Investment Trusts Notes

INVESTMENT TRUSTS TRUSTS | PAGE 53 INVESTMENT TRUSTS Superannuation * Superannuation is a way of saving money for retirement * Superannuation is compulsory * Superannuation funds are managed by trustees and they must ensure the money is invested with care * Trustees must act honestly and prudently, and make decisions in the best interests of all members * Three government agencies regulate and enforce legal standards: o ASIC (Australian Securities and Investments Commission) SS? Regulates what information funds give members and how they abide by company law * Corporations Act 2001 o APRA (Australian Prudential Regulation Authority) SS? Regulates how funds operate (not self--managed funds) SS? Superannuation Supervision Act 1993 o ATO (Australian Taxation Office) SS? Regulates self--managed funds, employer contributions, co-- contributions and superannuation tax rules Significance of Superannuation * Why super is important? o How serious is population ageing? SS? #of retires living longer SS? # of workers supporting future retirees SS? Labour force SS? Pressure on government * Superannuation is desirable: o Save money o Save on taxation of savings o Makes Australian shares a great investment * But there are alternatives to super: o Immigration SS? More people pay tax o Increased labour productivity SS? Rich economy to pay retirementincomes o Taxation incentives TRUSTS | PAGE 54

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