7.1 A significant proportion of the wealth of older people is held in superannuation funds. Abuse of an older person may include the use of deception, threats or violence to coerce the person to contribute, withdraw or transfer superannuation funds for the benefit of the abuser. Abuse could also include making certain investment decisions that may advantage the abuser now or in the future. Other issues relating to possible elder abuse include questions about the ability of a person acting under a power of attorney to deal with superannuation.
7.2 Submissions to the ALRC generally identified fewer concerns with financial abuse in the context of superannuation than with respect to bank accounts and other financial assets. This may be because superannuation funds are subject to significant access controls. This was noted by the Financial Services Council:
A rollover (when a person’s super fund is transferred to another super fund in their own personal name or to [a self-managed superannuation fund] where they are a trustee) is subject to stringent checks by the superannuation fund where funds are withdrawn from;
A transfer from a person’s super fund to another person’s super fund is only allowed in limited situations such as death or divorce, and in these events additional checks and paperwork is required; and
A withdrawal can only be made once a condition of release is met and for most Australians, this means reaching their preservation age, and even in this circumstance, withdrawals can only be transferred to the superannuation trustee’s nominated bank account.
7.3 The ALRC did identify two particular areas of concern regarding potential elder abuse in the context of superannuation. The first relates to what are called ‘binding death benefit nominations’ (BDBNs). The second relates to self-managed superannuation funds (SMSFs) which are subject to less regulatory oversight than retail and industry superannuation funds. Potential for elder abuse in the context of pressure to make a BDBN may occur through two means: the exercise of influence to have the older person make, or alter, a death benefit nomination in the trusted person’s favour; and seeking to make a death benefit nomination under the supposed authority of a power of attorney.
7.4 The ALRC considers that BDBNs should be seen to be ‘will-like’ in nature, and, from a policy perspective, treated similarly to wills. There is much uncertainty and ambiguity concerning BDBNs of superannuation funds, particularly whether an enduring attorney may sign a BDBN on behalf of a member. The ALRC has therefore concluded that these uncertainties and ambiguities need to be resolved in a focused review of the provisions to establish the clear ambit of the legislative provisions and their relationship to superannuation trust deeds. The central legal issue concerns the scope of the ability for fund members to direct trustees with respect to the payment of funds on the member’s death—as a matter of the construction of the trust deed as affected by legislation—and the formal requirements that may be required to do so, under the deed or by regulation.
7.5 The regulatory framework for SMSFs was designed on the premise of self protection. Such a regulatory framework may be problematic, as a larger number of SMSFs come under the control of older people who may require increasing decision-making support. The ALRC’s recommendations in relation to SMSFs are designed to:
better facilitate the process for appointing a person’s enduring attorney as trustee/director of their SMSF in the event of a legal disability;
improve planning for a potential legal disability as part of the operating standards of an SMSF; and
provide for Australian Taxation Office (ATO) notification where an enduring attorney has taken over as trustee/director of the SMSF following the principal suffering a legal disability.