Employer v Trustee

It is important to understand that an employer has no legal obligation to pay a particular superannuation benefit to a former employee or the dependants of that employee.

The legal obligation rests with the trustee or trustees of the superannuation trust that has been established to provide retirement and retrenchment benefits.

Since 1982 Employers have had an obligation to make contributions towards funding superannuation benefits, however the legal obligation to actually pay the correct benefits to the correct beneficiaries lies with the trustee of the trustees of the fund.

In the case of an employer-sponsored superannuation fund, the Employer is provided with a Power of Appointment by the original Trust Deed whereby the Employer can appoint certain employees to become objects of the superannuation trust (ie they become entitled to be “members” of the fund).

In the case of a pension fund, once the prescribed conditions have been satisfied, membership of a pension fund terminates with death and not with the termination of the contract of employment.

In the case of Defined Benefit “lump sum fund” membership of the Defined Benefit Fund will generally terminate with the termination of the Contract of Employment, however may funds provide a “roll-over” option so the member remains a member of the fund under an accumulation sub-fund.

A person who has been a member of a superannuation fund retains a “beneficial interest” in the fund, even if they have left the fund and are classified as a “former member”. Retaining a “beneficial interest” in the fund allows the former member to have access to the Deeds of the Fund and to have standing to sue the Trustee if the benefit payment has not been made in accordance with the Deeds of the Fund and properly construed.


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This tab updated on 28 March 2015