Responsible Entities for Superannuation Schemes

As recommended in reviews of the superannuation system, all super schemes established by private sector employers are established as trusts.

Superannuation schemes for public servants are established under Acts of Parliament, and most, but not all, are run as trusts. Trusts are currently seen as the most appropriate legal structure for superannuation schemes in Australia.

Trusts have been in existence (as a legal concept), for nearly a thousand years. In their earliest days, people could transfer their land to others, under trust that the receiving person would hold the land ‘to the use of’ the transferor.

A traditional trust vests title to property in a person or persons on behalf of another person or persons. The legal owner of the property is the trustee, and the other party is the beneficiary.

The person who provided the trust property is called the settlor, who may be the trustee, the beneficiary or some third party.

In a trust, the trustee owes a fiduciary duty to the beneficiaries. This duty means that the trustee must not place their personal interest above or in conflict with the interest of the beneficiaries, and not use the trustee position to acquire any other advantage.  A trustee may be a beneficiary, but not the sole beneficiary.

Trusts are often used to overcome the problem of unincorporated groups not being able to own property. In such a case, the trustees hold property for the group, on terms established by the trust deed. Superannuation generally uses the trust form.

Trusts are used in superannuation investment schemes to enable a wide range of investments to be created for beneficiaries. Superannuation schemes sometimes employ professional trustees, which operate under State and Territory legislation.