Written

For

The

Australian

-

Financial

abuse

the

hidden

problem

with

self

managed

super

funds

Would you leave your ex-partner in charge of your retirement savings? Sounds absurd, but that's essentially what's happening inside thousands of self-managed super funds across Australia — and a parliamentary joint committee has just shone a light on it.

Here's what struck me: financial abuse costs Australians an estimated $5.7bn a year, according to Deloitte and CBA. That's almost double what scammers pinch from us. And yet it's the quieter, uglier problem we rarely talk about — largely because it happens behind closed doors, often between people who once loved each other.

SMSFs are particularly exposed. The whole appeal of running your own fund is control and flexibility. But when the members are also the trustees, and there's little external oversight, that control can be weaponised. I've seen the pattern play out too often: one partner drives every decision, the other signs where told. Then a relationship breaks down, and the passive trustee discovers just how vulnerable they've been.

One case highlighted to the committee involved a single mother persuaded by a new partner to open an SMSF so he could "invest for her." When it ended, the money had been shifted to accounts only he controlled. Recovering it? Lawyers, accountants, and no guarantees.

Then there's the death benefits problem. In one distressing case, a woman's $353,000 super balance ended up with a man her daughters said had subjected her to domestic violence — because he technically fit the legal definition of a spouse. AFCA's hands were tied by legislation.

The committee's 61 unanimous recommendations — rare bipartisan agreement — include letting perpetrators of family violence be declared invalid beneficiaries. About time.

My practical advice for SMSF trustees: stay engaged. Know your accountant, know your adviser, and keep your own logins to every bank and investment account. If you're being told to just "sign here," that's your warning sign.