ARTICLE · 03 OCTOBER 2006

Can You Charge Negative Interest On Super Fund Benefits?

Clayton Utz

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A recent decision warns that a trustee of a superannuation trust is not entitled to reduce the retirement benefits it is due to pay by deducting interest.

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By Zein El Hassan and Jennifer Teh

Key Point

A recent decision warns that a trustee of a superannuation trust is not entitled to reduce the retirement benefits it is due to pay by deducting interest.

The decision of Justice Young of the Federal Court in Vision Super Pty Ltd v Poulter [2006] FCA 849, handed down in July 2006, has important implications for all trustees, not just trustees of super funds. Where trustees intend the word "interest" to capture an investment return that can be positive or negative, clear words should be used in any documents governing the entitlements of fund members. Otherwise, the trustee may be guaranteeing a positive return and, if so, this should be factored into the investment strategy for the fund.

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