Sent: 27-05-2010 08:06:03
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Long tail super benefit promises
The last week has seen the issue of truth in politics especially in relation to the difference between the spoken and carefully crafted written word.
This issue and the long-tail nature of some "promises" may create an interesting scenario in relation to superannuation.
The Government has said, via media releases of various Ministers (including the Treasurer) that, "An employee aged 30 today on average weekly earnings, will retire with an additional $108,000 in superannuation."
The Prime Minister was using the same figures during Question Time Monday 24/5/10 and Tuesday 25/5/10 as the Opposition asked about the new resources tax. It's also been used by other Government Ministers during media interviews since the start of May when the policy was announced.
On Tuesday the Prime Minister dropped the 30 years of age requirement.
Have these statements made Australian super funds - the majority of which are accumulation schemes - effectively defined benefit arrangements? That is, a benefit promise as opposed to open to investment risk.
During the SMSF Professionals Association Conference in Melbourne, Peter Bobbin, mentioned that "negligence claims last a lifetime" not the seven year rule that normally applies.
To justify his claim he pointed to a High Court decision involving advice given to a Commonwealth public servant in 1965 about his Commonwealth super because the issue did not manifest itself until 1994. Therefore the normal statute of limitations didn't apply to the old announcement.
Bobbin further refers to a 1997 High Court case which decided that professional's duty of care extends to others. That is, to potential beneficiaries.
Perhaps a wise 30 year old will keep a copy of this material so it can be produced when they retire and their additional Super Guarantee contributions have not delivered an additional $108,000 in retirement savings.
Many years into the future this might be a difficult case to run but it doesn't mean someone will not try.
I seem to recall that during the life of the Howard Government various Ministers responsible for superannuation made similar claims about a new super policy introduced by the Coalition. I wonder if anyone has kept copies of these "promises" so they can be used sometime into the future in a similar way.
Perhaps this goes to prove once again that he who has the best documentation tends to win the argument. Keeping documentation for years is painful - and sometimes costly - but clearly essential.
Finally please consider purchasing a copy of my book. You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
The second edition was released in April.
Two options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
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