hardware, is $100,000. The threshold value is determined and reviewed by the Audit & Risk Management Committee of the Board.

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

Software

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

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 assets 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 Income Statement in the period of disposal.

Depreciation and 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.

(d) Employee Benefits

Annual Leave

The provisions for employee benefits to annual leave and redundancy represents the amount which SAC has a present obligation to pay resulting from employees’ past services. These provisions are expected to be settled within 12 months and are measured at their nominal values using the remuneration rates expected to apply at the time of settlement plus related on costs.

Long Service Leave

The liability for long service leave is recognised in the provision for employee benefits and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary 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 in accordance with NSW Treasury policy.

Superannuation

Contributions are made by the economic entity to an employee superannuation fund and are charged as expenses when incurred.

(e) Rounding

All values reported in the financial statements have been rounded to the nearest thousand dollars, except where otherwise stated.

(f) Financial Liabilities

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

(g) Cash and Cash Equivalents

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

C11



(h) Revenues

Management fees and other fees are recognised as revenues when services have been provided and it is probable that economic benefits will transfer to SAC.

Interest is recognised on an accrual basis.

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

(i) Payables

Trade payables and other accounts payable are recognised when SAC becomes obliged to make future payments resulting from the receipt of goods and services

(j) Receivables

Trade receivables and other receivables are recorded at amounts due, less any provision for doubtful debts.

(k) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of applicable 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.

Cash flows are included in the Cash Flow Statement with applicable goods and services tax.

(l) Leases

Lease payments for operating leases, where substantially all of the risk and benefit remain with the lessor, are charged as expenses in the period to which they are incurred. 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.

Tenancy make good expenses are recognised as a liability. The amount is reviewed each year.

(m) Impairment of Assets

Assets are reviewed for impairment at each reporting date and whenever events or change 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. The 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.

(n) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(o) New Accounting Standards and Interpretations

The company has not early adopted any new accounting standards or Interpretations, however after reviewing the new releases, it has been determined that should early adoption have been made there would be no material impact on the calculation of numbers reported and only minor impact to additional disclosures.

(p) Dividends

Dividends payable to the NSW Treasury is set at a target of 60% (60% 2007) of the net profit after income tax.

C12



2. PROFIT FOR THE YEAR 2008$’000

2007$’000

a) REVENUE

Operating activities

Administration Fees 57,200 52,740

Interest revenue – other corporations 417 248

Profit on disposal of fixed asset 2 ‑

Other income 7,764 4,699

Total Operating Activities 65,383 57,687

Total Revenues 65,383 57,687

b) EXPENSES

Depreciation and Amortisation Expense

Software 389 251

Hardware 1,080 1,255

Other non‑current assets 755 869

Total Depreciation and Amortisation 2,224 2,375

Employee Benefit Expenses

Salaries and Wages 36,999 32,772

Redundancies 164 11

Provision for employee benefits 3,290 2,709

Superannuation contributions 3,547 3,007

Total employee benefit expenses 44,000 38,499

Other Expenses

Member communications 4,280 3,573

Contractors 1,967 2,741

Communications 987 919

Postage 847 761

Insurance 408 428

Printing 235 158

Operating lease – minimum lease payments 95 122

Loss on disposal of fixed asset - 2

Fees paid to the Audit Office of NSW and their agent:

- auditing of financial reports 80 91

Sundry administration expenses 557 518

Total Other Expenses 9,456 9,313

C13


3. INCOME TAX 2008$’000

2007$’000

(a) The prima facie tax payable on profit before income tax is reconciled to the income tax expense as follows:

Prima facie tax payable on profit before income tax at 30% (2007: 30%) 1,012 612

Current:

Non-deductible expenses 12 34

(Over)/Under provision of income tax in previous year (9) 72

Total Current Tax 1,015 718

Deferred:

Deferred tax expense/(income) related to the origination and reversal of temporary differences:

Prepayments (248) -

Property, plant and equipment 261 -

Total Deferred Tax expense/(income) 13 -

Income tax expense/(benefit) 1,028 718

(b) Deferred tax assets 1 July 2007

Charged to income

30 June 2008

The balance comprises temporary differences attributable to:

