Treasury has confirmed it will introduce penalties for the promotion of illegal early release superannuation schemes.
The schemes are promoted as a means of accessing members benefits before they have reached the defined preservation age of 60 years.
"This measure is an important part of the government's Stronger Super reforms and will provide penalties for those who promote schemes which undermine the government's retirement policy", Financial Services and Superannuation Minister Bill Shorten said on Friday.
Promoters of the schemes often use self-managed super fund structures to transfer the balance of a member out of the existing fund and then release the money against a steep fee, sometimes as high as 50 per cent of the balance.
But under the current legislation, the promoters can only be penalised if it can be proven that they were providing unlicensed financial advice.
"Promoters of illegal early release schemes have in the past exploited vulnerable people within our community by encouraging applications for rollover of superannuation balances," Shorten said.
"Promoters of these schemes generally target non-English speaking communities and take advantage of those who may not be fully aware of the rules regarding accessing superannuation benefits."
Shorten said several schemes have facilitated up to $8 million in illegal release of superannuation benefits and generated millions in commissions for promoters.
In some cases promoters have gone further and exploited identity data for other criminal purposes or actually stolen the entire balance, he said.
"Introduction of these penalties is an important step to protect the integrity of the superannuation scheme and prevent people's entire superannuation savings being stolen" Shorten said.
Further detail on the penalty levels will be released as part of the exposure draft, a spokesperson for Minister Shorten said.
Legislation giving effect to this measure is being progressed and will commence on Royal Assent.
