Your investments - frozen funds and hardship payments
What are frozen funds?
Frozen funds are registered managed investment schemes that have suspended investors’ rights to redeem their investments (get their money back).
It is important to understand that when you invest money in a managed investment scheme, your money becomes part of a shared investment portfolio along with all other investors’ money.
Why are funds frozen?
Responsible entities (scheme operators) are required by law to freeze payments if the scheme has less than 80% of its assets in cash or in a form readily convertible to cash.
A freeze on payments can prevent assets from being sold off too cheaply in order to meet requests for repayments, thus helping to ensure that all scheme members are treated fairly and that their capital is protected.
What you should do
If your scheme is frozen you might still be able to get your money back in the future.
In some cases, schemes can make withdrawal offers to investors over time, giving investors the opportunity to redeem their investments from the scheme.
If you are in financial trouble, you may be able to access some of your invested money on the grounds of hardship.
To find out about hardship payments
Contact the scheme operator of your managed investment scheme for details of the freeze and to ask about hardship payments.
The scheme operator must apply to ASIC for permission to be able to make hardship payments from the assets of the scheme.
If ASIC has given permission, the scheme operator will then determine who meets the hardship criteria.
To find out about members’ rights
Members of registered managed investment schemes have certain options if they believe that their scheme is no longer performing as intended or if the management of the scheme is not meeting their expectations, including asking for a members’ meeting and applying for court orders. See Information for investors in frozen funds (INFO 111 - PDF 882KB).
ASIC and frozen funds
ASIC does not determine who meets the hardship criteria nor issue hardship payments from frozen funds. However, ASIC does:
- assess applications by scheme operators and decide whether to give permission for them to make hardship payments generally from the assets of a scheme
- monitor the actions of scheme operators to promote compliance with the law and their duties to members
- collect data and provide information to government, investors, the media and other interested parties about frozen funds, and
- assess and if appropriate investigate concerns and allegations of unlawful activity against scheme operators.
We do not give legal advice.
Where can I get more information?
- More information about ASIC's role and the laws we manage.
- Information for investors in frozen funds (INFO 111 - PDF 882KB).
- Estimated frozen funds under management (INFO 142).
- MoneySmart's Retirement income planning.
This is Information Sheet 159 (INFO 159), issued in October 2012. Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.