investment fluctuation reserves

reserves built up within many accumulation-style superannuation funds, for the purpose of smoothing the year-to-year returns credited to member accounts. Investment reserves are established by not distributing some of the investment income when fund earnings are high. They are then used to top up the rates credited to member accounts when earnings are low. In this way, the rate credited to members on a year-to-year basis is not absolutely dependent on the market cycle. The Superannuation Industry (Supervision) legislation permits such reserves to be maintained, provided trustees establish and follow a strategy for their prudential management.

See also credited interest rate , free reserves , reserve , smoothing