CRAIGS SUPERANNUATION FAQS

Craigs Superannuation is a superannuation scheme registered under the Financial Markets Conduct Act 2013 that is designed to help you save for your retirement.

The Scheme is able to accept transfers from UK pension schemes and is a QROPS*.

*His Majesty Revenue and Customs (HMRC) does not and has never certified, approved or recommended any overseas pension scheme that contends or believes it has QROPS status.

Craigs Superannuation provides you with the flexibility to build a portfolio of investments from the list of Investment Options that suits your risk profile and investment objectives.

A Craigs Investment Adviser is available to help you transfer and select your investment portfolio at no additional cost. By joining the Scheme, you will also gain access to Craigs’ comprehensive research.

You can change the composition of your portfolio as your circumstances change by contacting your Craigs Investment Adviser or by completing the Investment Direction & Switch Form.

Your contributions into the Scheme (and those that are made for your benefit) are credited to a Scheme account in your name. Your contributions are pooled with other members’ contributions and invested into the securities selected by you and held through the Scheme. By pooling your investment with other members, you access more investments and achieve greater diversity.

The value of your portfolio will reflect the market value of your chosen Investment Options on the given date (less fees and taxes).

Craigs Superannuation is a trust, governed by a trust deed between us and The New Zealand Guardian Trust Company Limited, the Scheme Supervisor.

Your portfolio is not segregated and liabilities of the Scheme can affect all portfolios.

Craigs Superannuation portfolios have a cash account component. You will be required to retain 0.25% of the portfolio’s value in the cash account. The cash account will be used to record contributions, any income distribution and any payments out of your portfolio such as tax, fees or withdrawals.

The Scheme is able to accept transfers from UK pension schemes. If you do transfer your UK pension to the Scheme, your savings will be governed by the terms and conditions of the Scheme, and the terms and conditions of your UK pension scheme will no longer apply. Any transfers from a UK pension scheme or other QROPS will be treated as UK derived contributions in the Scheme and subject to QROPS rules.

UK pension transfers could attract a UK overseas transfer charge of 25% of the amount of your UK derived contributions if you are not a New Zealand tax resident when you transfer your UK pension to the Scheme. This overseas transfer charge may also apply if your tax residency changes while you are a member of the scheme within five full UK tax years from the date of your original UK pension transfer. The transfer charge may also apply if specified information has not been provided to the UK scheme administrator. We may refuse an application for a UK pension transfer without giving a reason.

More information on contributions is available in the ‘Other Material Information’ supplement on the offer register disclose-register.companiesoffice.govt.nz and the CIP website craigsip.com/document-library.

If you have transferred your UK Pension and decided to emigrate from New Zealand within five years, you could be subject to an Overseas Transfer Charge of 25%. Talk to your Advisor or go to business.govt.nz/disclose to view the scheme’s Other Material Information document for more information.

Our Investment Options are selected by the Craigs Private Wealth Research team. The research analysts undertake analysis, or use analysis from chosen providers, which considers data relating to a particular security, the industry and markets it operates in, competitive position, market liquidity together with general and specific economic indicators and commentary. The research team presents recommendations, and the CIP Investment Committee will approve either the inclusion or exclusion of a security on the Investment Options.

The Craigs Private Wealth Research team is responsible for researching and recommending securities to the Investment Committee who formally review and update the Investment Options list each quarter (or more regularly where appropriate). For an explanation of the ratings used, visit the understanding our recommendations page or view our Investment Options.

The key principles of the CIP Private Wealth Research philosophy can be summarised as:

1. A focus on quality across all asset classes;

2. An objective to grow capital but with a focus on generating cash flow;

3. A conservative approach to risk management; and

4. A recognition of the importance of careful and broad diversification.

The Investment Options are formally reviewed and updated each quarter, although changes can be made at any time. We will notify you at the end of each quarter if any security you hold or invest into is no longer an Investment Option.

The latest list of investment options is available from your Craigs Investment Adviser, on our Investment Options website page or from the offer register at business.govt.nz/disclose.

The current list of Investment Options is available from your Craigs Investment Adviser, on our Investment Options PDF or from the offer register at business.govt.nz/disclose.

