International Law

Illegal early release of superannuation benefits

By David Jacobson

APRA has written to the trustees of APRA Regulated Superannuation Funds expressing concern about the illegal early release (IER) of superannuation benefits involving transfers and rollovers into self-managed super funds (SMSFs) and to provide guidance on additional processes that trustees should consider implementing (see letter here).

APRA has identified two types of IER schemes whereby superannuation benefits held by APRA-regulated funds are illegally accessed under the guise of transfers or rollovers into SMSFs:

• The fraudulent use of a member’s identification by an unrelated party to steal the member’s benefits without their knowledge or consent.
• The member participates with a promoter to access the member’s benefits. In many cases, the participant ends up with a considerably reduced benefit after “fees?, tax and penalties are deducted.

The letter outlines a number of suggestions that trustees should consider integrating into benefit payment processes that may assist in verifying the validity of transfer/rollover requests to SMSFs starting with Proof of Identity checks to confirm they are dealing with their member (or authorised representative).

Full post as published by Australian Regulatory Compliance Review on February 07, 2010 (boomark / email).