As is too often the case with other aspects of financial services, some Australians encounter difficulties gaining access to and making effective use of some aspects of the superannuation system. In particular, Aboriginal and Torres Strait Islander peoples encounter needless difficulties to do with identification and about binding death nominations.
2.6.1Identification
In July 2016, the Australian Transaction Reports and Analysis Centre (AUSTRAC) published guidelines that allowed entities (including superannuation funds) to follow particular identification and verification procedures for Aboriginal and Torres Strait Islander peoples that would avoid some of the difficulties that would otherwise be encountered. Evidence in the Commission suggested that these procedures may not always be followed by all entities.
There is no reason for any entity not to have practices and procedures of these kinds and there is no reason for any entity not to have trained staff to use them.
2.6.2Binding death benefit nominations
A question arose in the course of the Commission’s proceedings about whether the law as it now stands permits Aboriginal and Torres Strait Islander peoples to make binding death nominations in respect of their superannuation that reflect the kinship structures of the peoples concerned. As Treasury pointed out in its submissions, nominations can be made in respect of a person with whom the nominator has ‘an interdependency relationship’.[1] The notion of an interdependency relationship is broad. Lest there be doubt, however, I urge consultation with relevant Aboriginal and Torres Strait Islander peoples about whether they, as the relevant users of the system, see difficulties about binding death benefit nominations that should be met.
2.6.3Early release of superannuation benefits for severe financial hardship
The Commission also sought submissions on whether superannuation funds that do not currently permit the early release of superannuation on the basis of severe financial hardship should do so.[2] A number of submissions indicated that they should.[3]
At the time of writing, Treasury was actively considering reform of the rules governing the early release of superannuation benefits on compassionate and severe financial hardship grounds.[4] In December 2017, Treasury released an issues paper entitled Early Release of Superannuation Benefits Under Compassionate and Financial Hardship Grounds and for Victims of Crime Compensation.[5] In November 2018, Treasury released a further issues paper containing findings and draft proposals.[6] Responses to this further issues paper are to be provided by 15 February 2019.[7] In those circumstances, I do not consider that it is necessary or desirable to make any recommendations on this matter.
It is now necessary to say something about the regulation of superannuation.
[1]Treasury, Module 5 Policy Submission, 20–1 [95]–[96].
[2]FSRC, Module 5 Closing Submissions, 174 [640].
[3]AustralianSuper, Module 5 Policy Submission, 3 [12]; ANZ, Module 5 Policy Submission, 5 [30]; Westpac, Module 5 Policy Submission, 9 [30]; NAB, Module 5 Policy Submission, 12 [52]; CFSIL and Avanteos, Module 5 Policy Submission, 16 [88]; FSU, Module 5 Policy Submission, 18 [125]; ASIC, Module 5 Policy Submission, 14 [74]; CHOICE, Module 5 Policy Submission, 17.
[4] Treasury, Review of the Early Release of Superannuation Benefits (15 December 2018) Treasury <https://static.treasury.gov.au/uploads/sites/1/2018/11/Issues-Paper-Early-Release-of-Superannuation-1.pdf>.
[5] Treasury, Early Release of Superannuation Benefits Under Compassionate and Financial Hardship Grounds and for Victims of Crime Compensation (December 2017) Treasury <https://static.treasury.gov.au/uploads/sites/1/2017/12/c2017-t246586-Consultation-Paper.pdf>.
[6] Treasury, Review of Early Release of Superannuation Benefits: Further Consultation and Draft Proposals (November 2018) Treasury <https://static.treasury.gov.au/uploads/sites/
1/2018/11/Issues-Paper-Early-Release-of-Superannuation-1.pdf>.
[7] Treasury, Review of the Early Release of Superannuation Benefits (15 December 2018) Treasury <https://static.treasury.gov.au/uploads/sites/1/2018/11/Issues-Paper-Early-Release-of-Superannuation-1.pdf>.