Is REST an Industry Super Fund?
Get a clear answer on REST's super fund status. Learn what defines an industry super fund and how REST fits into this unique model for members.
Superannuation in Australia represents a comprehensive system for retirement savings, designed to provide individuals with financial support once they cease working. Employers are generally required to contribute a percentage of an employee’s salary into a superannuation account, which serves as a long-term investment. This mandatory contribution mechanism aims to ensure that most Australians accumulate funds throughout their working lives, lessening reliance on public pensions in retirement. The accumulated savings are invested by chosen superannuation funds, with the goal of growing the balance over time.
Defining Industry Super Funds
Industry super funds are distinct entities within Australia’s superannuation landscape, characterized primarily by their not-for-profit structure. These funds are owned by their members, meaning any profits generated are reinvested back into the fund for the benefit of members rather than being distributed to external shareholders. This fundamental difference sets them apart from retail super funds, which are typically operated by financial institutions with a responsibility to generate returns for their shareholders.
Historically, industry super funds emerged from collaborations between trade unions and employer associations, initially catering to specific industries. While many retain ties to their origins, most industry funds are now open to the general public, regardless of their industry or union affiliation. Their governance often includes a board with equal representation from both employer and employee groups, fostering a member-centric approach.
REST’s Super Fund Status
REST, formally known as the Retail Employees Superannuation Trust, is indeed classified as an Australian industry superannuation fund. Established in 1988, REST originated to serve workers in the retail and fast food sectors, aligning with the historical development of industry funds. It operates on a not-for-profit basis, ensuring its primary objective is to benefit its members.
The fund’s structure reflects the core characteristics of an industry super fund, with its board of directors comprising representatives nominated by both employee and employer associations. This governance model underscores its member-owned philosophy and commitment to the financial well-being of its approximately 2 million members.
Operating Model of Industry Super Funds
Industry super funds typically employ a long-term investment philosophy, aiming to achieve sustainable growth for members’ retirement savings. Their investment strategies often consider a broad range of assets, including listed shares, property, and infrastructure. Many also incorporate responsible investment considerations into their portfolios, reflecting a broader commitment beyond just financial returns.
A notable aspect of industry super funds is their approach to fees. Due to their not-for-profit nature, they generally strive to maintain lower fees compared to other fund types. Fees typically include an administration fee for account management and an investment fee covering the costs of managing the fund’s assets. While fees can vary, the emphasis remains on providing a competitive net benefit to members, which is the investment performance after all fees and taxes are deducted.
These funds also prioritize member services and education, offering resources to help individuals understand their superannuation and make informed decisions. This can include access to financial advice on topics such as insurance coverage, investment options, and contribution strategies. Many funds offer basic insurance coverage, such as life insurance and total and permanent disability cover, automatically to members.