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Information Presentation on the National Entitlement Security Trust NEST PowerPoint PPT Presentation


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Information Presentation on the National Entitlement Security Trust NEST. What is NEST. A national industry trust providing an independent, flexible and not for profit financial structure, for protecting employee entitlements such as: Annual leave including annual leave loading,

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Information Presentation on the National Entitlement Security Trust NEST

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Information Presentation

on theNational Entitlement Security Trust

NEST


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What is NEST

A national industry trust providing an independent, flexible and not for

profit financial structure, for protecting employee entitlements such as:

  • Annual leave including annual leave loading,

  • Long service leave,

  • Severance; or

  • Any other entitlement. Provided that any such entitlement is included within and forms part of an employee’s relevant industrial agreement.


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What is

an industry trust

  • An industry trust is a legal arrangement established by industry stakeholders with specific rules and objectives. These rules and objectives are defined within a document called a Trust Deed.

  • Industry trusts are not a new concept and have operated successfully across a number of industries for many years.

  • Industry trusts currently provide superannuation, severance funds, long service leave funds and employee insurance benefits.


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How NEST operates

  • NEST operates in conjunction with each employer’s industrial agreement to provide an independent and transparent vehicle for funding employee entitlements.

  • Employers only contribute entitlements, in accordance with and only to the extent of specifically agreed provisions contained within an industrial agreement.

  • NEST does not determine the level, extent and type of employee entitlement contributions.


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The NEST objectives

NEST has two simple objectives which are

entrenched within it’s trust deed. The Trustee

manages NEST to achieve these objectives.

Objective 1: To protect employee entitlements.

Objective 2: To distribute income from the

investment of NEST contributions

to it’s employer and employee

members as the case may be.


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NEST governance

NATIONAL ENTITLEMENT SECURITY TRUST

NESTNominees Pty Ltd

Corporate Trustee

Employee Directors

Equal voting rights

and powers

Independent Chairperson

Casting vote only

Employer Directors

Equal voting rights

and powers


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NEST applications

NEST has the flexibility to protect entitlements in a variety of formats

which include:

Future Entitlements protected by:

  • Ongoing monthly contributions by Employers into the trust.

  • Contributions are calculated in accordance with accrual rates determined by an employee’s relevant industrial agreement.

    Past Entitlements protected by:

  • Staged transfer of existing accrued liability.

  • NEST as a beneficiary of a bank guarantee on behalf of it’s members


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Investment of NEST

contributions

  • The current investment manager for NEST is the ING Group.

  • ING rank as one of the worlds largest fund managers with 800 billion in funds under management.

  • The specific fund chosen for NEST is the ING/ANZ Enhanced Cash Fund with a Standard and Poors credit rating of AA.

  • This investment is asset backed by Australian residential mortgages and bank securities.


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Contribution flow chart

Employers contribute

into NEST

Employers receive a tax

deduction for the contribution

Net investment returns offset

future contributions and

Reduce labor on cost

Contributions are

invested into the ING/ANZ

Enhanced Cash Fund

Net investment returns can

be distributed to Employers


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ClaimsFlow Chart Model 1

Employer contributes

Into NEST

Funds are held in trust

and placed with an

investment manager

Employer pays claim to

Employee at the current rate

Employee claims their

entitlements from their

employer

Employer claims reimbursement from administrator for an

amount no greater than the total contribution received by NEST

from the employer on behalf of the specific employee


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ClaimsFlow Chart Model 2

Employers contribute

Into NEST

Funds are held in trust

and placed with an

investment manager

Employee claims directly

from the Trust

Employer is relieved of any

further obligation towards

the entitlement,to the extent

of the contribution made

Trust pays the employee for an amount no greater than

the total contribution received by NESTfrom the employer

on behalf of the specific employee. Trust provides the Employee

with all necessary statutory documentation


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Operating principles

  • Employers do not pay any fees or charges in addition to contributions for employee entitlements.

  • Administration fees are paid from investment income only.

  • The capital of the trust (contributions) cannot reduce in dollar value.

  • Equal employer and employee board representation with joint decision making.


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Taxation

  • Contributions into NEST are tax deductible at the time of making the contribution.

  • NEST complies with all the requirements of the new FBT legislation to be an FBT exempt fund.

  • Contributions into NEST form the capital of NEST and are therefore not taxable as trust income.

  • Payments to employees by the trust will be subjected to normal PAYE tax provisions.


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Administration

  • NEST is administered by Coverforce Pty Ltd who specialises in the administration of industry funds.

  • NEST has an efficient and transparent administration provided through B2B internet based administration systems specifically developed for NESTwhich:

  • Simplify the administration process

  • Provide transparency

  • Provide flexibility

  • Protect privacy


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Account

balances

Claim for entitlements

Employee details and

transactions

View and print monthly contribution

statement


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Monthly Contribution

detail

Drill down to view

Specific employee contribution detail


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Conclusion

NEST offers a realistic and sensible solution to protecting employee entitlements.

NEST does not aim to provide a quick fix solution but a method of providing employers with a vehicle for funding their employee entitlement obligations over a realistic time frame.

The trust fund model offers tangible benefits for both employers and employees.


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