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.

The Two Acts of Parliament Overseeing Superannuation in Australia

1.     The Superannuation Industry (Supervision) Act 1993. This is the Act that lays out the rules that all complying funds must adhere to. This is known as ‘compliance.’ The rules laid out under the Act relate to such things as the following:

• Enquiries and complaints.
• Fund accounts and administration.
• Fund management.
• Investments.
• The setting of penalties for trustees who fail to perform according to the rules.
• The regulation and operation of the various superannuation funds.

All superannuation trustees are required to be registered under this Act. To become licenced a trustee must satisfy APRA that they are sufficiently skilled in human, technology and financial  matters, risk management, and have appropriate management skills.

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.