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Interest, crediting rates, and your Super

 At NSL, the members’ superannuation investment return is determined by a Crediting Rate.

A Crediting Rate is defined as the investment earnings applied to member account balances after a particular period. Ideally the members’ earning rate is equal to the gross investment earnings of the Fund for that period (expressed as a percentage) less the investment management expenses, administration expenses, taxes and after allowing for any reserves (if applicable) applicable during the same period. This is hereafter referred to as Net Surplus Available to Members. If reserves are funded by NSL, they represent reductions in the Annual Crediting Rate.

NSL determines an Annual Crediting Rate early each calendar year which is applied to the member account balances retrospectively for the period from 1 January to 31 December of the previous year.

NSL also determines and applies an Interim Crediting Rate in the event that a member exits the Fund, such that the member’s final entitlement includes an earnings rate for the period from the most recent Annual Crediting Rate till the date of exit.

Crediting Rates can be either positive or negative (as stipulated in the current Trust Deed), as they primarily depend on investment performance

Current Interim Crediting Rate is 1%

Interim Crediting Rate Policy

Because Members can leave the Fund at any point during the year, Nambawan Super estimates an Interim Crediting Rate. This rate is reviewed and agreed by the NSL Board, or delegated Committee throughout each year.

The Interim Crediting Rate is a ‘best estimate’ only, and is subject to change. It is used to ensure exiting members’ final entitlements include interest earned from the year to date, and  reflect as closely as possible

The NSL Board recognizes that some members join or leave the Fund during the year, and also recognize that Fund earnings accrue at varying rates through the year. The NSL Board (through the Investment Committee and in consultation with the Licensed Investment Manager) regularly reviews (at least quarterly) current period investment returns of the Fund, and estimates the likely full year investment return. The NSL Board realizes this is a “best estimate” only and is subject to material changes.

Interim Crediting Rates are notional, and only apply when a member exits the Fund. Interim Crediting Rates can be either negative or positive, as they primarily depend on investment performance.

The Licensed Fund Administrator is advised of the Interim Crediting Rate to be applied to exiting member entitlements. In line with international practice, the Licensed Fund Administrator applies the Interim Crediting Rate using a time weighted rate of return basis.

Annual Crediting Rate

The NSL Board, in consultation with the Licensed Investment Manager, determines an Annual Crediting Rate once per annum. Only after Net Surplus Available to Members has been calculated can the Annual Crediting Rate be determined and returns credited to member accounts. Determining Net Surplus Available to Members usually occurs early each calendar year, with draft financial accounts for the Financial Year ending the previous 31st December.

In determining the Annual Crediting Rate, the assets of the Fund are valued in line with international standards, using a hierarchy of valuation methods.

The overall net investment performance of the fund plus general reserves are used to determine Gross Surplus Available to Members. A deduction will be made for an amount required to be held for any future reserves arriving at the Net Surplus Available to Members. The Annual Crediting Rate reflects the distribution of the net surplus available to members as a percentage rate over the value of the members’ account.

Once the crediting rate has been applied to members’ accounts, the financial records maintained by the Fund are reconciled to the member records maintained by the Licensed Fund Administrator.

Read the full Crediting Rate Policy here.

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