Superannuation is usually people’s second most sizeable asset, after their home. So, it’s hardly surprising that superannuation is an attractive target for scammers given the size of the funds available.
In 2019, Australians lost a staggering $6 million to superannuation scams, with those aged 45–54 losing the most1.
So, how do you know what’s genuine and what’s a scam? We look at some of the most common super scams and suggest some tips for protecting yourself from scams.
It’s not a new trick – scammers trying to convince you they can help you access your super early. But we’ve seen an increase in this activity over recent months with COVID-19 causing many Australians financial stress, and the idea of being able to release some money from super suddenly becoming very attractive.
According to the ACCC Deputy Chair Delia Rickard, scammers are cold-calling people claiming to be from organisations that can help you get early access to your super. But the only way to withdraw your super under the COVID-19 early release scheme is via the Australian Taxation Office (ATO). There’s no need to use a third party or pay a fee to get access1.
This scam particularly targets those with self-managed super funds (SMSF). Considered a type of investment fraud, scammers try to convince people to invest in non-existent or illegal companies or sectors2.
In some cases, the scam involves persuading people to move their super from industry or retail funds into SMSFs on the basis they will have more flexibility in what they can invest in.
Unlike some other types of super fraud, this targets large groups rather than individuals. For example, you might see advertisements for investment seminars or special offers to help you set up an SMSF and access the property market.
The scammers play on people’s lack of knowledge and willingness to rely on the advice of so-called “experts”. Not only can you potentially lose money but you might also find yourself breaching superannuation rules, such as the sole purpose test.
Someone posing as a financial adviser or another type of superannuation expert can easily fool people with a list of seemingly impressive credentials. But they almost certainly won’t have a licence to set up or manage super funds.
They will likely take a percentage of any money you move into another super scheme or could possibly take it all by transferring it into an account they’ve set up. Again, this is particularly prevalent with SMSFs where the scammer has access to the money.
Identity theft is becoming more widespread, and not just in the case of super fraud.
Technology is fuelling the growth, with scammers finding new ways to obtain your personal information to help them fraudulently access super funds1.
Unsurprisingly, the most common strategies use email (often known as phishing) or cold calls, requesting your personal information or financial details. Scammers will pretend to be from a company you have a relationship with, like your bank, super fund or the ATO. They typically rely on the temptation of a special offer, perhaps offering to check if your super account is eligible for various benefits, or they use scare tactics like claiming an upcoming change will lock you out of your account if you don’t take immediate action1.
In response, many super funds have implemented either security questions or two-step verification process when customers access their online systems. But some correspondence is still sent by mail, such as passwords for new accounts, and this is often targeted by scammers who steal items from mailboxes.
Remember, if something sounds too good to be true, it probably is.
If you think you’ve been the victim of a superannuation scam, or maybe you’ve just been targeted but didn’t provide any information, the quicker you can act the better.
1 Scammers targeting superannuation in COVID-19 crisis https://www.scamwatch.gov.au/news-alerts/scammers-targeting-superannuation-in-covid-19-crisis
2 Common Superannuation Scams And Tips On Avoiding Them https://www.canstar.com.au/superannuation/avoiding-superannuation-scams/
The article was prepared by BT - Part of Westpac Banking Corporation ABN 33 007 457 14, and is current as at 15 May 2020.
This article does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to these factors before acting on it. This article provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This article may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, the Westpac Group accepts no responsibility for the accuracy or completeness of, nor does it endorse any such third party material. To the maximum extent permitted by law, we intend by this notice to exclude liability for this third party material.
© BT - Part of Westpac Banking Corporation