'Best' interests

Abstract

Trustees ordinarily have a duty to act in the ‘best interests’ of the beneficiaries. This general law duty is reinforced in the superannuation context by s 52(2)(c) of the SIS Act. This article builds on a widely held view

that ambiguities in the provenance of the duty make its precise content unclear. This has an important impact on s 52(2)(c) where it is stripped of the supporting balustrades that enable it stand within the general law. The article proposes that the general law duty should be interpreted broadly; as connoting a compendium of familiar trust law obligations, including those of loyalty, fidelity and impartiality. The article also proposes that, in the statutory context at least, the inclusion of the superlative ‘best’ cannot be ignored; it implies a process of ‘optimisation’ that intensifies the trustee duties traditionally owed at general law. The effect of this approach is illustrated by reference to three issues currently facing trustees of Australian superannuation funds: their obligations when offering investment choices to members, their obligations with respect to the investment strategy of their default option and whether they can incorporate ‘sustainable’ investment approaches into the investment strategies of their funds.

Keywords: best interests, pension fund, superannuation fund, fiduciary, sustainability