CareSuper receives favourable judgement from the Supreme Court of Victoria
CareSuper recently sought judicial advice in the Supreme Court of Victoria around our proposed approach to protect the Trustee for CareSuper (the Trustee) against insolvency in the event of a future fine or penalty.
New legislation that came into effect from 1 January 2022 means that if a super fund’s trustee company (which is responsible for governing the fund) becomes liable for a penalty under any Commonwealth Law or pays an infringement notice, the money cannot be paid from the super fund and the trustee will become liable for such payments.
If the Trustee for CareSuper did not have any assets to make this type of payment, it could become insolvent and unable to continue as Trustee, which would have a significant consequences for the Fund and result in substantial costs for CareSuper members. As an Industry SuperFund established only to benefit members, CareSuper’s Trustee Company has held minimal capital and does not pay dividends to shareholders.
While the Trustee is not facing any fines or penalties, our actions intend to protect current and future members from the potential impact of these new laws.
We can now advise that on 20 December 2021 we received judicial advice that the actions we proposed to protect the Trustee were justified. The Judge determined that the Trustee for CareSuper, CARE Super Pty Ltd, has the power within the existing Trust Deed to charge the fund (CARE Super), a fee for its services in governing the retirement savings of its 220,000 members. The exposure of the Trustee and its directors to statutory liability is integral to providing trustee services and can be taken into account in setting a fee that is fair and reasonable. The Judge further found that the charging of the fee does not contravene the SIS Act.
The Trustee had sought advice from specialist advisers, Mills Oakley, PwC and Deloitte and its insurance provider MetLife, as to potential statutory liabilities, insurance cover and various indemnities that apply to services it contracts to determine an appropriate fee, considering the best financial interests of members. On 22 December 2021, a fee of 0.10% of the fund’s assets was transferred from CareSuper’s General Reserve to a new Trustee Resilience Reserve held by the Trustee.
This transfer of assets was not deducted from members’ accounts and no accounts were affected. However, as the General Reserve is an invested pool of funds accumulated from operational surpluses over a number of years and belongs to members, we’ll be writing to members in the coming weeks to update them on the change.
As an Industry SuperFund whose sole purpose for over 35 years has been to look after our members’ retirement savings, rest assured we’re committed to acting in your best financial interests.