Document ID: chunk:federal_register_of_legislation:C2025C00134:section:52:p3
Version: federal_register_of_legislation:C2025C00134
Segment Type: section
Provision Reference: s 52 (pt 3/6)
Character Range: 366265–369055

investments covered by the strategy, having regard to the expected cash flow requirements in relation to the entity; and
 (iv) whether reliable valuation information is available in relation to the investments covered by the strategy; and
 (v) the ability of the entity to discharge its existing and prospective liabilities; and
 (vi) the expected tax consequences for the entity in relation to the investments covered by the strategy; and
 (vii) the costs that might be incurred by the entity in relation to the investments covered by the strategy; and
 (viii) any other relevant matters;
 (b) to exercise due diligence in developing, offering and reviewing regularly each investment option;
 (c) to ensure the investment options offered to each beneficiary allow adequate diversification.

Insurance covenants
 (7) The covenants referred to in subsection (1) include the following covenants by each trustee of the entity:
 (a) to formulate, review regularly and give effect to an insurance strategy for the benefit of beneficiaries of the entity that includes provisions addressing each of the following matters:
 (i) the kinds of insurance that are to be offered to, or acquired for the benefit of, beneficiaries;
 (ii) the level, or levels, of insurance cover to be offered to, or acquired for the benefit of, beneficiaries;
 (iii) the basis for the decision to offer or acquire insurance of those kinds, with cover at that level or levels, having regard to the demographic composition of the beneficiaries of the entity;
 (iv) the method by which the insurer is, or the insurers are, to be determined;
 (b) to consider the cost to all beneficiaries of offering or acquiring insurance of a particular kind, or at a particular level;
 (c) to only offer or acquire insurance of a particular kind, or at a particular level, if the cost of the insurance does not inappropriately erode the retirement income of beneficiaries;
 (d) to do everything that is reasonable to pursue an insurance claim for the benefit of a beneficiary, if the claim has a reasonable prospect of success.

Covenants relating to risk
 (8) The covenants referred to in subsection (1) include the following covenants by each trustee of the entity:
 (a) to formulate, review regularly and give effect to a risk management strategy that relates to:
 (i) the activities, or proposed activities, of the trustee, to the extent that they are relevant to the exercise of the trustee's powers, or the performance of the trustee's duties and functions, as trustee of the entity; and
 (ii) the risks that arise in operating the entity;
 (b) to maintain and manage in accordance with the prudential standards financial resources (whether capital of the trustee, a reserve of the entity or both) to cover the operational risk that