Former Labor Senator Sherry made an important point:
Senate Hansard – 31 March 2004 (page 22400)
“If your money is stolen prior to retirement, it is quite a catastrophic event. So superannuation has a unique purpose as a financial product in Australia’s finance system. It has a unique purpose for retirement savings, and it is also compulsory. If a person’s money is stolen, let us say they were in their 50s or 60s;whatever the age they decide to retire – they could not simply go back and work in order to recover the moneys that were stolen. That is impractical……”
Superannuation Safety Amendment Bill 2003Senator Sherry (Labor Tasmania)
……….. The original bill did not contain measures that were objectionable to the Labor Party, and we support the bill. However, the original provisions in the bill fell way short of what the Labor party considers adequate in terms of protecting the safety and the security of the retirement income system of Australians through superannuation.
On a previous occasion when we debated the bill, I made the point that Australians now have approximately $550 billion in superannuation savings. It is a substantial part of our retirement income system, together with the age pension. It is unacceptable in principle to the Labor Party that a bill dealing with the safety of superannuation does not provide for full compensation, for example, in circumstances where theft and fraud occur from an individual’s superannuation fund. The Labor Party have been arguing this principle for some years. It is now the policy of the Labor Party to ensure full compensation in the event of theft and fraud. It is not a matter that should be left to the discretion of the minister of the day, whoever that may be. There should be full compensation, which means 100 per cent in the event of theft and fraud.
The Labor Party take the view that superannuation has a very special status. Obviously it is for retirement incomes. That gives superannuation in part its special status. It is moneys that accrue over a long period of time; it can be 30 or 40 years through a working life. In the event of theft occurring, it is quite catastrophic in its impact. We are talking here about superannuation savings that are now compulsory for Australian employees……
Superannuation is complex. It is not easy for many in the community to understand its complexity. If your money is stolen prior to retirement, it is quite a catastrophic event. So superannuation has a unique purpose as a financial product in Australia’s finance system. It has a unique purpose for retirement savings, and it is also compulsory. If a person’s money is stolen, let us say they were in their 50s or 60s;whatever the age they decide to retire – they could not simply go back and work in order to recover the moneys that were stolen. That is impractical……
Whatever the circumstances, it is grossly unfair that, if a person’s money is stolen as a result of theft and fraud, they will not be fully compensated. They should be fully compensated in those circumstances.
The minister has used her discretion and exercised the existing mechanism on a couple of occasions – the most well-known case being Commercial Nominees – to provide 90 per cent compensation.
The Labor Party does not believe that is acceptable, given the circumstances I have outlined. It should be 100 per cent, and it should not be up to the minister’s discretion…..
The theme, as put forward by the Liberal Party, is that there should effectively be a penalty if theft and fraud occur and that you should not be compensated because otherwise you would have trustees, who are guardians of our superannuation system, making irresponsible decisions – there would be less pressure on the to live up to their obligations as trustees and therefore full compensation should not be payable. I do not agree with that approach. I have outlined why theft and fraud should be fully covered.
The argument advanced by the Liberal government falls over for two basic reasons. Firstly, it is a trustee system. Therefore, why should we expect the individuals in the trust to bear part of the losses in the event of theft and fraud? If the trustees are involved in the theft and fraud, they may well end up in jail. There may well be part compensation payable, the trustees may well be sued and some moneys may be recovered, at the end of the day, that is not a big help to the victims, who in this case are members of a superannuation trust. They are members of a superannuation trust because the Australian law requires them to be. There is no choice about being in the superannuation system; it is compulsory in Australia for employees…..No matter what superannuation fund you choose to join, there should be full compensation in the event of theft and fraud.
This tab updated on 28 March 2015