The Commonwealth Bank Case

APRA has been using the transfer of member from one fund to another as a means of concealing fraud in the superannuation industry and protecting its clients – the major financial institutions.

Slatery J ruled in Beck v Colonial Staff Super Pty Ltd [2015] NSWSC 723 {Link}. that a “successor fund transfer” could not be used as a mechanism for defeating the rights that a member was entitled to before the “successor fund transfer” took place.

The plaintiff, Mr Peter Beck, was a member of the Colonial Group Staff Superannuation Fund. Colonial was acquired by the Commonwealth Bank and Mr Beck’s membership was transferred to the Officer’s Superannuation Fund where the trustee is the Commonwealth Bank Officers Superannuation Corporation Pty Limited.

However Mr Beck had a valuable entitlement if he was forced to retire before the age of 55 if he had completed an extended period of service and that entitlement had not been transferred to the Officer’s Superannuation Fund.

Slattery J ruled that Mr Beck was still entitled to that entitlement even though is was not in the “governing rules” of the “successor fund” – the Officer’s Superannuation Fund.

The Court relied on Regulation 13.16 of the Superannuation Industry (Superannuation) Regulations 1994:

Accrued benefits–restriction on alteration

(1) For the purposes of subsection 31(1) of the Act, it is a standard applicable to the operation of regulated superannuation funds that, subject to subregulation (2), a beneficiary’s right or claim to accrued benefits, and the amount of those accrued benefits, must not be altered adversely to the beneficiary by amendment of the governing rules or by any other act carried out, or consented to, by the trustee of the fund.

A beneficiary may agree in writing to exchange an accrued benefit for a different benefit and APRA may also have consented in writing to the alteration after at least two third of the members have agreed to an reduction or two thirds of the Directors have agreed where the “equal representation rule” applies.

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This tab updated on 16 August 2015