Unallocated contributions account - establishment

The primary purpose of this resolution is to authorise the establishment of an unallocated contributions account so that contributions can be received by the Trustee and credited to a general account of the superannuation fund pending their allocation to the relevant members.

The resolution also specifies the proper management strategy which will apply to the unallocated contributions account (“the Unallocated Contributions Account”).

Additionally, the resolution also specifies the investment strategy which will apply to the Unallocated Contributions Account.

Background

1. While for superannuation purposes, an unallocated contributions account is not a reserve (as the account is not concerned with contingent future expenses) but is an accounting construct used to record contributions pending allocation to the member, it still must be properly managed. This requires that the purpose of the account be clearly specified and that the account only be used for its specified purpose. There is no need for a discrete investment strategy of the account as the contributions pending allocation will form part of the cash balance of the fund.

2. Proper management of the account may require the trustee:

(a) to clearly specify the purpose of the account;

(b) to determine whether the account will be subject to its own investment strategy (which is highly unlikely) or whether the general investment strategy of the fund will apply;

(c) to identify the sources from which the account will be financed;

(d) the timeframe over which the account will be built up;

(e) to clearly specify the circumstances in which the trustee may transfer contributions from the account and the time by which the contributions must be transferred from the account; and

(f) such other matters as the trustee considers relevant.

3. Given the short time period in which contributions will be held in the account, the investment strategy for the account will be investment as cash deposits to an immediate call account (eg bank, building society, credit unit or a cash management account) within the general investment strategy of the fund.

For further information or advice please call the SUPERCentral Help Desk on 02 8296 6266, we would be pleased to assist.