Govt Actuary forced back to the drawing board

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The super industry strongly opposes plans to limit the payout from their funds.

Wednesday, May 10th 2000, 12:00AM

by Philip Macalister

The superannuation industry has told the Government Actuary in clear terms that it doesn't like his proposals for limiting pay outs from funds.

In March the actuary released a discussion paper which outlined his interpretation of a key phrase of the superannuation legislation which relates to the purposes of these types of funds.

Under the act a fund can only qualify as a super scheme if its purpose is "principally for the purpose of providing retirement benefits."

Government Actuary Geoff Rashbrooke says that some funds are now pushing "the edge of the envelope" and he has been forced to take firmer action.

Under his proposal a super scheme would only met the terms of the act its non-retirement benefits formed only a relatively small proportion of the benefit payment from a scheme.

Schemes that paid out non-retirement benefits of more than about 10 per cent would face deregistration, he proposed.

The industry has strongly opposed the ideas outlined in the discussion paper.

Investment Savings and Insurance Association chief executive Vance Arkinstall says the proposals were counterproductive and contrary to the way super law has developed over the years.

"We are totally against the proposal he was making."

Arkinstall says if the actuary wanted to enforce the proposal he would have to get the Parliament to change the law.

The response from the industry raises the question: what use is the superannuation fund legal structure?

The principally for retirement part of the super law is one of the key differences between super funds and other legal structures.

If it is relatively meaningless and members' savings aren't locked in until retirement, there appears to be little point in having it.

Rashbrooke plans to issue a formal response to submissions, and some thoughts on this question next week.

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