A Blockchain-Based Model for the Prevention of Superannuation Fraud: A Study of Australian Super Funds

Abstract

Superannuation is the fund set aside by employers to provide their employees with a dignified retirement. Studies highlight that issues can arise with retirement funds from employers, such as failure to make required contributions to an employee’s superannuation fund, incorrect payments, or debiting the wrong fund, contrary to legal or contractual obligations. To address these issues, the Australian Government has implemented laws and regulations to ensure employers fulfil their contribution obligations. Despite these safeguards and highly secured information systems, there has been a significant increase in fraudulent activity in the finance sector, and there have been several instances of employers not making contributions, misusing retirement funds, or reporting incorrectly in their systems. The current process restricts employees from viewing recent data until the contributions reach their super fund, which opens the doors for fraud. Recently, blockchain technology has gained popularity because of its ability to improve security and prevent fraud across many sectors, including finance. Prior studies have shed limited light on how superannuation fraud can be prevented. Moreover, there is limited literature on the possibility of utilizing blockchain technology to address this issue. Therefore, this paper aims to review the current superannuation contribution process and identify the factors contributing to non-payment, incorrect payments, misallocation of funds and communication gaps. This study presents a novel process model and develops a blockchain-based application to mitigate fraudulent practices. This research provides valuable insights into the design of innovative process models that utilize blockchain technology to address superannuation challenges. Furthermore, the paper presents a sample simulated smart contract to explore additional implications and advancements in this domain.