Superannuation
funds have structural similarities to unit trusts - both are governed
by a trust deed - and also share similar goals and objectives,
providing a variety of fund and investment options.
However, superannuation funds operate under the Superannuation
Schemes Act 1989. While a trustee is required, the trustee need
not be one of the five statutory trustees. The trustee is, however,
required to be approved by the Government actuary.
Superannuation funds are either locked or unlocked. If the fund
is locked you will be unable to withdraw your money until you
reach a certain specified age. A few exceptions to this rule exist,
as in the case of moving overseas and transferring the fund to
another registered scheme. Some funds will, however, allow you
to redeem a limited amount of funds each year. This practice is
known as "restricted access benefits", allowing redemption
of up to 20% of your fund.
Locked funds may be useful for investors who are likely to be
tempted to "dip" into their life savings, but these
funds are by their nature highly inflexible.
Superannuation funds do not provide income distributions to investors.
The fund is for long-term capital maintenance or growth.
Superannuation funds have become very popular
in recent years. Despite their popularity, the Shape of Money
recommends that you consider all available investment options,
both managed and direct, and take appropriate advice, before committing
to a long-term investment vehicle.
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