The Supreme Court of Victoria has issued favourable judicial advice to CareSuper, saying its proposal to reserve a portion of member assets to protect it from future penalties is justified.
CareSuper had sought the advice in November, in anticipation of new legislation that would come into effect 1 January 2022 which meant that super fund’s trustee company, rather than the fund itself, could be liable for a Commonwealth penalty.
The judge determined the trustee for CareSuper, CARE Super Pty Ltd, had the power within the existing trust reed to charge the fund a fee for its services in governing the retirement savings of its 220,000 members and that it did not contravene the Superannuation Industry Supervision Act (SIS).
CareSuper chief executive, Julie Lander, said the law change could have threatened the solvency of trustees without assets, such as industry superfunds, resulting in substantial costs for members.
“While the trustee is not facing any fines or penalties, our actions intend to protect current and future members from the potential impact of these new laws,” Lander said.
CareSuper had sought advice from specialist advisers, Mills Oakley, PwC and Deloitte and its insurance provider MetLife, as to potential statutory liabilities, insurance cover and various indemnities that applied to services it contracted to determine an appropriate fee.
On 22 December 2021, a fee of 0.10% of the fund’s assets was transferred from CareSuper’s General Reserve to a new trustee resilience reserve held by the CareSuper trustee.
Lander said the transfer of assets was not deducted from members’ accounts and no accounts were affected.
“However, as the general reserve is an invested pool of funds accumulated from operational surpluses over a number of years and belongs to members, we’ll be writing to members in the coming weeks to update them on the change,” she said.
“As an Industry SuperFund whose sole purpose for over 35 years has been to look after our members’ retirement savings, rest assured we’re committed to acting in your best financial interests.”