Two important law reforms to make the super system safer are now a step closer.
The reforms, set out today alongside the government’s response to the parliamentary inquiry into financial abuse, will prevent perpetrators of family and domestic violence from receiving their victims’ super death benefits. They will also give the ATO the power to prevent rollovers into newly established SMSFs where there are concerns of fraud, financial abuse, misconduct or potential consumer harm.
Abuse victims’ death benefits
At the moment, a super fund may be legally obligated to pay a member’s death benefit to a person who perpetrated family and domestic violence against that member. The government will release draft legislation to change this later this year.
“Super is money people save for their own retirement and, in the event that they pass away, for the people they love. It should never be paid to the person who abused them,” said ASFA Chief Policy and Advocacy Officer James Koval.
“A perpetrator receiving their victim’s death benefit is a continuation of the abuse, and it comes at the expense of the family the victim leaves behind. Today’s announcement brings us one step closer to closing this insidious loophole.”
“The superannuation sector identified this problem and has long advocated for change, including putting forward practical solutions to the government to get the law to better protect victims and their families,” Mr Koval said.
Rollovers into SMSFs
The second reform recognises that the rollover of super from APRA-regulated super funds into a new SMSF can be a high-risk moment. It is a point at which a perpetrator of financial abuse can gain control of an abuse victim’s savings, or at which scammers and fraudsters try to move money outside the protections of the APRA-regulated system.
“Once money leaves the safety of larger institutional super funds and moves into a self-managed fund, it can be very difficult to recover. That makes the rollover the right point for the regulator to intervene,” Mr Koval said.
“Giving the tax office the power to stop a super withdrawal in its tracks while it investigates suspected financial abuse or crime is a sensible safeguard. It’s an example of progress on the broader consumer protections for SMSFs that Minister Mulino announced in August.”
ASFA will continue working with the government to ensure both reforms are implemented effectively, with meaningful safeguards that prevent the superannuation system from being used as a vehicle for abuse and financial crime.
Members of the media may contact:
Scott Roberts
Media and Content Lead
sroberts@superannuation.asn.au
0451 949 300
About ASFA
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry, and the only industry body that represents all parts of the APRA-regulated system.
Our more than 100 members include retail, industry, corporate and public sector funds and their service providers. For over sixty years, ASFA has been the voice of super, advocating for a dignified retirement for all Australians. Through research, advocacy and collaboration, ASFA promotes efficiency, sustainability and trust in Australia’s world-class retirement income system.