Employee benefits 1,685 246 1,931

Accrued expenses 23 162 185

Other provisions 180 (50) 130

Prepaid expenditure - 247 247

1,888 605 2,493

(c) Deferred Tax Liabilities


1 July 2007

Charged to income

30 June 2008

Amounts recognised direct to income statement:

Fixed Assets - 309 309

Accrued Interest Income 19 10 29

Amounts recognised directly in equity: 1 July 2007

Charged to equity

30 June 2008

Revaluation of Property 1,242 361 1,603

Total Deferred Tax Liability 1,261 680 1,941

C14



4. TRADE AND OTHER RECEIVABLES 2008$’000

2007$’000

Current

Trade receivables 7,413 8,161

Provision for impairment of receivables (75) (205)

7,338 7,956

Income tax receivable - 175

Other receivables 104 68

7,442 8,199

5. OTHER ASSETS

Current

Prepayments 825 830

6.(a) PROPERTY, PLANT AND EQUIPMENT

Land and Buildings

Freehold land and building at independent valuation 2008 Note 1(c) 8,700 7,800

Less accumulated depreciation - (202)

8,700 7,598

If freehold land and buildings were stated at historical cost basis, the amounts would be as follows:

At Cost 3,724 3,724

Accumulated Depreciation (209) (162)

3,515 3,562

Computer Equipment:

At fair value

Opening balance 12,054 11,787

Accumulated depreciation (10,058) (9,652)

1,996 2,135

Plant and Equipment:

At fair value



1,727 1,618

Total Computers and Other Plant and Equipment 3,723 3,753

Total Property, Plant and Equipment 12,423 11,351

C15


6.(a) PROPERTY, PLANT AND EQUIPMENT (continued)

Movements in Carrying Amounts 2008$’000

2007$’000Computer Equipment:


Additions 942 811

Disposals (1) (1)

Depreciation expense (1,080) (1,255)

Carrying amount at the end of the year 1,996 2,135

Land and Buildings:

Balance at beginning of the year 7,598 7,699

Revaluation increment 1,203 ‑

Depreciation expense (101) (101)


Other Plant and Equipment:


Additions 763 78

Disposals - (7)



(b) INTANGIBLES6.

Software:

At fair value



Total Intangibles 1,742 1,201

Movements in Carrying Amounts

Software:

Balance at beginning of the year 1,201 602

Additions 930 850



7. TRADE AND OTHER PAYABLES

Current unsecured liabilities

Trade payables 1,551 2,945

GST payable 735 880

2,286 3,825

C16



8. PROVISIONS 2008$’000

2007$’000

Current

Employee benefits

Provision for employee benefits at beginning of year 5,410 4,452

Additional provisions raised during the year 3,627 3,028

Amounts used (2,920) (2,070)

Carrying amount at reporting date 6,117 5,410

Declared dividend

Provision at beginning of year 856 1,205

Additional provisions raised during the year 1,400 856

Amounts used (856) (1,205)

Carrying amount at reporting date 1,400 856

Tax Provision

Tax Provision at beginning of year (note 4) (175) ‑

Additional provisions raised during the year 1,315 ‑

Amounts used (558) ‑

Carrying amount at reporting date 582 ‑

Lease Incentives

Unamortised Incentives at beginning of year 79 79

Additional Incentives recognised during the year 32 ‑

Amounts amortised (79) ‑

Carrying amount at reporting date 32 79

Total Current Provisions 8,131 6,345

Non-Current

Employee benefits

Provision for employee benefits at beginning of year 208 426

Additional provisions raised during the year 110 ‑

Amounts used - (218)


C17


8. PROVISIONS (continued) 2008$’000

2007$’000

Lease Incentives

Unamortised Incentives at beginning of year - 79

Additional Incentives recognised during the year 35 ‑

Amounts amortised - (79)

Carrying amount at reporting date 35 ‑

Provision for Tenancy Make-Good

Tenancy make‑good costs at beginning of year 290 290

Additional provisions recognised during the year - ‑

Payments during the year - ‑


Total Non – Current Provisions 643 498

Total employee benefits 6,435 5,618

Total employee numbers 648 548

The current provision for employee benefits includes $2,079,000 of vested long service leave accrued which is expected to be taken beyond 12 months.

