What is a superannuation trust?

Contributed by Paul Bingham and Graham Young and current to 1 September 2005

Virtually all private sector superannuation schemes in Australia are organised through the legal device of a trust. A trust is a form of ownership of property in which one person (the trustee) is the legal owner of the property, but is under a legal obligation to use the property exclusively for the benefit of another person (the beneficiary). In the case of a superannuation trust, the rights and obligations of the trustee and beneficiaries (often called members) are set out in a document called a trust deed.

The trustee of a superannuation fund may be a company or one or more individual people. Some commercial organisations (usually associated with insurance companies) act as trustees for a large number of employers under a single trust deed.

As noted above, some public sector superannuation schemes are not set up as trusts. The rights of members of these schemes depend on the legislation governing them.

The legal principles governing the law of trusts were developed in cases concerning trustees who administered, without payment, sums of money made available to the beneficiaries through gifts and wills. As will be apparent from this chapter, these principles are in general inappropriate to determine the rights of members of modern superannuation schemes, where the benefits are provided in a commercial context, frequently in substitution for wages under awards and contracts of employment.