The Employer’s Obligations

The Principal Employer of any Government Regulated Superannuation Fund has important legal obligations.

The Employer has under the common law Lord Browne-Wilkinson’s “Implied Obligation of Good Faith” when it comes to dealing with the Employee’s superannuation fund and benefits.

Furthermore in the case of the AusBev Superannuation Fund the Trust Deed and Governing Rules of this fund place additional obligations on the Principal and associated Employers.

Under Rule 1.2.2each Employer” is required to ensure compliance with “any application of a Superannuation Law”.

 

Note Rule 1.2.2(e) and Rule 1.2.2(h).

Rule 1.2.2(e) – Provision of Information.

The Statutory Disclosure Obligations of a Trustee of a Government Regulated Superannuation Fund with respect to “Information on Request” are covered by Section 1017C of the Corporations Act 2001 and Regulation 7.9.45 and Schedule 10A 11.1 of the Corporations Regulations 2001.

It is a criminal offence if Responsible Officers of a Trustee contravene subsections 1017C(2) or 1017C(5) of the Corporations Act 2001 and the penalties are prescribed under Item 296C and Item 297B of Schedule 3 of the Corporations Act 2001.

Two of the Responsible Officers of the Trustee are Employees of the Principal Employer – the Member-elected Directors on the Board of the Trustee.

Both Member-elected have failed to comply with both subsection 1017C(2) and 1017C(5) of the Corporations Act 2001 and well as failing to comply with the Principal Employer’s Code of Business Ethics and Conduct.

Rule 1.2.2(h) – Amendment of Trust Deeds

The Trust Deed and Governing Rules of the Fund consists of a set of Trust Documents that includes the founding Trust Instrument executed in the State of Victoria on 23 December 1913, plus all subsequent Deeds of Amendment (Resolutions).

A Member or Beneficiary of the Fund is entitled to obtain copies of these Fund Documents in order to obtain their own legal advice under Section 1017C of the Corporations Act 2001 and Regulation 7.9.45 of the Corporations Regulations 2001.

Once an employer joins a Superannuation Fund the person remains a Member until a valid Condition of Release event occurs as prescribed in the Governing Rules of the Fund. One the Trustee or an agent acting on behalf of the Trustee (eg Fund Administrator) receives supporting evidentiary documentation (eg a certified copy of a Death Certificate), the Governing Rules then empower the Trustee to release a Lump Sum Benefit or a Pension.

Following the deletion of the “Retrenchment Rule” in the Deed of Amendment executed on 20 December 1982, the valid Condition of Release events for members of the Division 2 final salary Defined Benefit fund are:

  • Attaining the Normal Retirement Age of 65
  • Death of the Member
  • The Member becoming Totally and Permanently Disabled
  • The Member voluntarily deciding to retire from the Fund (and no longer being in the service of the Principal or associated Employer) and having attained the Early Retirement Age of 55
  • The Member decides to terminate his Contract of Employment with the Principal or associated Employer before attaining the Early Retirement Age of 55.

Any Employee who became a Member of the Division 2 final salary Defined Benefit Fund before it was closed to new members on 1 December 1997, is legally entitled to retain Membership of this fund until one of the valid Condition of Release events listed above occurs. {Note: Members should always obtain a copy of the Trust Deed and Rules and seek their own legal advice with respect to their own circumstances}.

An offer was made by the previous corporate Trustee to existing Members of the Division 2 Defined Benefit Fund to “voluntarily” elect to leave this fund and to join the new Division 5 money purchase Defined Contribution Fund, after the Division 2 Fund was closed to new Members on 1 December 1997.

However the new Division 5 Fund has a “Cessation of Service Rule” that empowered the Trustee to terminate the Membership of any Member of the Division 5 Fund:

  • Where the Member decided to terminate his or her Contraction of Employment (Resignation), OR
  • Where the Employer decided to terminate a Member’s Contract of Employment (Retrenchment).

Members were not informed at the time that they would be repudiating a very valuable entitlement if the elected to accept the Trustee’s offer. They would lose the entitlement to remain a Fund Member in the event that the Employer decided to terminate the Member’s Contract of Employment. The Member would also then lose Death and Disability cover up until the Normal Retirement Age of 65 (or until they elected to resign from the Fund after the age of 55).

Any Member of the Division 2 Fund who accepted this “offer” now has a claim against the Directors of the former Trustee, including the Member-elected Directors, for dishonest conduct (ie a Tort of Deceit).

The Rules can only be Amended in accordance with the Rules and Statutory Legislation.

Under Rule 1.13.1 the Rules can only be amended if:

  • The Fund Actuary certified that the amendment will not “prejudice the value of the rights secured for or in respect of any Member“, OR
  • At least 75% of the Members of the Fund agree in writing to the proposed amendment.

Therefore to re-introduce a “Retrenchment Rule” into the Governing Rules of the Fund would require the approval of 75% of the Membership.This has never occurred.

{Note: The Statutory Requirement is a minimum of 66% under Regulation 13.16 of the Superannuation Industry (Supervision) Regulation 1994}.

 

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