Investment Restrictions

Some common examples of investments a superannuation fund can make include:

  • All types of bank accounts
  • Debentures, Mortgages and other fixed interest securities
  • Shares in public companies
  • Property, both residential & commercial
  • Term Deposits with banks, building societies and credit unions
  • Cash Management Trusts
  • Unit Trusts, including Managed Funds, Property Trusts and Mortgage Trusts
  • Pooled Superannuation Trusts
  • Life Office products such as superannuation bonds

There are a number of investments that a superannuation fund cannot make. The list includes:

  1. A superannuation fund cannot buy assets from members, their relatives or related parties, unless the assets in question are listed securities (such as shares listed on the stock exchange), business property or units in widely held unit trusts (such as Perpetual Industrial Share Fund). Note that barter credits are an asset, so they cannot be transferred from a member, relative or related party into the super fund.
  2. A superannuation fund cannot operate any kind of business. It must be in the "business" of investing money.
  3. A superannuation fund cannot buy equipment or vehicles to lease them out, if the lease is to any member, relative or related party unless the value of the equipment or vehicles is less than 5% of fund assets.
  4. Loans to members or relatives, even if secured by mortgage, are prohibited. Loans to, or investments in, related companies or trusts are heavily restricted (to less than 5% of fund assets). This includes unit trusts where the fund or related parties control over 50% of the units.
  5. Residential property cannot be rented to a member, relative or related party.
  6. Superannuation funds can borrow money but only under strict conditions. For example, an overdrawn bank account is not acceptable.
  7. Investments such as gold bullion, gems, antiques, etc. are very speculative (high risk), do not usually produce income and are only purchased to be sold at a profit. These should be avoided.
  8. Timeshare units are not an investment under the Trust Act. They are not suitable for a superannuation fund.

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