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Impaired consent to the splitting of superannuation contributions: Issues, impact and potential solutions

Ong, Collin (2016) Impaired consent to the splitting of superannuation contributions: Issues, impact and potential solutions. Honours thesis, Murdoch University.

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Abstract

The Australian superannuation system seeks to ensure that individuals have income in retirement. The government implemented the superannuation contributions splitting scheme to allow spouses to share their superannuation with each other. The scheme was intended to provide low-income and non-working spouses with superannuation assets under their control. This was expected to benefit women in particular.

However, there is a risk that the scheme will operate to the detriment of spouses and jeopardise their financial position in retirement. There is a lack of safeguards to protect spouses from applying to split their contributions where their decision is not free, informed or independent. Further, imposing the scheme’s application process into the superannuation system’s trust structure has caused a dissociation between the legal and practical decision maker under the scheme. These issues are particularly detrimental in light of the heightened risk of vitiated consent between spouses for financial decisions.

This thesis seeks to examine these issues and their impact and propose potential solutions to prevent the scheme operating to spouses’ detriment and remedy the situation where it occurs. It is argued that the scheme does not sufficiently protect spouses’ interests. It is also argued that the dissociation between the legal and practical decision maker exposes trustees to potential liability and leaves spouses without a clear avenue of recourse where their contributions are transferred in circumstances of impaired consent. Thus, both the trustees and spouses are left in a difficult position under the scheme. As a result, despite the government’s intentions, the contributions splitting scheme may disadvantage, rather than benefit, vulnerable spouses.

Publication Type: Thesis (Honours)
Murdoch Affiliation: School of Law
Supervisor: Honey, Robyn
URI: http://researchrepository.murdoch.edu.au/id/eprint/35612
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