Superannuation Fraud & SMSF Scams: How to Protect Yourself

A common scam that targets older Australians involves their superannuation. It’s a sad fact that many lose their retirement because of fraudsters. To avoid falling victim to superannuation fraud and SMSF scams, you need to know what they are and how they work.

Types of superannuation and SMSF scams

There are a few tricks scammers employ to fool their victims into handing over information or funds. Here are some superannuation and SMSF scams you need to be aware of.

Early access to superannuation balance

This scam involves fraudsters cold-calling or emailing you, offering you access to your superannuation balance regardless of whether you’re at preservation age or not. They tell you, their potential victim, that they can take out your super balance from your fund on your behalf if you tell them your superannuation information.

Many are tempted by the idea of getting their funds from their super fund, especially if it has a substantial amount or you’re in need, before they’re entitled to it. However, it’s important to remember that accessing your super before retirement age is illegal.

Those claiming to get your super balance from your fund are only after your personal and financial information. If you receive this type of call or email, it’s best to cease communication and report their number or email address.

SMSF establishment

In this scenario, a scammer will convince you to establish a self-managed super fund and transfer your current super balance into it. Scammers using this ploy will usually try intimidation or urgency. Instead, they will try to slowly build trust over time to convince you to create an SMSF.

If you do create an SMSF under their behest, they’ll likely ask to manage your SMSF, so they have complete control of your super fund. Once they do have control of your SMSF, they can transfer the balance from your fund to a third-party bank account.

Practice caution and be mindful about who you talk to and entrust your superannuation to. If you’d like to create an SMSF, go to an established and licensed financial advisor or tax expert directly.

SMSF investment scam

Another SMSF scam is fake investment scams. In these cases, a scammer will offer you a fraudulent high-return investment scheme or persuade you to invest in cryptocurrency, foreign bonds, or other unusual investment avenues. These offers sound too good to be true because they are.

If you receive a cold call or email from someone claiming to have high-return investment opportunities for your SMSF, it’s best to ignore them. For those who do have to invest using their SMSF, discuss your options with your accountant or financial advisor and avoid communicating with cold callers.

Identity theft

One way for fraudsters to access your superannuation fund is through identity theft. There are a few ways your identity could be stolen. Cybercriminals may send you phishing links where they can get your personal details, online passwords, and other pertinent information, or they could cold call you and trick you into giving them your details.

If you think your data has been compromised, contact IDCARE for assistance. You should also let your bank and super fund know about the breach in security.

How to protect yourself from superannuation fraud

Being vigilant and practising caution is key to protecting yourself from superannuation fraud. Here are a few tips and tricks to keep safe from scams:

Regularly check your balance

In some cases, people aren’t aware that their super fund has been compromised and their balance drained until after the fact. You can avoid this by checking your balance regularly and looking for unusual transactions or changes in personal details. By being on top of your super fund, you’ll spot any issues or inconsistencies quickly, which can stop scams in their tracks.

Contact official resources

Scammers often pretend to be representatives of official businesses or government bodies. In cases like these, always contact the source yourself. If the person on the phone calls you and says they’re contacting you on behalf of your super, hang up and call your superannuation fund directly to double-check their claims.

Understand superannuation rules

If you know superannuation rules, you’d know that it’s not legal to access your super fund before you’re eligible or in very limited situations. Anyone you encounter who claims they can get your super balance for you isn’t telling you the whole truth and is likely a scammer.

Check licences

When it comes to setting up or managing a super fund or SMSF, you’ll need to be registered and licensed. If someone offers to set up and manage your super for you, ask for their licence and look them up on the ASIC's Professional Registers Search. You can also check the APRA's Disqualification Register to see if their licence has been disqualified.