Self-managed super funds risk being used for financial abuse in super
A new Super Consumers Australia investigation
Hobart woman Claire’s* former husband set them both up in a joint Self Managed Super Fund (SMSF) in 2005, and pressured Claire to move all her superannuation into the fund. She had no idea that the structure would eventually be used to drain her entire retirement savings. Now separated and at age 61, Claire can no longer afford to retire.
Super Consumers Australia’s Director of Advocacy (Campaigns), Lily Jiang says that while Claire’s circumstances may be unique, she is far from alone.
“The SMSF system was designed for self-management but it’s become a backdoor for financial abuse. When someone is moved into an SMSF through coercion or without their knowledge, they’re not just losing control of their super, they’re being made legally responsible for decisions they didn’t make.”
More than 1.6 million women have reported experienced partner economic abuse in Australia. Financial abuse is estimated to cost victim-survivors over $5.7 billion annually – $3 billion more than the total annual cost of scams.
The misuse of SMSFs was highlighted in the 2024 government inquiry into financial abuse, along with the important role that professionals like financial advisers, planners and accountants can play in preventing and detecting abuse, as the ‘gatekeepers’ who help set the SMSFs.
Super Consumers Australia is calling for urgent government and industry responses:
- Prioritise a review of financial abuse within SMSFs, as recommended by the 2024 Parliamentary Joint Committee on financial abuse.
- Mandate proactive checks by super funds when members transfer balances into SMSFs, to help spot potential abuse early.
- Lift standards across advice, planning and accounting professions, so that professionals are equipped to detect and act on signs of financial abuse.
- Invest in greater community awareness and frontline worker training, particular among culturally and linguistically diverse communities.
“For many women, superannuation is the largest and only asset they hold alone. Without concerted efforts to disrupt financial abuse in super, perpetrators will continue using mis-using structures like SMSFs with little consequences,” Ms Jiang says.
Read more about Claire’s story and the issues involved here