Understanding the superannuation fund reserve

A reserve is an account within a superannuation fund which is set aside for a variety of purposes as permitted by the Fund’s trust deed. Amounts held in reserve don‘t belong to any single member of the fund.

The amounts in the Fund’s reserves are the result of excess tax amounts which have built up in the Fund over time. These are generally for tax amounts received at the Fund level which are not directly attributable to an individual member.

They typically relate to:

• forfeited tax benefits received after members have left the Fund
• delayed tax deductions received from the ATO in relation to the Fund accounts.

Some of these amounts will continue to be accrued and will continue to fund the reserves over time.

Determining member specific allocation of these benefits would give rise to challenges in equitable distribution including:

• the treatment of already exited members
• existing members and new members, and
• the equivalency of a fund-level benefit being applied to individual members.

The approach to offset the ORFR fee and recover regulatory and Fund operating expenses allows for an equitable way for the Trustee to use these reserve amounts for the benefit of members over time.