Products and services

When employees leave - make it a best case scenario

By letting us know as soon as you can that an employee is leaving, you'll be giving them the time they need to:

• make the most of their continuing insurance options
• make the right choice for their super
• make appropriate investment decisions
• seek any financial and tax advice they need
• enjoy the best case scenario.

Let's look at (an all too frequent) worst case scenario. On 7 April, Jack (an employee) gives one month's notice that he'll be leaving on 7 May. We first hear of it on 7 June when we get the monthly contribution schedule. We then load any contributions for Jack, run his benefit payment estimate and send it to him. By the time Jack gets his paperwork, it's been 5 or 6 weeks since he left. It could be too late for Jack to make the most of the financial opportunities outlined above and he could have made some inappropriate decisions in the meantime. He may even hold his employer accountable for the late notification.

Early notification is the best way to achieve a good outcome for your employees and to minimise potential liability for you. Look out for the notification advice that we will be rolling out shortly. If you have any questions, please contact your account manager or adviser.

Housekeeping

Processing freeze

Please note that transaction processing will be suspended between 26 June and 14 July 2009. This will allow us to test, check and audit final unit prices - an essential step in determining members' super account balances for 30 June 2009 benefit statements. The freeze applies to all transaction requests, including contributions, rollovers, investment switches, benefit quotations* and payments and online services. Transaction requests received on or after 26 June will be processed as quickly as possible, in order of date received, once the freeze is lifted.

Contributions and rollovers

For contributions and rollovers to be reflected on the 30 June 2009 statements, they must reach us together with the required documentation before 26 June. If they reach us on or after 26 June, they will be held in our bank account during the freeze and used to purchase units on the day we process them.

We regret any inconvenience that this freeze may cause and thank you for your co-operation during this busy period. Please call us on 1300 880 588 if you have any queries.

* During this period, we will be able to provide an approximate benefit quotation as at 29 June 2009 only (please call us on 1300 880 588 or email us to request a quotation).

Government co-contribution and tax deductions

In order for members to be eligible for a tax deduction or government co-contribution for the 2008/2009 financial year (if applicable), contributions must reach us before 26 June. Cheques should be made payable to the Aon Master Trust and have the required documentation attached.

Postal address

Just a reminder that our postal address is now: Aon Master Trust
PO Box 1949
Wollongong NSW 2500

Indexed fee increase

The trustee has approved an increase of $3.50 per annum in the standard membership fee (from the current $63 pa to $66.50 pa) in line with increases in Average Weekly Ordinary Time Earnings. This increase will apply from 1 July 2009. Details of all fees will be set out in the 1 July 2009 Product Disclosure Statements. Please note that Directions for members, which is being mailed out later this week, notifies members of this increase.

Exceptions

If you have a current non-standard member fee agreement with the Aon Master Trust, the 1 July 2009 increase will not apply. We will be in touch with you in due course regarding the application and timing of the member fee increase for your employees, and will notify your employees separately and in advance of any changes.

Investment performance - quarter ended 31 March 2009

Was March the start of a recovery?

In March, Australian shares shot up 8.1% and international shares 6.1% in Australian dollar hedged terms. Given the level of volatility and economic uncertainty, the March rally in shares is unlikely to be long lived.

The March surge was isolated to shares and did not spread to the credit sector of the fixed interest market. This is another fact pointing to the temporary nature of the upturn, as investor sentiment and risk appetite were not consistent across asset classes.

Historically, the confidence of CEOs in the US has been an approximate predictor of medium-term market performance. The CEO confidence index rose in March but not to levels consistent with sustained increase in corporate earnings and share market returns. So, while things are starting to look up, the March upturn appears to be a bear market rally.

Australian shares

• A volatile three months with a return of -1.8% for the quarter comparing favourably with global share markets.
• While Australian shares shot up 8.1% in March, the high level of market volatility and uncertainty about the duration of the recession suggests that the magnitude of this increase is unsustainable.

International shares

• Nearly all sectors and regions recorded falls. Global share markets fell 11.6% in Australian dollar terms and -10.1% when hedged for currency fluctuations.
• Negative economic news continued to dominate: US unemployment reached a 25-year high, US GDP was revised down to -6.1% for the March quarter and consumer spending declined across the globe.
• After steep falls in January and February, share markets rallied in March as policy actions (by the US Treasury and Federal Reserve among others) boosted investor confidence.

Property

• The global property securities market returned -21.0% in Australian dollar hedged terms. Asia (-6.4%) was the strongest region in local currency terms, followed by continental Europe (-10.1%), the UK (-29.7%) and North America (-31.4%).
• France (-8.3%) led performance in the European real estate securities market, followed by the Netherlands (-10.4%) and Germany (-10.5%). The UK market struggled due to the recent flurry of equity issuance coupled with weak economic news.
• The Asian property market rebounded sharply in March. Hong Kong's 7.5% recovery during the quarter was linked to the broader equity market's rally and factors related to the residential sector.

Australian fixed interest

• A subdued quarter with Australian bonds returning 0.3%.
• Semi-government bonds outperformed other sectors following the March announcement that existing and future issues will be eligible for a government guarantee. Government bond yields rose across all maturities over the quarter. Bond yields rose by 0.3% to 3.4% (three-year) and by 0.4% to 4.4% (10-year). In response to the Reserve Bank rate cut and in anticipation of monetary easing, the 90-day bank bill rate fell by 1.0% to 3.1%.

International fixed interest

• A weak January and February and a stronger March saw international bonds return 0.6% in Australian dollar hedged terms. Signs of an improvement in credit markets (except for the Financials sector) led to mounting optimism that the worst of the financial crisis was over.
• Monetary policy continued to ease globally. The Bank of England made record-low cuts in its official interest rate, the European Central Bank's rate hit an all time low, and UK and US central banks started to buy up government securities and corporate debt. In Australia, Reserve Bank cuts of 1.0% in January and 0.25% in April brought the official rate to 3.0%.

Source: Russell Investments

Industry news and legislation

May 2009 Federal Budget

The Budget includes both major spending initiatives and some savings. In this report, Aon focuses on budget announcements relating to superannuation, pensions, health insurance and employee benefits - the key issues that may affect you and your employees.