Aaron Dunn, chief executive of Smarter SMSF, said the prospect of financial abuse has been specifically highlighted within the SMSF sector following a parliamentary joint committee report issued late last year.
“Quite clearly, this is an issue that resides in our community, so what the government is wanting to do is to look specifically at where situations have occurred,” he said.
“There were some very interesting examples of circumstances where financial abuse had been overlaid with superannuation, and even more specifically, with SMFSs, where the money had been moved into SMSF land, and then ultimately control had been taken over by the abusing partner, and therefore became very difficult to be able clawback.”
Dunn said 61 recommendations were made in the final report that the committee adopted unanimously.
“From a superannuation and SMSF perspective of note was recommendation nine, which recommends the government undertake a review of the intersection here between financial abuse and the superannuation system and specifically SMFSs, because we have these grievances within the SMSF sector.”
“We know that in certain circumstances, we’re not going to see the ability for an individual to have coverage under AFCA, and therefore that can pose its own problem. The other area that was highlighted was ensuring that there are enhanced protections for victims where there are superannuation and insurance claims as well.”
Tim Miller, technical and education manager for Smarter SMSF, said one of the practical considerations was under the existing conditions of release.
“I’ve certainly seen it where under the existing conditions of release, for example, where I’ve had clients looking to access money under financial hardship or compassionate grounds, but due to financial abuse, getting access to superannuation monies that way, even the ability to roll money out of a self managed superannuation fund, was difficult because of the way that parties were acting,” Miller said.
“It’s a key issue and has been for a long time. We saw previous governments discuss the concept of domestic abuse and conditions of release around superannuation, so there’s a far broader topic here.”
A key point raised in the submissions for the report, Miller said, was the idea of whether, where there is financial abuse, there could be changes to the definition of dependency, from the death benefits point of view, to ensure partners were unable to access monies via this process.
“There are so many changes that would be needed if we’re going down that path, and it’s certainly very early stages, but I see this as a big ticket item for a long time.”
“I also see it as a key policy moving forward for whoever is in government. When you see so many recommendations being unanimously adopted, it tends to suggest that there’ll be some momentum on this as we move through the year, regardless of what side wins government.”
