Bank of New Zealand Officers’ Provident Association Staff Superannuation Scheme

You now have a choice

M ember Choice The aim of this presentation is to introduce you to Member Choice investment options You now have a choice

M ember Choice Hover over the bottom left corner of the screen for arrows that allow movement between slides. If you wish to exit the presentation at any time, simply press ‘ESC’ on your keyboard Hover over the bottom left corner of the screen for arrows that allow movement between slides. If you wish to exit the presentation at any time, simply press ‘ESC’ on your keyboard You now have a choice

What should you consider? ­What you should consider M ember Choice

­The options - what are they? What are your investment options? ­What you should consider M ember Choice

How do you choose the right option for you? ­How do you choose? ­What you should consider ­The options - what are they? M ember Choice

­How do you choose? ­What you should consider ­The options - what are they? First, let’s think about what you should consider during this process. M ember Choice

-your age -level/security of income -other investment assets/liabilities Every Member is different - You should consider Consideration of these factors will in part determine

-your age -level/security of income -other investment assets/liabilities -your approach to volatility of returns Every Member is different - You should consider

-your age -level/security of income -other investment assets/liabilities -your approach to volatility of returns Every Member is different - You should consider Do you prefer consistency in your return or will you accept ‘ups and downs’ in the return to achieve a higher return over time

-your age -level/security of income -other investment assets/liabilities -your approach to volatility of returns Every Member is different - You should consider Let’s look at the relationship between an asset class and its volatility of return

Volatility vs Return As you can see there are four main asset classes High Risk Low High Return Shares Property Fixed Income Cash

Volatility vs Return Cash investments offer a lower level of volatility of return than the other asset classes High Risk Low High Return Shares Property Fixed Income Cas h

Volatility vs Return Cash carries less risk than the other asset classes, but the return is expected to be lower. High Ris k Low High Return Shares Property Fixed Income Cash

Volatility vs Return High Risk Low High Return Shares Property Fixed Income Cash Let’s look at some past OPA gross returns from cash.

As you can see the returns were positive within a range of about 5% – 10% Expectation is that the return will be in line with a 90 day Bank bill rate As you can see the returns were positive within a range of about 5% – 10% Expectation is that the return will be in line with a 90 day Bank bill rate CASH OPA gross returns Past performance should not be taken as an indicator of future performanc e

Volatility vs Return Fixed income offers moderate potential return and less volatility in return than shares. High Risk Low High Return Shares Property Fixed Income Cash

The return is more up and down than cash. The range in which it fell is between -10% & 20% suggesting a higher degree of volatility of return than cash The return is more up and down than cash. The range in which it fell is between -10% & 20% suggesting a higher degree of volatility of return than cash FIXED INTEREST OPA gross returns Global returns include a hedge (100%) to 2008 Past performance should not be taken as an indicator of future performance

Volatility vs Return Shares offer a higher potential return but with greater volatility High Risk Low High Return Shares Property Fixed Income Cash

As you can see shares can offer a high return but also a negative return. SHARES The range these returns fell into were as low as – 37.9% and as high as 51.8% Overseas returns include the hedge at various levels OPA gross returns Past performance should not be taken as an indicator of future performance

Volatility vs Return If we show the returns together we can see how each asset class varies in its returns High Risk Low High Retur n Shares Property Fixed Income Cash

Volatility vs Return In summary High Risk Low High Return Shares Property Fixed Income Cash

Volatility vs Return The higher the expected return, the greater the volatility and the higher the risk High Risk Low High Return Shares Property Fixed Income Cash

Volatility vs Return So if you’re risk averse, you’ll accept more cash and fixed interest in your investment High Risk Low High Return Shares Property Fixed Income Cash

Volatility vs Return If you’re willing to take a higher level of risk you’ll accept more shares in your investment High Risk Low High Return Shares Property Fixed Income Cash

Member Choice gives you an opportunity to select a risk / return profile that fits with your circumstances

So what are the options available

Your Investment Options: There are eight options – The 17.5 options are income tax related (per PIE/PIR rules; refer Investment Statement) CASH/CASH 17.5 CONSERVATIVE/CONSERVATIVE 17.5 BALANCED/BALANCED 17.5 GROWTH/GROWTH 17.5

Your Investment Options: We’ll examine CASH/CASH 17.5 first CASH/CASH 17.5 BALANCED/BALANCED 17.5 GROWTH/GROWTH 17.5 CONSERVATIVE/CONSERVATIVE 17.5

CASH/CASH 17.5 As the name suggests these options invests in cash. Neutral Asset Allocation

Volatility vs Return High Risk Low High Return Shares Property Fixed Income Cash CASH/CASH 17.5 With a lower risk of negative returns

CONSERVATIVE/CONSERVATIVE 17.5 These options invest predominately in Income Assets – i.e., Cash and Fixed Interest. Neutral Asset Allocation

Volatility vs Return High Risk Low High Return Shares Property Fixed Income Cash CONSERVATIVE/CONSERVATIVE 17.5 Expect a lower return over the longer term than the Balanced and Growth options

Volatility vs Return High Risk Low High Return Shares Property Fixed Income Cash CONSERVATIVE/CONSERVATIVE 17.5 Expected chance of a negative return in this option is 1 in 75

BALANCED/BALANCED 17.5 These options includes investments in all asset classes Neutral Asset Allocation

BALANCED/BALANCED 17.5 It will provide both income and capital growth. These options should provide a higher return than cash over the medium term (5 – 7 years, but expect ups and downs in returns including some years of negativity It will provide both income and capital growth. These options should provide a higher return than cash over the medium term (5 – 7 years, but expect ups and downs in returns including some years of negativity Neutral Asset Allocation

Volatility vs Return High Risk Low High Return Shares Property Fixed Income Cash BALANCED/BALANCED 17.5 These options offer medium risk and return

Volatility vs Return High Risk Low High Return Shares Property Fixed Income Cash BALANCED/BALANCED 17.5 Expected chance of a negative return in these options are, on average 1 out of every 10 years

GROWTH/GROWTH 17.5 Investment predominantly in growth assets – i.e., shares and property Neutral Asset Allocation

GROWTH/GROWTH 17.5 These options suit members who are looking for high returns over the long term and accept that returns will be volatile Neutral Asset Allocation

Volatility vs Return High Risk Low High Return Shares Property Fixed Income Cash GROWTH/GROWTH 17.5 Expected chance of a negative return in these options are, on average 1 out of every 5 years

Investment Choice It’s important that you choose the right option for you But be aware, a 2% or 3% difference in return can mean a lot For example:

Investment Choice Future lump sum at 4% net of tax/fees $129,438 Assume a current entitlement of $55,000 (an OPA average) with regular contributions of $4,000 p.a. for 10 years (compounded monthly) Future lump sum at 6% net of tax/fees $151,220 Future lump sum at 7% net of tax/fees $163,459 Lump sums include contributions only; not employer contribution

So what next? –Decide how much risk you’re willing to take. Use the calculator provided to help get an indication of what risk profile suits you. –If you’re still uncertain seek independent financial advice –Once you’ve decided on an option, complete the option form –If you don’t select an option you will be assigned to the Balanced/Balanced 17.5.

Remember, we are available to answer any questions you may have. Thank you for taking time to look at Member Choice