The Superannuation Complaints Tribunal of Australia handed down
a decision on 2 February 2014 (Determination Number D13-14\109
 SCTA 6) which reinforces the rights of trustees to change
the terms of a superannuation fund to the detriment of some of its
members, and the ability to remove a minimum return rate offered by
a fund at the request of an employer contributing to the same
In this case the superannuation fund had been set up by an
employer which guaranteed former employees who remained as members
of the fund a minimum of 4% return on their superannuation
investment. This minimum return was only applicable to a small
percentage of members of the fund. The employer funded the
shortfalls arising from the performance of the fund in order to
meet the minimum return rate.
The trustee removed this minimum return provision in compliance
with the requirements under the trustee deed (including a six month
notice period) at the request of the employer. The employer had
indicated that due to changes in superannuation legislation, the
minimum return was being applied to larger benefit amounts for a
larger period of time, which was not envisaged at the time the term
was included in 1997.
The member of the superannuation fund argued that removing the
4% minimum return rate was unfair or unreasonable. In particular,
the member argued that the removal of this provision:
now exposed his fund to the volatility of the market;
passed the benefits to only a small percentage of members, and
so it would be unfair for the fund to argue that the minimum return
provision adversely affected the majority of the members of the
superannuation fund; and
was in the interests of the employer rather than the members of
The Tribunal, in accordance with powers under the
Superannuation (Resolution of Complaints) Act 1993, ruled
that it was not unfair or unreasonable for the trustee to remove
the 4% minimum return, on the basis that the trust deed granted
this power to the trustee.
Furthermore, the Tribunal considered the original purpose of the
provision and ruled that, due to changes in the law and the current
use of the minimum 4% return rate, its removal was not unfair or
unreasonable. The Tribunal also accepted that the
Superannuation Industry (Supervision) Act 1993 (Cth)
permitted trustees of superannuation funds to adapt to legislative
changes and employer requests for change as long as it is permitted
under the fund's trust deed.
What this means for you
This case highlights the following.
Trustees can consider employer requests to change terms in a
fund that may be to the detriment of its members.
Depending on the terms of the superannuation fund, a fund may
be providing a benefit to an exclusive portion of its members at
the expense to others.
The terms of a superannuation fund can be fluid; receiving
significant benefits in one year does not guarantee the same in the
future, as those terms can usually be changed.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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