Superannuation Alert 26.08.16
Financial Services eBulletin - 26 August 2016
The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
- On 15 August 2016, ASIC made available Consultation Paper 267 - Remaking ASIC class orders and guidance on audit and financial reporting for public comment. The Consultation Paper sets out ASIC's proposal to remake various class orders in relation to audit and financial reporting review. Among other things, the Consultation Order proposes to repeal Class Order [CO 98/106] Financial reports of superannuation funds, approved deposit funds and pooled superannuation trusts. Comments on the Consultation Paper can be made by 12 September 2016.
- On 22 August 2016, the New South Wales Court of Appeal handed down its decision in Commonwealth Bank Officers Superannuation Corporation Pty Ltd & Anor v Beck & Anor  NSWCA 218, overturning the decision of the New South Wales Supreme Court in Beck v Colonial Staff Super Pty Ltd & Ors  NSWSC 723 (Beck v Colonial Staff Super).
In Beck v Colonial Staff Super the Supreme Court held that a trustee's exercise of its power to amend the relevant trust deed in order to remove a discretionary benefit was invalid and in breach of the trustee's duties under general law and superannuation legislation. It was also held that the relevant amendments to the trust deed to remove the discretionary benefit provision contravened the trustee's obligation to protect "accrued benefits". An explanation of Beck v Colonial Staff Super is discussed at length in our article A special kind of benefit Beck v Colonial Staff Super.
In allowing the appeal and setting aside the orders made by the Supreme Court, the Court of Appeal held the following (among other things):
- The trustee did not contravene its obligation to protect accrued benefits by removing the discretionary benefit provision. Where a person is entitled to consideration under a discretionary benefit, that person has "no proprietary interest in the assets out of which the benefit is to be paid, but only a mere expectancy or hope that the power will be exercised in his or her favour". While the discretionary benefit provision in question could be described as an "inchoate right in the process of accrual", this does not amount to an accrued benefit.
- When interpreting the meaning of "accrued benefit" in regulation 13.16 of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (SIS Regulations), the Supreme Court erred in applying the definition in regulation 9.27 of the SIS Regulations, as that definition only applies to Division 9.5 of the SIS Regulations.
- The trustee did not fail to give proper consideration as to whether the removal of the discretionary benefit provision was in the best interests of members, as the trustee removed this provision on the advice of its in-house counsel that the provision could contravene anti-discrimination legislation and inserted into the trust deed an alternative basis for providing such a benefit.
- The Supreme Court erred in finding that the appellant was estopped from denying that it would not terminate the respondent's employment before he turned 55 (with varying reasons given by the Court of Appeal in support of this finding).
- On 23 August 2016, APRA released its Quarterly Superannuation Performance, which explains that at 30 June 2016 superannuation assets totalled $2,109.9 billion, of which MySuper products amounted to $474.9 billion.
- On 23 August 2016, APRA also released a selected 'Pension membership profile' to supplement the June 2015 edition of the Annual Superannuation Bulletin, containing new pension statistics about account-based pensions, allocated pensions, annuities, other pension benefits and transition to retirement pensions.
Emilia Michael | Lawyer
+61 3 9269 9580
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