You can switch all or part of your investment into another security or securities by completing the Investment Direction & Switch Form available from your Craigs Investment Adviser or craigsip.com/document-library.

We have discretion to reject switches, for example if the Scheme is being used to actively trade securities.

Brokerage expenses of up to 1.25% of the amount of the relevant listed equity transaction may be incurred when a switch is being executed.

You can change your investment direction for future contributions at any time by contacting your Craigs Investment Adviser or completing an Investment Direction & Switch Form.

If you die while you are a member of the Scheme, your interest in the Scheme will be paid to your estate or, if your balance does not exceed the prescribed amount (currently $15,000) and other conditions are met, we may pay your balance to an eligible claimant under the Administration Act 1969.

We will require a certified copy of the death certificate, or probate, or where there is no Will, a Letter of Administration.

If you wish to withdraw funds from the Scheme you must give written notice using our withdrawal request forms. A withdrawal request cannot be withdrawn once given.

For more information on withdrawals go to the offer register; business.govt.nz/disclose

The Scheme has a tiered management fee structure. This means the management fees charged to your Scheme account are determined by the asset class of the securities you hold and the market value of your investment in those particular asset classes.

The total management fee will not exceed 1.25% of the market value of your total investment into the Scheme. Fees will be recovered from your cash holdings, or by selling your securities within your portfolio proportionately.

Flat Management Fee Structure:

*For those securities that are funds, the management fees are not the same as the annual fund charges. An explanation of what annual fund charges comprise is set out above.

Performance fees may be charged within certain securities. The performance fee will typically be reflected in the securities price and may therefore indirectly affect your returns. For further information, please refer to the Investment Options.

The total annual fund charges for each security are set out in the Investment Options supplement. These are stated as a percentage of the net asset value of the security.

The ‘Total Annual Fund Charge’ is made up of the following:

• Management fees – Management fees are calculated based on the number of days the security has been held throughout the relevant year. The management fee covers the cost of managing the Scheme, including managing the investments, processing contributions, withdrawals and corporate actions, dealing with correspondence and preparing statements. We currently meet the fees payable to the administration manager, custodian and supervisor out of the management fees. Fees will be recovered at the end of each quarter from your cash holdings, or by selling down securities within your portfolio proportionately.
• Fees and expenses of underlying funds – in relation to a security that is a fund, that fund may also have fees and expenses which are charged by the manager and supervisor of that fund. These fees and expenses will be reflected in the fund’s unit price and may therefore indirectly affect your returns.
• Performance fee – the total annual fund charge will include the performance fees for any related underlying fund. Performance fees for other underlying funds are not included as part of the total annual fund charge. The Investment Options PDF identifies which securities charge performance fees.

Certain fees, charges or expenses are subject to GST at the prevailing rate.

Sarah invests $10,000 in a number of the investment options from the Investment Options document. She is charged brokerage of $125.00 when her funds are invested (1.25% of $10,000).

This brings the starting value of her investment to $9,875.00.

She is also charged the management fee, which works out to about $123.44 (1.25% of $9,875.00). These fees might be more or less if her account balance has increased or decreased over the year and are dependent on the type of investments she has selected.

Over the next year, Sarah pays other charges of $40.00.

Estimated total fees for the first year:

Brokerage: $125.00

Management Fees: $123.44

Other charges: $40.00

If Sarah’s investment options include any funds, those funds may be subject to further fees (including performance fees) and expenses.

This example may not be representative of the actual fees you may be charged and reflects a sample portfolio of investment options at the maximum management fee rate.

We can change the existing fees and introduce new fees by giving two months’ notice to all affected members.

Craigs Superannuation is not a Portfolio Investment Entity (PIE) so is taxed as a widely-held superannuation fund at a flat rate of 28% on taxable income.

Tax can have significant consequences for your investments and it is important, if you have any queries relating to the tax consequences of your investments, that you seek professional advice.

For further information on the tax consequences of investing in the Scheme and the potential tax implications of transferring foreign superannuation entitlements to the Scheme, please refer to our Other Material Information or the offer register business.govt.nz/disclose or the CIP website craigsip.com/documents