Investor InsightsSuper Stategies > Knowing who’s who in the super and investment world

Knowing who’s who in the super and investment world

March 2020

The superannuation and investment sector includes a number of organisations and entities, each with an important role to play

The superannuation and investment landscape is complex, and understanding the roles and responsibilities of the entities and organisations which govern and manage the sector can be challenging (not to mention confusing). However, having an understanding of the various moving parts can go a long way towards taking control of your finances and securing the financial future you want.

The federal government

In 1992, the federal government introduced a compulsory employer contribution scheme, known as the Superannuation Guarantee, which was intended to ensure a more secure retirement for Australians.

Since the introduction of Superannuation Guarantee, the federal government continues to make changes to superannuation legislation to make it more equitable and create incentives for Australians to save for their retirement. As part of its role, it determines (as a matter of law):

  • The minimum amount your employer must contribute to super on your behalf. Currently, the rate is 9.5 per cent of base salary or wages, gradually increasing to 12% by 1 July 2025.
  • Your preservation age – the minimum age at which you’re able to access your super if you’re permanently retired. This is between 55 and 60, depending on your date of birth.
  • Contributions caps – there are limits on how much we can put into superannuation each financial year. Currently, these caps are $25,000 for concessional contributions and $100,000 for non-concessional contributions.
  • The rates at which earnings on your super and any withdrawals that you make are taxed. The tax rate on withdrawals varies, depending on your age and the amount withdrawn.
  • Much of the language used to describe and explain superannuation (as well as other investment vehicles) in documentation such as product disclosure statements and annual statements

Super funds

A super fund is a type of trust set up and managed by trustees to hold assets, being superannuation retirement savings for beneficiaries which are superannuation fund members. Money is deposited into a superannuation fund to provide for an individual’s retirement.

Super funds fall into five categories.

  • Retail funds are generally run by financial institutions and are open to everyone.
  • Industry funds are often overseen by trade unions. They were originally set up to cater for workers from a specific industry or sector but, today, many are open to the public.
  • Public sector funds are set up by governments, for government employees and former employees.
  • Corporate super funds are set up by companies for their employees.
  • Self-managed super funds (SMSFs) are private super funds set up by individuals for up to four members.

It’s possible to be a member of more than one super fund. Around six million Australians hold two or more super accounts, according to the ATO’s 2018 data.

Trustees

The individuals or a company known as a corporate trustee, responsible for running a super fund are known as trustees. Their role is that of a general manager and the onus is on them to ensure a fund is operating properly and well, for the benefit of its members. Trustees’ responsibilities include choosing investment managers to look after their fund’s investments, overseeing the administration of the fund, and ensuring the fund complies with its governing rules, the trust deed and all relevant legislation.

Some super funds use a corporate trustee to perform the trustee function. In order to do so, except in the case of an SMSF, corporate trustee companies must be approved by the Australian Prudential Regulation Authority (APRA).

Administrators

A fund administrator is a third party service provider to which the trustees outsource its administration function to take care of the day-to-day running of a super fund. The duties of a fund administrator typically include running the fund’s call centre, preparing government reports, annual reports, and member statements as well as payment of benefits and setting up new members.

Investment managers

Investment managers are specialist companies chosen by trustees to make investment decisions on behalf of a fund. They are responsible for investing the super fund’s assets in line with the investment management agreement or strategy in the asset classes they specialise in. Trustees commonly appoint multiple investment managers; each specialising in a different asset class.

Custodians

Custodians are specialist companies appointed by super fund trustees to hold and safeguard a fund’s assets from loss. The duties of a custodian can include: opening accounts; securities registration; the collection of investment income, including dividends, rent and interest; the clearing of derivatives; and the settlement of transactions.

Regulators

There are three main federal government agencies responsible for regulating Australia’s superannuation industry and ensuring it operates fairly, transparently and efficiently.

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) are responsible for the licensing and regulatory oversight of the financial services sector, and for the conduct of financial institutions, insurers, super funds and the professional organisations which service them.

The Australian Tax Office regulates SMSFs, administers the Superannuation Guarantee and recovers unpaid compulsory superannuation contributions, on behalf of workers.

Product providers

Institutions which offer investment vehicles or products, including superannuation, are known as product providers. The products on offer allow you to invest in funds which select from a combination of asset classes such as property, shares, bonds and cash. Some asset classes have a higher level of risk associated with them but, in turn, may potentially offer a higher level of return.

Superannuation is a form of investment, however it differs from other investment products in several ways. It’s concessionally taxed, there are limits on the amount you are able to contribute each year and, except in very limited circumstances, you are unable to access your funds until you satisfy the retirement conditions or reach age 65.

As a product provider, OnePath offers members access to superannuation and investment products through the OneAnswer platform.

OnePath staff are not authorised to provide advice on your individual circumstances or investments. This means they are unable to advise you about the risks associated with different asset classes, or on how your super and investments should be invested.

Financial advisers/planners

A financial adviser can help you to understand your financial position, identify your goals and implement strategies to strengthen your position, by selecting your investments, including super.

Financial advisers can assist you to develop an investment plan that’s tailored to your circumstances; one which will help you make the most of your savings, investments and super. Your adviser can work with you to ensure the funds in your investments and super are appropriately invested, for someone in your circumstances.

Your financial adviser can also help you to determine your life insurance requirements, find out whether you’re eligible for Centrelink income support payments or other  government benefits and assist you with your estate planning needs.

Financial advisers can act (with your permission) on your behalf by executing your investment strategy with product providers (such as OnePath). Importantly, financial advisers have a responsibility to act in their clients’ best interests, and must choose investment products based on suitability for their individual needs.

To be legally able to provide you with financial advice, your adviser must be licensed by the Australian Securities and Investments Commission (ASIC) or be an authorised representative of an organisation which is licensed by ASIC.

The power of professional advice

Managing your retirement savings and other investments can be challenging and it can be helpful to discuss the issues you face, and the options available to you, with a professional. If you have any questions about your super, or your circumstances have changed, contact your financial adviser.


This article is issued by OnePath Custodians Pty Limited (OnePath Custodians) ABN 12 008 508 496, RSE L0000673, AFSL 238346 and OnePath Funds Management Limited (OnePath Funds Management) ABN 21 003 002 800, AFSL 238342

You should read the relevant Financial Services Guide (FSG), PDS, Additional Information Guide (AIG), Investment Funds Guide (IFG), and product and other updates (for open and closed products) available at onepath.com.au and consider whether OnePath products are right for you before making a decision to acquire, or to continue to hold any OnePath product. Alternatively you can request a copy of this information free of charge by calling Customer Services on 133 665.

Taxation law is complex and this information has been prepared as a guide only and does not represent taxation advice. Please see your tax adviser for independent taxation advice.

Before re-directing your super or moving your money into your product, you will need to consider whether there are any adverse consequences for you, including loss of benefits (e.g. insurance cover), investment options and performance, functionality, increase in investment risks and where your future employer contributions will be paid. Any investment is subject to investment risk, including possible repayment delays and loss of income and principal invested. Returns can go up and down. Past performance is not indicative of future performance.

The information provided is of a general nature and does not take into account your personal needs, financial circumstances or objectives. Before acting on this information, you should consider the appropriateness of the information, having regard to your needs, financial circumstances or objectives. The case studies used in the articles on this website are hypothetical and are not meant to illustrate the circumstances of any particular individual. Opinions expressed in this document are those of the authors only.