Superannuation Scams

Superannuation Scams

There are so superannuation scams out there these days. Some have been on the news and while others have avoided the detection of authorities. Some, if not many people, however, still are unable to identify which ones are legit and which are superannuation scams. Nevertheless, most of these scams have things that are in common.

Offers like getting you superannuation early seems like a brilliant idea but agreeing to such might end you up getting into a lot of bigger problems. Accessing your superannuation or retirement savings before the age of 55 is illegal except in very limited circumstances.

Therefore, anyone offering you early access to your super easily is likely a scammer.

How do superannuation scams operate? 

Most scammers will get in touch with you and say that they can withdraw your super and move it to a self-managed super fund (SMSF) so that you can pay off your debts or use the money for something that you really want.

Once your retirement savings are transferred or withdrawn, the scammer would get a large commission from your funds or steal and keep the whole amount for themselves. Agreeing to the scam put you at risk of losing your hard-earned retirement savings. You might also unintentionally get into tax penalties because of taking the super early before your retirement age. Scammers may even make you sign false statements that will expose you to fines.

Other superannuation scams are intended to steal your identity. They can pretend to be you in order for them to transfer your super to a fake SMSF which they have access to.

Who are the targets of scammers?

Illegal superannuation scams often target people who are struggling with debt, unemployed individuals and people from non-English speaking backgrounds.

Let’s talk about a case where a scammer takes Maria’s super or retirement savings.

Maria was very desperate to pay off her car loan and credit card debt. She has $30,000 in her super fund and wanted to use that money now before her retirement and not for the coming years. She saw an ad on a local paper that she can get hold of her superannuation money now and decided to call the number on the ad.

Bill answered her phone call and said that all she need to do was sign some papers to transfer the money to his self-managed super fund. He also said that he will give Maria 90% of the $30,000 and he would only take a 10% commission. Maria considered it a great idea so she signed the papers.

Weeks later, Maria has still not received the $27,000 from Bill. She found it strange but was confident that the money would come soon. Then a call from the Australian Taxation Office told her that she has a big tax bill to settle because she accessed her super earlier than required.

She also got a call from an investigator from ASIC who received complaints from other people in Bill’s self-managed super fund who did not receive any of the money he promised. The investigators made it clear to Maria that it is illegal to access and get hold of super funds early before retirement and was further asked about her transactions with Bill.

The ASIC investigator then sent Maria the real bank statements from Bill’s fund. Bill had withdrawn all her money and there was nothing left. Later it was found out that Bill has a gambling problem and ran the scam to fund his vices. Bill was already bankrupt, which simply means that Maria will not get her money back.

Warning signs or clues of Superannuation Scams. 

Illegal super scammers promote and try to get people to believe that anyone can access their super with their help. Superannuation scams usually put advertisements promoting early access to super. They also sometimes offer quick and easy ways to access or unlock your super. They also offer you to take control of your super. They are also, usually, unlicensed operators.

If anyone approached you or got in touch with you about accessing your super early before your retirement, report it to ASIC immediately. You can lodge an online complaint or call ASIC infoline at 1300 300 630. You can also report the potential scammer to the Australian Taxation Office to 13 10 20.

When is an early release of super legal? 

Early release of retirement savings is legal on very limited circumstances. Super may be accessed if you are experiencing financial hardship or under compassionate grounds.

Some of the limited circumstances that will let you access your super before your retirement age include:

  • Incapacity or if you are suffering from temporary or permanent incapacity.
  • Severe or extreme financial hardship or if you are receiving Commonwealth benefits for the past 26 continuous weeks and are still incapable of financing your necessary expenses.
  • Under compassionate grounds. Or to pay for bills of medical treatments for those who are seriously ill.
  • If you have a terminal medical condition. If you are terminally ill or if you obtained an injury that can result in death within the period of 2 years. This should be certified by two registered medical practitioners where at least one is a specialist.
  • If you are leaving Australia permanently or if your super account have less than $200.

Carefully think about whether you really need to access your super early and seek advice if unsure. Accessing the super soon may not be a long-term financial solution if money is hard to come by. It will also reduce the amount of your retirement in the future. If you are having a hard time identifying superannuation scams, seek the advice of professionals. It will also be a good idea to let an approved SMSF auditor or professional check the background of the company you are investing in to make sure it is legitimate.

Kingston Knight Audit are the Auditor Melbourne experts to contact when dealing with your trust account audit, SMSF Audit, financial statement audit,  and internal audit requirements. Contact us today, Kingston & Knight Audit offers a free telephone consultation to establish how we can best help you achieve the assurance and compliance you require.

Call our Melbourne team today on 03 9088 2242, or email us via