Financial abuse concerns flagged with access to super proposal
If the government proceeds in opening up access to superannuation benefits to assist victims of domestic violence, it is critical the laws are carefully drafted to prevent any instances of financial abuse occurring against victims, warns a community legal centre.
In a submission to the government’s consultation on the early release of superannuation benefits, the Financial Rights Legal Centre said victims of domestic violence should be able to access their superannuation benefits early under an additional compassionate ground for early release of superannuation.
“However, it is critical that this ground be carefully drafted so as to not create further opportunities for financial abuse, or lead to unnecessary long-term financial detriment to the individual,” said the submission.
“To avoid creating opportunities for further financial abuse, safeguards would be necessary to ensure that funds released are utilised for the benefit of the individual and do not become accessible to the perpetrator. For example, paying the release directly to the Rental Bond Board or equivalent service to assist with relocation.”
The submission said it is well established that victims of domestic violence are often subject to ongoing financial hardship as a result of the abuse they have suffered and these victims should be assisted to gain financial independence.
“However, we do not believe that victims should unnecessarily erode their own superannuation to achieve this. Financial Rights is concerned that allowing victims to access their own superannuation may push the onus back on to victims to remedy the damage caused by the perpetrator,” it warned.
“Furthermore, accessing superannuation early could have a lasting effect on victims by causing significant financial hardship in retirement. For example, in situations where an individual’s accumulated funds in superannuation are already lower than average due to economic abuse and isolation.”
Accessing superannuation on this ground should therefore be a last resort for victims, it said.
“If victims are being forced to rely on superannuation, a review of the services available to them may be of more value in the long term,” the submission stressed.
“It is therefore imperative that individuals who are considering making an application to access their own superannuation under this additional compassionate ground have access to appropriate support and advocacy services such as community based financial counselling and legal advice on their consumer rights. This would establish whether there are alternatives to releasing superannuation unnecessarily.”
In assessing applications for release under this ground, the ATO should be sufficiently familiar with the other services and options available to victims and make appropriate referrals to ensure that this ground is only utilised as a last resort, it said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.