The difficulty of attracting suitably qualified and experienced directors who are prepared to work for no remuneration has forced the Retail Employees Superannuation Trust (REST) to obtain Court approval to amend the REST trust deed to permit the trustee to be paid remuneration out of the trust fund.
REST was established in 1987 and now has over 1.9 million members and $29 billion in funds invested. At the same time, the obligations of the trustee have increased very significantly since the Trust was established in 1987, and this has imposed significant additional obligations on the directors of the trustee.
Neither the trustee nor any of its directors were paid any remuneration in relation to the administration of the trust, despite the significant time and effort expended in overseeing the control and management of the trust.
While the trust deed did contain a limited provision that the trustee may use trust funds to meet its expenses in performing its duties, there was no general provision entitling the trustee to be paid remuneration out of the trust fund. One of the sponsoring organisations also objected to such payments being paid.
In brief, the court accepted the trustee’s proposal for an amendment to the trust deed that would provide for the payment of a fee to the trustee and the payment by the trustee of some or all of that fee towards the remuneration of directors.
The judge referred to an earlier decision in Cuesuper Pty Ltd  NSWSC 981 (18 September 2009). In that case, the trust deed expressly prohibited remunerating the trustee, prompting the trustee to apply to the court for an amendment to the trust deed to provide for its remuneration. The court determined that the trustee directors of the fund should be remunerated, notwithstanding the possibility for conflict between their interest to be paid for their services and their duty to administer the fund with as little expense as possible, commenting that the case illustrates the adage “penny wise and pound foolish” – that is, the failure to pay relatively small remuneration in order to retain a professional and committed Board may result in less skilled administration of Cuesuper and a poorer return to its members.
These cases illustrate the difficulty large superannuation funds have to attract and retain trustees with the skills and experience required without adequate compensation. The cases also recognised conflicts of interest in trustees having the power to set their remuneration. Hence external advice regarding appropriate remuneration levels would also go some way to minimising any perceived conflict of interest, as well as demonstrate good governance.Back to all articles