What's a 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.

As Trustee, Macquarie Investment Management Limited (MIML) has regulatory obligations to maintain an ‘operational risk financial requirement’ to cover operational risks in relation to the management of the Macquarie Superannuation Plan (MSP). MIML meets these obligations by holding trustee capital which is funded by shareholder capital (from Macquarie Bank Limited) and Macquarie Superannuation Plan retained earnings. See What is the ORFR Fee? for more information.

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. 

The majority of reserve amounts have only recently become available.

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.