News 07/08

Super Concepts e-SuperUpdate provides you with technical tips and updates on Self Managed Superannuation Fund topics of interest.

From time to time you may read articles in the media or receive information about changes to the superannuation rules. Invariably the question arises as to whether the trust deed of your self managed fund is flexible enough to cope with some or all of these changes. At Super Concepts we make every effort to ensure that any deed we provide is flexible enough to cope with the myriad of changes to the superannuation law. However, there are often times when the trust deed requires amendment to meet new rules, such as the introduction of new types of pensions which may not have existed the last time the fund's trust deed was reviewed.

Here are some of the questions we are asked at Super Concepts to give you an idea of the flexibility of the current trust deed (SC0708). Previous Super Concepts trust deeds provide a similar level of flexibility to enable you to run your fund successfully. However, if you wish to ensure your deed is absolutely up to date then updating to the current Super Concepts deed may prove worthwhile.

Will the Super Concepts trust deed permit individuals or a company to be a trustee of the fund?

Yes, the Super Concepts trust deed permits the trustee to be either individuals or a company to be a fund trustee (clause 7). Actually, about one third of our clients have a company act as trustee while the remainder are individuals of their self managed superannuation fund.

What happens if there is a conflict between the Super Concepts trust deed and superannuation legislation?

If there is a conflict between the trust deed and the superannuation law then the law prevails (clause 3.3). This occurrence shoud be rare as the provisions of the deed provide enough flexibility to ensure the requirements of the legislation are met at all times.

Is it possible to appoint and remove trustees of the fund?

Yes, the Super Concepts trust deed allows the appointment and removal of the trustee or founder of the fund (clause 8). The appointment of a trustee, as a legal personal representative of a member, may be necessary should a member die or if a child under 18 wishes to become a member. The removal of a trustee may be necessary where they no longer qualify, as in the case of bankruptcy, or in the case of divorce of a fund member or members.

Is it possible to have different classes of members of the fund?

Yes, it is permissable for different classes of members (clause 5.8). For example, there may be pension members and lump sum members in the fund.

What does the trust deed permit the trustee to invest in?

The Super Concepts trust deed permits the trustees of the fund to invest in a wide range of investments including shares, bonds, property, insurance policies and authorised trustee investments (clauses 22 and 23).

If I am in dispute with another trustee, how can the dispute be resolved?

The trustee must establish a complaints procedure if required by the Act. In any case an enquiry or complaint must be handled by the trustee within 90 days of receipt (clause 33).

Does the Super Concepts trust deed permit the establishment of seperate accounts when a member is in pension phase and also contributing to the fund in accumulation phase?

Yes, it is possible for the trustee to maintain an accumulation and pension account for a member at the same time (clauses 35 and 36). There is no restriction on the number of accounts that can be maintained for a member. However, it is usual for a member to have one accumulation account and a pension account for each pension that is being paid to them.

What types of benefits are provided by the deed?

The Super Concepts trust deed is able to provide a wide range of benefits to members and their beneficiaries either directly or indirectly. These benefits can be paid as lump sums or pensions.

Benefits can be paid in the following circumstances:

• Retirement;
• On reaching preservation age (currently age 55);
• Death of a member;
• Permanent Incapacity;
• Temporary Incapacity; and
• Other circumstances as prescribed by the superannuation legislation.

Is it possible to commence a Transition to Retirement pension if I use the Super Concepts trust deed?

Yes, clause 49 permits the payment of Preservation Age Benefits to cover all types of pensions once a member reaches their preservation age. These pensions include Transition to Retirement account based pensions and market linked income streams.

Does the Super Concepts trust deed provide for various types of death benefit nominations?

The Super Concepts trust deed provides for four types of death benefit nominations in clause 51.

The nominations are:

• Binding death benefit nomination which lapses each three years;
• Non-lapsing binding death benefit nomination;
• Non-binding death benefit nominations; and
• A statement of wishes.

Each of these nominations serves a useful purpose depending on the circumstances of the client. It is worthwhile to seek professional advice on which type of nomination is useful for the member.

Is it possible for the fund to borrow for purposes of instalment warrants under the Super Concepts trust deed?

The Super Concepts trust deed has provisions which permit the fund to invest in an instalment. The relevant clause depends on the type of instalment warrant used for purposes of the borrowing. Where the instalment warrant involves a loan which is used to acquire the investment then clause 23.2 permits the trustee to borrow as permitted by the superannuation legislation. If the instalment warrant also includes a derivative such as a call option then clause 23.8 relating to the use of derivatives is also relevant.

Is it possible for me to commence a pension from the fund and at the same time contribute to the fund?

Yes, it is possible for you to draw down a pension from the fund and contribute to the fund at the same time. However, under the superannuation law you are unable to add contributions to your pension at any time. Before you add the contributions or other amounts your pension is required to be converted to accumulation phase and then a new pension commenced with the additional contributions.

Further Questions

We have created a more extensive document on Frequently Asked Questions about Super Concepts Trust Deed and this can be downloaded from the SuperAssist section on our website.

Wanting to update your Super Concepts Trust Deed?

If you wish to update your trust deed, contact us on 1800 625 644 or complete our application form located on our website.