trust deed amendment

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On 7 December 2021, the HESTA Trustee (the legal entity responsible for the management of HESTA) received approval from the Supreme Court of Victoria to amend the HESTA Trust Deed. The amendments to the Trust Deed will allow the HESTA Trustee to receive a limited trustee fee from the Fund.

 

Nature and effect of the Trust Deed of amendment

Ongoing changes to the superannuation environment have increased the operating and regulatory complexity arising for super fund trustees and expanded the range and circumstances in which penalties or fines may be imposed on trustees of superannuation funds. One particular change has the effect that these penalties will also be unable to be covered for out of the assets of the Fund.

These combined changes have materially increased the financial risk profile of the HESTA Trustee company. Due to the profit-for-member status of the fund, the HESTA Trustee company currently does not have capital to cover this potential risk.

In these circumstances, it was necessary, and in the best financial interests of all Fund members, for the HESTA Trustee to amend the Trust Deed. This will authorise the HESTA Trustee to charge an appropriately limited Trustee Fee, so that it has its own money to adequately manage those financial risks.

The Trustee Fee will be separate from the Fund assets and will be held in a separate reserve by the HESTA Trustee, to be known as the Trustee Capital Reserve.

The Trustee Fee was structured so that any such fee charged meets certain conditions, while also ensuring that the HESTA Trustee can build the Trustee Capital Reserve to remain financially resilient to continue acting as trustee of the Fund:
 

  • Cap on Trustee Fee: The maximum amount of the Trustee Fee, which may be taken in each successive three-year period, cannot exceed 0.125% of the net assets of the Fund; and
     
  • Cap on Trustee Capital Reserve: A Trustee Fee cannot be charged if the size of the Trustee Capital Reserve has reached the cap of 0.125% of the net assets of the Fund.  

 

The HESTA Trustee does not currently intend to charge a separate or additional Trustee Fee to members as the cost of any Trustee Fee charged is expected to be included in the total administration fees and costs charged.

The Trust Deed was also amended to require the HESTA Trustee to disclose annually:

  • the amount(s) of the Trustee Fee, if any, paid in the previous financial year;
  • the balance of the Trustee Capital Reserve as at the end of that financial year;
  • any net earnings on the Trustee Capital Reserve as at the end of that financial year; and
  • any payments out of the Trustee Capital Reserve in the previous financial year.


You can find out more about the changes to the Trust Deed and the Trustee Fee in the Trust Deed (pdf).

 

 

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