Loophole Enables Financial Abuse Via Super
In an effort to protect victims of domestic and family violence, the Super Members Council (SMC) has endorsed a proposal to amend Australian superannuation laws. This move aims to close a loophole that allows family violence perpetrators to financially benefit from their victim's superannuation.
Under current laws, abusers can claim their victim's superannuation unless their actions directly result in the victim’s death. Introducing a 'forfeiture-like' rule could provide legal certainty for super trustees to block such claims, ensuring that perpetrators cannot benefit financially from their actions.
SMC's recent submission to the Treasury emphasises empowering super trustees with the authority to consider domestic violence when distributing death benefits. This provision would apply even if the abuse did not directly cause the member's death, better aligning with community expectations and acknowledging the experiences of victim-survivors.
Avoiding lengthy and costly court processes, the Council advises against a reform option that would involve the courts. Instead, they advocate for clear legislative guidance to enable trustees to make fair and trauma-informed decisions.
Council's Call for Comprehensive Reforms
Reforms should also extend to self-managed super funds, according to the Council, ensuring that trustees can apply the new laws to various super arrangements such as reversionary pensions and defined benefit schemes. Addressing all types of super arrangements is crucial to avoid undermining the intended reforms.
Misha Schubert, CEO of SMC, highlighted the importance of these reforms, stating, "It is fundamentally wrong that a perpetrator of domestic or family violence can still inherit their victim’s super."
This initiative follows significant multi-partisan efforts in the last Parliament. Led by the Parliamentary Joint Committee in Relation to Financial Abuse, chaired by Senator Deborah O’Neill and Deputy Chair Alex Hawke, these efforts helped build strong community and Parliamentary momentum for reform.
The Council has long championed closing this shocking legal loophole, including advocating for policy changes in its asks of all parties and independents during the last election. These reforms aim to ensure super delivers dignity, safety, and financial security, preventing it from being used to entrench harm.
The SMC submission underscores the need for the Government to consider similar victim-centered reforms for different types of super arrangements. Ensuring trustees can apply the proposed new law across various schemes is essential for safeguarding members' interests and preventing coercive control, elder abuse, or long-term harm.
