Fund Transfer and Trust Deed Amendments

Before the Trust Estate of one superannuation fund can be transferred to another Fund, it is generally necessary to amend the terms of the trust to allow the transfer to proceed without the Trustee committing a Breach of Trust and so that the entitlement of members are protected.

An example of such amendments is provided in Queensland Local Government Superannuation Board v Superannuation Complaints Tribunal & Anor [2014] FCCA 2473 {Link}. .

Clause 15.4 of the City Super Trust Deed was amended to expressly authorise the transfer by City Super to LG Super of an unallocated amount to be applied to the benefit of a defined class of City Super members. To the extent that the funds not yet allocated to individual members, they were subject to a direction as to how they would be dealt with when the time came for actual payment. That course was explicitly authorised by the amended trust deed which is not under challenge.

In some cases an Act of Parliament may be required if the fetters imposed on the Power of Amendment might prevent the application of the Trust Estate to a transfer arrangement.

An example is the Elder’s Trustee and Executor Co. Ltd Provident Funds Act 1971 (SA).

In this case an amendment was made to the Power of Termination so that the Trust Estate could be transferred to another fund without the need to distribute the assets to the members of the fund as provided by the original Power of Termination.

Another example is provided in 2011 when it was announced that Local Super would merge with Statewide Super, effective 1 July 2012. Statewide would then have $4 billion in Assets and 160,000 members.

Local Super covered local government employees of South Australia and the Northern Territory and had around 25,000 members with $1.7 Billion of funds under management.

The Parliament of South Australia enacted the Local Government (Superannuation Scheme) (Merger) Amendment Act 2012 (SA) to amend the terms of the Trust Deed of the Transferor Fund {Local Super} to allow the transfer of the Trust Estate to the Transferee Fund without the Trustees committing a Breach of Trust and to ensure that the members’ rights were protected.

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This tab updated on 31 July 2015