9. TAX

Non Current

Deferred tax liability


Amounts recognised direct in income statement:

Fixed Assets 309 ‑

Accrued Interest Income 29 19

Amounts recognised direct in equity:

Revaluation of Property 1,603 1,242

1,941 1,261

C18



10. ISSUED CAPITAL

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 2008 and during 2007–2008 were held by the Hon. Michael Costa MLC, former Treasurer, and the Hon. John Della Bosca MLC, former Minister for Education and Training. The Hon. Eric Roozendaal MLC, Treasurer and the Hon. Carmel Tebbutt MP, Deputy Premier, Minister for the Environment and Climate Change and Minister for Commerce, now hold the shares.

Equity 2008$’000

2007$’000

Contributed equity 6,000 6,000

Total equity at the end of the financial year 6,000 6,000

Movement in contributed equity

Balance at beginning of the reporting period 6,000 6,000

Add/less movement - ‑

Balance at the end of the reporting date 6,000 6,000

11. RESERVES

Asset Revaluation Reserve

Balance at beginning of the reporting period 2,900 2,900

Revaluation of Property ( Note 1c) 843 ‑

Balance at end of reporting period 3,743 2,900

The asset revaluation reserve records revaluations of non current assets

12. CAPITAL AND LEASE COMMITMENTS

Operating Lease CommitmentsCommitments in relation to operating leases contracted for at balance date but not provided for in the financial statements (including GST):

Payable ‑ minimum lease payments

‑ not later than one year 1,819 1,357

- greater than one year and less than five years 3,609 1,164

- greater than five years 669 ‑

6,097 2,521

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

C19


13. RELATED PARTIES

(a) Directors and Key Management Personnel

The names of the Board Members of SAC in office during the year ended 30 June 2008 and up to the date of signing these financial statements are as follows:

Directors:

Dr. C. Gellatly Ms E. Crestani

Mr N. Davis Mr P. Cormack (CEO) (resigned 30 November 2007)

Ms G. Roper Mr P. Beck (CEO) (appointed 2 April 2008)

Mr P. Small

In addition to Directors and CEO disclosed above, the names of the Key Management Personnel of SAC in office during the year ended 30 June 2008 and up to the date of signing these financial statements are as follows:

Ms F. Abercrombie ‑ General Manager ‑ Information Technology

Ms J. Byrne ‑ Company Secretary

Mr E. Lo ‑ General Manager – Finance & Administration

Mr B. Morris ‑ Compliance Manager

Mr D. Allen ‑ Manager – Human Resources (appointed 31 March 2008)

Mr M. Luciano ‑ General Manager – Marketing & Business Development

Ms M. Varley‑Mason ‑ General Manager – Human Resources (resigned 15 January 2008)

Mr J. Trent ‑ General Manager – Projects and Transition (resigned 4 December 2007)

Mr G. Sandstrom - Chief Operating Officer (appointed 5 August 2008)

(b) Compensation of Directors and Key Management Personnel

2008$

2007$

Short Term Benefits – (Salaries, Directors Fees, Bonuses) 1,562,781 1,392,195

Post Employments Benefits-Superannuation 78,642 315,407

Termination Benefits 135,269 1,787

1,776,692 1,709,389

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

14. ECONOMIC DEPENDENCY

The majority of SAC’s business revenue comes from two clients.

15. FINANCIAL INSTRUMENTS

For the purposes 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 amortised cost. Such measurement provides a reliable estimate of asset or liability. Any impairment loss occurring on financial instruments is treated as an expense in the period in which it occurs.

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Capital Risk Management

SAC 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. SAC did not have any debt for the years ended 30 June 2008 and 30 June 2007.

Financial Instruments Risk Management 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 SAC to incur a financial loss.

The Board approved Treasury Management Policy prescribes surplus cash to be invested with major Australian banks. 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 SAC may not be able to meet its financial obligations when they fall due. SAC has steady cash inflow from contracted services with trustees and manages its liquidity by annual budgeting and rolling 3 months cashflow forecast. In accordance with Board policy SAC invests its surplus cash in bank deposit to ensure adequate liquidity.

The following tables summarise the maturity profile of the SAC’s financial liabilities.

