Time to close super abuse loophole

Did you know that current laws allow a family violence perpetrator to inherit their victim’s superannuation death benefit? 

The only exception is if the abuser is found to have murdered the victim. 

It seems super funds can't do anything to stop the increasing incidence of fund members being pressured by abusers to nominate them as beneficiaries. 

Last month a domestic violence abuser was awarded a $65,000 payout by a super fund after his 22-year-old wife took her own life. The victim’s mother failed in her bid to stop super fund HESTA paying out her superannuation and death benefits to her husband despite a record of abuse by him. 

The fund said it was legally obliged to make the payment to her husband, as her legally nominated beneficiary. 

That case, and others, have resulted in superannuation peak bodies uniting in urging the Australian Government to reform current super laws to stop perpetrators of family violence being able to claim their victim’s super and profit from their abuse. 

Peak bodies, the Super Members Council, Association of Super Funds of Australia, and Women in Super have written to relevant ministers and appeared before a parliamentary inquiry into financial abuse calling for law reform. 

The inquiry is investigating the role the financial services industry and its governing regulatory framework can have in better detecting and preventing financial abuse and supporting victim-survivors and vulnerable people. 

The super peak bodies’ submission calls for:

• Expanding the Forfeiture Rule to family violence-related crimes. This law prevents murderers from inheriting their victim’s super. 

• Investigate legislative reforms that would allow super funds to withhold death benefits in substantiated cases of family violence. Clear and robust evidence standards, judged by an independent body such as a court, would ensure procedural fairness and due process. 

Other inquiry witnesses include victim-survivors and representatives from the banking and buy-now-pay-later sectors. The full transcript of proceedings will be published by the Parliament here.  

Super Members Council CEO Misha Schubert says it’s time to close the legal loophole that can reward abuse perpetrators and better protect victims of family violence and financial abuse. 

“A perpetrator getting their victim’s super death benefit is an extension of the abuse, and the super sector has come together to call for urgent reform,” she said. 

Association of Superannuation Funds of Australia (ASFA) CEO Mary Delahunty said the super sector was unified to stop victims of family violence being further victimised through the misuse of the superannuation system. 

“The reforms we are calling for will be a critical step towards ensuring that people’s superannuation is protected and not used as a financial reward for perpetrators,” she said. 

“These reforms are about standing up for victims of family violence. We are committed to working with the government to make these necessary changes to protect those who have been wronged, not those that have caused harm.” 

Women in Super says the proposed reforms were not just about preventing financial gain for perpetrators, but an opportunity for advocates and policy makers to work together to ensure super was not being used as a mechanism for financial abuse. 

The super bodies are concerned abusers are pressuring victims to name them as “eligible beneficiaries” of their superannuation benefits, including death benefits, paving the way for them to benefit in future if anything happened to their victim. 

 

Related reading: The Australian, SMCA