Regulation Bodies of Super in Australia
In Australia there are around 500,000 superannuation funds currently operating with 362 holding assets totalling more than $50 million. All are operating under regulations devised by two Acts of Parliament, the Superannuation Industry (Supervision) Act 1993 and the Financial Services Reform Act 2002. Employer contributions made to their employee's superannuation fund are regulated by another Act, the Superannuation Guarantee (Administration) Act 1992.
The four regulatory bodies governing super in Australia
The two Acts governing how Australian superannuation funds operate have four regulatory bodies to properly supervise that their legislation is carried out effectively, these are:
1. The Superannuation Complaints Tribunal (SCT)
A body which performs under the auspices of the Superannuation (Resolution of Complaints) Act. An Act that determines how any complaints regarding superannuation are dealt with as well as outlining the process to be undertaken in resolving such complaints. This tribunal has the authority to resolve problems that arise between a fund member and the fund management by either conciliation negotiation. It is a hearing of last resort, only coming into effect when all other avenues have failed.
2. The Australian Taxation Office (ATO)
The ATO is charged with making certain self managed funds comply with all the necessary rules and regulations. It also has the responsibility of ensuring the correct taxation is applied to all superannuation savings held in the various funds.
3. The Australian Securities and Investments Commission (ASIC)
This particular body has the job of being a protector of consumer rights in the financial services area which includes superannuation. It also makes certain that superannuation fund trustees carry out all their responsibilities in the way of supplying information to their fund members.
4. The Australian Prudential Regulation Authority (APRA).
APRA is charged with reviewing the various fund's annual account along with making sure the funds all behave prudently at all times.
Superannuation protection regulatory boards
The Australian Treasury’s policy advice on superannuation falls under three broad categories.
- Retirement Income PolicyTreasury plays the role of adviser on retirement income policy, which includes the objectives, adequacy, and overarching framework and design of superannuation system. It also takes care of the different proposals regarding alternative personal savings tools. Furthermore, it also takes care of the modeling and analysis of the government policy impact on households as well as the financial consequences of demographic tendencies and population ageing.
- Prudential PolicyHere, the Australian Treasury works closely with the Australian Prudential Regulation Authority or APRA. The treasury gives out advice to the Government regarding the prudential life of the superannuation; while APRA’s role in regards to superannuation is to make sure that the trustees are aware to their responsibilities to affiliates and carefully manage the funds under their charge.
- Consumer ProtectionAgain, the role of the Treasury is to give advice to the Government about the consumer policies in relation to superannuation. Treasury also works in close relationship with the Australian Securities and Investments Commission or ASIC, the market integrity locator and financial services consumer protection of Australia. While the Treasury gives advice, ASIC ensures consumers of confident and informed participation in the financial organisation.
The two acts of parliament overseeing superannuation in Australia
1. Superannuation Industry Act
- Exercise caution and discretion when investing the money
- Assets should be separated from employers
- Get professional advice; however, the final decision is from the trustee’s
- Ensure sufficient reserves to pay member’s benefits
- Transparent documentation of all transactions concerning the funds
- Keep accurate accounts and records of the super funds
Record Keeping Responsibilities
- An accurate account or documentation should be provided at all times.
- Make sure that all accounts are accurate and properly noted.
- Keep records of meetings and agendas that have transpired among trustees
- Submit a report to the Australian Prudential Regulation Board
- Have the accounts updated and audited every year
Under this category, the Superannuation Industry Act advises the trustee of the following:
- The risks and returns of the investments after formulating the objectives and strategies of the funds
- The various investments included in the portfolio which includes asset groups and other sub-categories
- Cash flow requirements and liquidity of the funds
- Requirements needed to meet potential liabilities at present or in the future
2. The Financial Services Reform Act 2002.
This Act has a wide ranging financial scope with the aim of providing the finance industry with a certain level of standardisation. It determines that a superannuation fund trustee must be licenced before being allowed to operate a fund. In short the Financial Services Reform Act 2002 carries out the following roles:
- The provision for licensing of individuals who provide financial services or products, known as 'dealers.'
- The setting out of what determines, good conduct and bad conduct. It makes rules defining what misconduct entails as regards the management of superannuation funds.
- The overseeing of training programs for agents who represent dealers.
- The setting out the level of information that has to be provided on financial products sent to fund members and prospective fund members.
Fund trustees must conform to strict rules
If you are a member of a superannuation fund your fund trustee will be bound by law to always make decisions in the best interest of all fund members. He or she must always act prudently and honestly. Your fund trustee must have demonstrated to the appropriate regulatory body that he or she is a fit and proper person for the job. There will be a trust deed that outlines the fund rules that the fund trustee must also comply with, as well as the above legislation. If the trustee of your superannuation fund fails in any aspect to properly carry out his or her obligations in any way there are courts and tribunals they must answer to which can either penalise them, or remove them from their office as trustee.
Superannuation is the best way to ensure a better retirement
Becoming a member of a properly constituted superannuation fund is one of the best ways to ensure your retirement years will be much easier financially than would otherwise be the case. On the way you will receive substantial tax relief as well have the enjoyment of receiving contributions from your employer that represents pay increases that have been foregone in the past in preference of contributing to your financial future.
You will also benefit from the life insurance and disability insurance cover built into superannuation funds ensuring your family will be protected should you happen to die before reaching retirement. You are also protected with a disability insurance should you become incapacitated and not able to work. You will however need to check your particular fund management to ascertain the amount of cover you will be likely to receive on both these occasions, as it may be in your interest to top the cover up if you feel it is too low for the amount of responsibility you currently carry.