Year ended 30 June 2008Less than 3

months($000)

3 monthsto 1 year

($000)

1-5 years($000)

Total($000)

Accounts payable 1,551 ‑ ‑ 1,551

1,551 ‑ ‑ 1,551

Year ended 30 June 2007Less than 3

months($000)

3 monthsto 1 year

($000)

1-5 years($000)

Total($000)

Accounts payable 2,945 ‑ ‑ 2,945

2,945 ‑ ‑ 2,945

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The sensitivity analysis below has been determined based on the exposure to interest rates at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 60 basis point increase or decrease represents SAC’s assessment of the possible change in interest rates. The analysis is performed on the same basis for 2007 and is not guaranteed.

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15. FINANCIAL INSTRUMENTS (continued)

Effect on

Floating Rate

Change in variable Profit after tax Net assets

+/ - 2008$’000

2007$’000

2008$’000

2007$’000

Interest rate risk +60bps 35 24 35 24

Interest rate risk ‑60bps ‑35 ‑24 ‑35 ‑24

Other Market Risks

SAC does not have material exposure to foreign currency risk or other price risks.

16. CASH FLOW INFORMATION 2008$’000

2007$’000

(a) Reconciliation of Cash

Cash at bank 8,354 6,951

Call deposits with banks are earning interest at current bank deposit rates. The effective interest rate earned for the year was 6.02% (2007: 5.17%).

(b) Financing Facilities

SAC did not have credit facility as at 30 June 2008.

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(c) Reconciliation of Cash Flows from Operations with Profit after Income Tax:

INFLOWS/(OUTFLOWS)

INFLOWS/(OUTFLOWS)

Profit after Income Tax 2,345 1,323

Non–cash flow adjustments:

Depreciation expense 2,224 2,375

(Gain)/Loss on disposal of plant and equipment (2) 2

4,567 3,700

Changes in Assets and Liabilities:

(Increase)/decrease in assets:

Receivables 887 (879)

Other assets 5 (324)

Deferred tax assets (605) (227)

Increase/(decrease) in liabilities:

Trade creditors (1,394) 568

GST payable (145) ‑

Provision for employee benefits 817 738

Provision for lease incentives (12) (80)

Provision for doubtful debts (130) (26)

Provision for income tax 582 163

Deferred tax liabilities 319 (1)

324 (68)

Net Cash Flow from Operations 4,891 3,632

17. SEGMENT REPORTING

SAC operates in the financial services industry in Australia.

18. SUBSEQUENT EVENTS

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

(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 Balance Sheet Date’.

19. CONTINGENT ASSETS AND LIABILITIES

At balance date and up to the signing of these financial statements there are no known contingent assets or contingent liabilities.

— End of Financial Statements —

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Index of Legislative Compliance

Access B30Changes to Legislation B30Chairman’s Message A3Charter A1Chief Executive Officer’s Review A4 ‑ A5Committees B4 ‑ B6, B8Complaints B13Consultants B28Disability Action Plan B26Discussion of Issues and Performance A6 ‑ A11Directors B2 ‑ B4Directors’ Declaration C3Electronic Service Delivery B26Employee Code of Conduct B26Employees’ Leave Entitlements Part CEqual Employment Opportunity B12Ethnic Affairs Priorities Statement B26 ‑ B27Executive Numbers B11Executive Structure B7Executive Remuneration B9 ‑ B11Executive Performance B9 ‑ B11Financial Statements (and Notes) Part CFreedom of Information B14 ‑ B25Governance B1 ‑ B8Grants to Non‑Government Organisations B28Guarantee of Service B30Heritage Management B27Independent Audit Report C1 ‑ C2Insurance B28Letter of Submission Part AManagement B7Major Works B28New Contracts B28NSW Government’s Action Plan for Women B27NSW Government Energy Management Policy B27Objectives A1, A6 ‑ A9Occupational Health and Safety B27Organisation Chart A2Overseas Visits B29Oversight B1 ‑ B6Payment of Accounts B29Privacy Policy B27Publications B30Report Production Details B30Risk Management A16Waste Reduction & Purchasing Plan B28

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Level 18, 83 Clarence StreetSydney NSW 2000

GPO Box 3887Sydney NSW 2001

Telephone02 9238 5555

Fax02 9238 5272

Websitewww.pillar.com.au

ABN 80 976 223 967AFS Licence number 245591