How to protect yourself from superannuation scams

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.

1. Offering early access to your superannuation

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.

How to avoid the superannuation scam

• Familiarise yourself with rules around super. Other than for extreme financial hardship or compassionate reasons, you generally can’t access your super until you’re aged 55-60.
• Don’t click links in suspicious-looking emails. Always type the full website url into your browser.
• Remember, your personal information is exactly that – personal. Don’t share your super or myGov account details with anyone.
• Don’t provide personal information to someone you don’t know or trust, even if they claim to be from your super fund or bank. Check with the relevant institution to verify their authenticity.

2. Exclusive investment opportunities

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.

How to avoid the superannuation scam

• Ignore any unsolicited offer that promises a ‘hot tip’ or insider knowledge.

3. Fake professionals

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.

How to avoid the superannuation scam

• Check if the “professional” is licensed on ASIC's website before you engage with them. 
• Use APRA's Disqualification Register to check whether someone has been disqualified.

4. Stealing your identity

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.

How to avoid the superannuation scam

• If you receive a letter or email from your super fund and suspect it’s not genuine, call your super fund and ask them.
• Never provide your superannuation information to someone who contacts you unexpectedly. And don’t be pressured to make immediate decisions. Always allow time to check the legitimacy of the person or company.
• Ensure your super fund has your latest contact details to avoid correspondence being sent to the wrong place.
• Keep an eye on your superannuation statements for suspicious activity.
• Securely dispose of documents containing personal information – shred them if possible.
• Be aware of what you post on social media and how much information someone can learn about you. 
• Keep yourself cyber safe with up-to-date antivirus software on your digital devices and log out of online accounts after using them

What to do if you think you've been scammed

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. Contact your super fund straight away and alert them to potentially fraudulent activity.
2. Lodge a complaint with ASIC. ASIC is responsible for handling financial and investment scams, including super scams.
3. You can also report certain types of scams, including phishing, to the ACCC’s Scamwatch.
   
   

Next read: Why super is a long term investment

References:

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/