Working to protect super from abuse

Content warning: suicide, domestic violence, financial abuse.

We recently made a submission to a parliamentary inquiry on financial abuse. The Verve Super team was shocked by the lack of existing research and literature on the topic and how financial abuse intersects with superannuation. So we met with survivors, not-for-profit organisations, and industry experts to learn more about the issue and how abusers take advantage of the super system to threaten, financially isolate and steal from their victims.

Here are 7 things we learned – and want to share.

1. The shocking stats

Financial abuse is a common form of domestic abuse and is prevalent in most relationships where other forms of domestic violence is occurring. Superannuation is often targeted and manipulated by abusers, both during a relationship and after separation.

Estimates by the Australian Bureau of Statistics suggests that 16% of Australian women will experience financial abuse at some point in their lifetime, compared to 7% of men. That’s 2.3 million Australians altogether, and research finds that between them they lose $5.7 billion every year. But because many victims don’t realise they are victims, these numbers could be even higher.

2. What happened during the Covid early release scheme

During the Covid-19 pandemic, Australians were able to withdraw some super to help cover living costs as an emergency measure. The Australian Institute of Superannuation Trustees estimated that 70,000 of the 1.5 million women who withdrew money during the pandemic were coerced to do so.

A government taskforce was established to tackle fraud in the scheme and support victims of crime. But no comparable effort was made to prevent criminal financial abuse. Sadly, there has been poor research since the initiative to understand how so much financial abuse occurred, and no lessons learned for next time. The Coalition Government at the time labelled the financial abuse a trade-off associated with the speed at which the scheme was rolled out.

Verve Super, and our parent company Future Group, hold concerns for any future early release schemes, including housing-related schemes.

3. Self-Managed Super Funds have less protection

One of the most concerning aspects of financial abuse relating to superannuation is the establishment of Self Managed Super Funds (SMSFs). We heard multiple accounts of victims being coerced or encouraged into opening SMSFs and shifting their funds out of a super fund and into a SMSF. Once someone has shifted their superannuation into an SMSF the strict regulations around super funds no longer apply. When you open a SMSF you typically become a Trustee or Co-Trustee of the fund, and are expected to protect your own superannuation savings. This makes it far easier for an abuser to shift funds away from the victim.

When writing our submission we spoke to Tracy Hill, founder of the podcast ‘Who the Hell is Hamish?’. Tracy is a senior executive who had previously worked in financial services, and a single mum, who had her entire superannuation savings of over $300,000 stolen by her then-partner. Tracy’s one message is: “unless you personally really know what you are doing and deeply want a SMSF, keep your superannuation in a regulated environment – and don’t allow a partner, accountant or any other person convince you otherwise.”

4. Perpetrators often receive their victim’s super

Financial abuse and domestic violence are crimes that costs lives. Tragically, there’s a strong link between domestic violence and suicide: research from Western Australia suggests that up to 70% of suicides are linked to domestic abuse, and 78%-99% of domestic abuse cases also include financial abuse.

Suicide is always highly distressing to the victim’s friends and family, but as a final act of disrespect perpetrators are often awarded the victim’s superannuation and other assets, even if they were not the named beneficiary.

Molly Wilkes’ story highlighted this issue in the news recently, thanks to her mother, Julie Adams, who is fighting to change the law to prevent former partners from inheriting superannuation after a suicide in cases where there was domestic violence.

We strongly support her efforts, as the current legislation relating to how superannuation is paid to beneficiaries in the case of death, often makes it impossible for funds to avoid paying out to the perpetrator even where it’s clear that domestic violence was prevalent.

Superannuation Trustees can only pay out a beneficiary payment to a valid beneficiary, under current regulations. To be deemed valid, the person must be financially dependent on the person who has died. In the case of a domestic violence victim who is childless, generally the only way to ensure that the perpetrator doesn’t receive the super is to establish a will and have the ‘estate’ listed as the beneficiary. This is obviously incredibly complex, and for many victims of abuse whose movements and financial resources are controlled by someone else, this will be impossible.

There is a clear need for legislative change.

5. Super assets can be easy to conceal

It’s still too hard for people to find out what their partner’s superannuation assets are when they separate. So, if a financially abusive person wants to hide those assets from their victim, they often can. It is possible to request this information from superannuation funds, but only if you know the fund. The ATO will release this information to the courts, but a typical court process costs well over $50k and can be psychologically draining for victims. We’re calling on changes to the law to allow any person going through a separation to be able to gain this information from the ATO.

6. Victims can’t use super to rebuild their lives

According to Verve’s Christina Hobbs, “it is ridiculous to think that you can access your super to have your wisdom teeth removed, but a woman fleeing domestic violence can’t access her super to prevent her own homelessness or fund lawyers to help secure a fair settlement to ensure her own retirement security.”

At Verve Super we support an evidence-based approach for allowing victims for domestic violence to access their superannuation if they need it to rebuild or protect their assets. This could be to fund legal support, psychosocial support, housing or skills training. Many victims are dragged through a separation process that can last years, often while the perpetrator has access to their household financial assets and the victim is locked out. But there are no proper mechanisms by which victims of domestic abuse can access their own super, even to cover survival needs, and they are often unable to meet the typical definitions of ‘financial hardship’.

Sadly, many victims are then forced to share half their super anyway, in cases where abusers run down all the assets in a household during the settlement process.

7. It’s something we should be talking about

If you’ve learnt something from this article, please share that knowledge with your friends. Financial abuse is poorly understood, and many victims may not recognise when it is happening to them. While super is more protected than other assets, there are still ways that it can be put at risk. So please share the word and help us start more important conversations in this space.

Verve Super pushing for reform

Superannuation funds are often one of the first financial touchpoints for victims, either when they try to access funds after leaving abusive situations, or when a perpetrator is trying to access their victim’s superannuation.

Our submission to parliament urges reforms that will further protect victims’ assets and earning potential, including introducing regulation that matches the seriousness of the crimes committed and the suffering experienced by victims.

We’ve asked for urgent research into the issue, a new national body to co-ordinate action against financial abuse, tighter safeguards against perpetrators accessing their victims’ super, more support to overcome language barriers, as well as industry-wide training in financial and domestic abuse.

This will be a focus area of our advocacy in the coming months and years as we work to build a more equal superannuation system.

How to check your beneficiary

To check who your beneficiary is, log in to your Verve Super account and click ‘Beneficiaries’ in the side menu. Find out more about what happens to your super if you die here, including which beneficiary forms you might need.

If you or anyone you know are experiencing thoughts of self-harm or suicide, please call Lifeline on 13 11 14, or text 0477 13 11 14, for free and confidential support. Beyond Blue can also assist you with mental health resources, you can reach out to them on 1300 224 636.

If you think you or anyone you know may be experiencing domestic violence, help is available. Please reach out to 1800RESPECT, a 24-hour free helpline, on 1800 737 732.

To access free financial counselling, reach out to Financial Counselling Australia on 1800 007 007.