Trustees have a “duty of care” to the Members and Beneficiaries of the Fund, however that duty is not absolute. Trustees (and their Agents) can and do make mistakes.
However Trustees must act honestly.
If a Trustee acts honestly and makes an “innocent” mistake, then the Trustee is indemnified from the assets of the Fund and does not have to pay for this mistake out of the Trustee’s own Pocket.
However if the Trustee acts dishonestly or is grossly negligent in executing the trust then as a Trustee of a Government Regulated Superannuation Fund the Directors of a corporate Trustee are no longer indemnified from the assets of the Fund and furthermore all Professional Indemnity Insurance policies will refuse to cover dishonest conduct.
Under Section 57 of the Superannuation Industry (Supervision) Act 1993 the directors of a corporate Trustee are not indemnified for dishonest or negligent Breaches of Trust.
Members who receive a Benefit Payment should never rely on the Member’s Benefit Statement, the documents can easily be wrong either through accident or fraudulent design.
A Member who receives a Benefit Payment, especially a final salary Defined Benefit, should always obtain a copy of the Trust Deed and Governing Rules and check their entitlement.
If the Trustee has made an accidental or “innocent” mistake, the Trustee will have not problem with complying with Section 1017C of the Corporations Act 2001 and Regulation 7.9.45 of the Corporations Regulations 2001 and providing copies of the following Fund Documents to the Member “free-of-charge”:
- relevant versions of the Trust Deed and Rules and associated amendments
- copies of recent audited accounts of the fund and associated auditor’s report
- a copy of the “most recent” actuarial report for Defined Benefit Funds
If the Member then finds that a mistake has been made and then provides evidence of this mistake to the Trustee, the Trustee should have no problem in remedying the mistake, since the Trustee can make additional payments from the assets of the fund for a non-fraudulent Breach of Trust, in this case an accidental underpayment of the benefit.
If however the Trustee refuses to provide copies of any of the Fund Documents listed above, then this is a “red flag” indicator that the Trustee has engaged in a fraudulent design to steal money that lawfully belongs to this Members and most likely other members of the Fund.
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