A $800,000 Fraud

Australian Guardians is complying an extensive file of case histories of how Members have been defrauded out of their lawful superannuation entitlements.

The following is another case history where this Member was the victim of three frauds:

Click on the link or refer to the tab “Favourite Frauds” to learn more about these frauds and to see if you too may have been a victim of one or more of these frauds.

Australian Guardians fraud case history {AG 1996/8}.

The Member had been a Member of a Government Regulated Superannuation Fund for just over 14years and was retrenched by the Employer. The Trustee then released a lump sum benefit of $180,200 (before the Superannuation Surcharge).

The Trust Deed and Rules contained an “exclusions list” that empowered the Trustee to deduct certain components of remuneration such as “overtime payments” when determining the final salary Defined Benefit, however none of the listed exclusions applied to this Member.

Therefore if a valid “Condition of Release” event had occurred the benefit payment for the final salary Defined Benefit should have been $214,000 instead of the $180,200 payed by the Trustee.

This Member had been a victim of the Superannuation Salary Fraud and the Trustee had made unlawful deductions that were no where mentioned in the Governing Rules of the Fund.

Retrenchment was no longer a valid “Condition of Release” and so the Trustee had unlawfully terminated this Member’s Fund Membership.

The Member is lawfully entitled to remain a Member of the Fund until he attains the Normal Retirement Age of 65 {or elects to voluntarily retire after the Early Retirement Age of 55}.

At the Normal Retirement Age of 65 this Member’s final salary Defined Benefit entitlement will be $829,000 {Note if the Member had remained an employee and received no further promotions his final salary Defined Benefit entitlement would have been $2,432,000}.

So instead of receiving a lump sum benefit of $829,000 at the Normal Retirement Age of 65 and having ongoing death and disability cover, this Member had his fund Membership unlawfully terminated at the age of 40 and then receiving only  $180,200.

Thus the Member was a victim of both the Superannuation Salary Fraud plus the Unlawful Termination Fraud.

But there is more.

When the Member accepted the offer of employment representations were made to the Member of what his superannuation entitlement would be if he remained in the service of the Employer until the Normal Retirement Age of 65.

The accrual rate of the final salary Defined Benefit Fund was based on this assumption.

However in the 1990s it became common practice for Employers to force Employees out of the workforce by the age of 55 if not earlier. Actuarial firms were advising Human Resources Department to “cull” workers over the age of 55 since a final salary Defined Benefit follows a “hockey stick” curve with most of the benefit accruing between 55 and 65 so that means there is a great incentive for Employers to retrench Employees well before that can attain their best superannuation accrual years, completely ignoring the Age Discrimination Act 2004.

Since the Member was a Member of a hybrid superannuation fund that had an associated “top up” accumulation Fund into which additional contributions could be made to increase the total superannuation benefit, the Employer started making additional contribution into superannuation as part of the Member’s “salary packaging” arrangements.

These contributions were specific to that Member, however these additional contributions that amounted to nearly $50,000 have simply “vanished” and the Trustee has no record of what happened to these additional “top up” contributions! {Note the final salary Defined Benefit Fund has a substantial surplus and the Employer was on an extended “Contribution Holiday” so the $50,000 was not placed into the common asset pool of the final salary Defined Benefit Fund}.

If the investment return of these additional contributions average 6% then at the age of 65 the value of the $50,000 would be around $200,000.

So this Member was also a victim of the Contribution Skimming Fraud!

Hence if there had been no fraudulent conduct by the Trustee and agents of the Trustee this Member should have received around $ $1,030,000 at the Normal Retirement Age of 65, instead of only $180,000 at the age of 40.

Reg Flag Agencies

This member initially believing that he was only a victim of the Superannuation Salary Fraud, since the Trustee refused to provide copies of any Trust Documents lodged a Complaint with the Superannuation Complaints Tribunal. In this case the Tribunal acted ultra vires (beyond power)  the Superannuation (Resolution of Complaints) Act 1993 as amended by the Superannuation Industry (Supervision) Legislation Amendment Act 1995 No.144, 1995  and ruled that the Trustee had not acted unfairly or unreasonably in defrauding the Complainant of $34,000 by way of the Superannuation Salary Fraud.

Furthermore the Tribunal Members acted negligently for not obtaining copies of the Trust Documents from the Trustee that would have confirmed the Complainant to have also been a victim of the Unlawful Termination Fraud and the Contribution Skimming Fraud.

Implications for all Members of Government Regulated Superannuation Funds

If this Member could be defrauded out of $0.8 Million of his lawful retirement benefit with the Superannuation Complaints Tribunal acting unlawfully (ultra vires) and ruling that the Trustee had not acted unfairly or unreasonably , how confident are you that you received you lawful superannuation entitlement? How large a claim for a Breach of Trust might you have?

To either have “peace of mind” that you did receive your lawful benefit or to establish your claim for a Breach of Trust against your Superannuation Trustee, become a Members of Australian Guardians today.

Australian Guardians is assisting some Members confirm claims that run into the 100s of thousands of dollars and in some cases like the case above into the $ millions of dollars.

Email audguardian@gmail.com or leave contact details below.

Membership is free.

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