Publication:Sea Talk Winter 2004/A little bit of relief
Changes to the RAN Relief Trust Fund
The RAN Relief Trust Fund was established in 1913 and has since undergone many changes in name, structure and policy.However, the main object of providing welfare assistance to members and their families remains the same 90 years later.
The fund has $3.2 million in assets, of which $2.9 million is on loan to members at present.
Today, the RANRTF provides assistance in the form of Home Management Services Grants of up to $500, Family Support Services Loans of up to $2000, Furniture and Housing Loans of up to $2500 and Special Loans of up to $2500 for medical and dental, legal, funeral, and education expenses.
As a non-public Fund, the RANRTF does not receive funding from the Defence Budget.
The only sources of income for the fund are donations from the RAN Central Canteens Fund and interest accrued from investments.
Its operating costs, currently $65,000 a year which comprises employee expenses, bank fees, administrative fees, insurance cover, taxation and audit fees for example, are deducted from the fund.
Without charging for access to these loans, the RANRTF funds have been reduced by up to $975,000 over the last 15 years. This needs to be stopped to ensure sustainable funding levels.
The trustees of the RANRTF are entrusted with the responsibility of ensuring both the financial management and its ongoing viability.
After long and careful deliberation, the trustees concluded that to ensure the long-term tenure of the Fund it was necessary to introduce a moderate loan administration fee to cover operating costs.
The introduction of an administration fee is not a new idea.
The RAAFWTF has been charging a fund management contribution of between 2.8 per cent and 3.5 per cent for many years. This has put the RAAF on a better standing to be able to provide greater value loans and a wider variety of products.
From February, a loan administration fee of $25 was introduced. Home management services grants do not attract the fee.The $25 loan administration fee contributes to reducing the impact that the operating cost has on the amount of money available for loan.
By not recovering the operating costs, the RANRTF assets would decrease by $650,000 over 10 years resulting in the fund being unable to financially assist about 260 members.
RANRTF Loans remain interest free and the loan administration fee is considered extremely moderate at $25.
To illustrate this, the RANRTF loan has been compared to borrowing $2500 from four major banks, the Australian Defence Credit Union and DEFCREDIT.
| Lender | Loan Amount | Interest Rate PA | Admin Fee | Estimated cost over 12mths |
| RANRTF | $2500 | 0% | $ 25 | $ 25.00 |
| ADCU | $2500 | 4.41% | $ 35 | $395.25 |
| DEFCREDIT | $2500 | 12.9% | $ 0 | $322.50 |
| WESTPAC | $2500 | 14.35% | $175 | $533.75 |
| NAB | $2500 | 12.8% | $100 | $420.00 |
| CBA | $2500 | 11.95% | $120 | $418.75 |
| ANZ | $2500 | 12.17% | $125 | $429.25 |
As can seen be in the table at the bottom of the page, our members enjoy subsidies of up to $500 when receiving financial assistance from the RANRTF rather than an alternative financial institution.
The general use of the RANRTF loans has changed somewhat since its inception from providing welfare assistance to assisting members to purchase furniture items.
In the 2002/2003 financial year, 2444 loans were provided. Of these, 2135 were for furniture, 289 for housing purchase and renovation, four for medical or dental expenses, four for funeral expenses, three for legal expenses and nine for other expenses.
This equates to 87 per cent of loans being provided to assist with the purchase of furniture and 12 per cent for housing.
This leaves just 1 per cent of loans being provided for special purposes such as medical and dental, funeral, legal and other expenses.
The RAN Relief Trust Fund provides and subsidises 2500 personnel, one-quarter of the trained workforce, per annum. $25 is not too much to ask to ensure that others may also benefit from the loans in future years.
Further information can be obtained from your RANRTF Officer or the RANRTF Central Office via email ranrtf@defence.gov.au
