The more frequently assets of a superannuation fund are valued
to determine changes in value, the greater the risk of error.
Unless the trust deed of a superannuation fund contains a power
to vary the value that must be applied, whether it is a crediting
rate or unit price, the price as determined by the trust deed must
be applied to the member accounts, including former member
accounts. Any under payment, subject to the de minimis principle,
must be compensated. Otherwise the trustee is in breach of trust in
not paying the amount required to be paid by the trust deed. The
trustee is not entitled to apply a materiality test.
Trustees will generally wish to apply a materiality test. To do
this, the powers in the trust deed must permit this.
The trust deed may also need powers to allow for dealing with
market volatility where assets cannot be accurately valued.
Disclosure also needs to be considered. Correction of amounts
that are de minimis is not required. However, the exact scope of de
minimis in the context of pricing errors is yet to be tested. It is
something much less than a materiality test.
The revised 'Unit pricing: Guide to good practice', a
joint ASIC and APRA guide which was updated in August 2008,
recognises that for exited members there can be a fixed dollar
minimum of up to $20 set before compensation is required. This
contrasts with the original guide that did not recognise a fixed
dollar minimum, although it did recognise that the trustee could
consider whether it was consistent with the trustee's
obligations to set a threshold or to differentiate between
Both the original guide and the revised guide recognised a
materiality test of 0.3%.
There is no consideration of the legal basis on which either a
fixed dollar minimum or the 0.3% materiality test may be applied.
Twenty dollars is not necessarily a de minimis amount. Also, de
minimis is equally applicable to existing members as well as former
members, although the threshold amount may differ.
Trustees need to ensure that they have appropriate powers in
their trust deed. Otherwise, apart from a de minimis amount (in the
proper legal sense), a trustee is not entitled to apply threshold
levels in determining compensation. In addition, there should be a
policy properly disclosed so that investors are on notice.
Phillips Fox has changed its name to DLA Phillips Fox
because the firm entered into an exclusive alliance with DLA Piper,
one of the largest legal services organisations in the world. We
will retain our offices in every major commercial centre in
Australia and New Zealand, with no operational change to your
relationship with the firm. DLA Phillips Fox can now take your
business one step further − by connecting you to a global
network of legal experience, talent and knowledge.
This publication is intended as a first point of reference
and should not be relied on as a substitute for professional
advice. Specialist legal advice should always be sought in relation
to any particular circumstances and no liability will be accepted
for any losses incurred by those relying solely on this
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).