The “Moral Hazard” Argument

Superannuation funds are generally based on the legal concept of a “trust”.

Trust has been used for centuries and the law of trusts has developed on the presumption that the beneficiaries will take an active role in the supervision of the Trustees and the administration of the trust.

This is quite logical since it is the beneficiaries’ money that is being held on trust from them to enjoy at a later date.

This basic assumption finds it way into the “Moral Hazard” argument used by the Coalition to justify a basic compensation level of 90% of losses incurred, since it is expected that the members of a superannuation trust will take some interest in the administration of their superannuation trust and be attentive to the conduct of the trustee or trustees of their superannuation trust.

To allow the members and beneficiaries to have an active role in the supervision of the administration of their trust, the law provides a right of access to all but a limited number of documents held by the trustee or trustees to administer the trust.

That is why the Parliament has made it a criminal offence to wilfully conceal non-exempt documents from members and beneficiaries of a superannuation trust.

More information on the legal right to have access to the Deeds of the superannuation trust can be found here.

There are currently approximately 30 million superannuation accounts held by around 12 million adult Australians, so it is impossible for a few hundred Australian Public Servants to monitor so many individual accounts.

The only party who can properly supervise the conduct of the Trustee of a superannuation fund is the members themselves.


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