It is the policy of the Coalition Government to provide at least 90% compensation, with the Minister responsible for Superannuation to increase this to 100% in the appropriate circumstances.
Senator Coonan discussed the rationale for the Coalition’s Compensation Policy in the Senate.
An important point made by the former Liberal Senator Helen Coonan with respect to Coalition was that:
Senate Hansard – 31 March 2004 (page 22400)
Superannuation Safety Amendment Bill 2003
Senator Coonan (Liberal – NSW)
We are debating the message and my motion that the committee not insist on amendments (26) and (27). Amendment (26) relates to what has been colloquially called the 100 per cent compensation matter – inserting a requirement in the legislation for the government to provide financial assistance of 100 percent for superannuation losses due to fraud or theft. As has been noted this morning, the government is rejecting the amendment. I should just say why briefly. Under part 23 of the Superannuation Industry (Supervision) Act 1993 the minister, in this case me, has discretion to grant compensation for losses as result of fraudulent conduct or theft. In exercising this discretion the minister may grant financial assistance up to 100 per cent of the determined eligible loss. I should say that I can envisage situations where it may be appropriate to do so but I can also envisage cases where it certainly may not.
Ministerial discretion ensures that public interest considerations can appropriately be taken into account when determining the level of financial assistance to be paid in the event of theft of fraudulent conduct. Within this framework, it has been longstanding government policy to cap financial assistance provided under part 23 of the SI(S) Act at 90 per cent of the eligible loss. Eligible loss is not necessarily confined to the amount of an investment that may be lost; it can also extend to the costs of replacement trustees and other expenses.
Payment off less than 100 percent financial assistance seeks to address moral hazard concerns. In particular, it ensures that fund members bear at least some responsibility for any losses, have incentives to monitor their accounts and check that funds are being managed in a prudent manner.
A review under the former Howard Government “Outcomes of the Review into Part 23 of the Superannuation Industry (Supervision) Act 1993″ confirms a committed to provide compensation.
This tab updated on 28 March 2015