(Australian Associated Press)
Superannuation scammers are hustling unsophisticated workers on fringes of Australia’s major cities into illegally spending their meagre retirement savings.
The Australian Taxation Office is warning workers to watch out for “unscrupulous promoters” trying to trick them into unlocking their retirement fund early to buy a car, pay debts or go on a holiday.
ATO deputy commissioner James O’Halloran said the scammers could not only cost workers’ their superannuation but leave them with a tax bill and a hefty fine.
“Attempting to access your super early in this way is illegal, and people need to be aware of the financial dangers of falling prey to these promoters,” he said in a statement on Tuesday.
“These people could cost you a big part of your hard-earned retirement savings.”
The scammers, who are usually known and trusted by the victims, operate by assuring them the arrangements are legitimate before setting up self-managed superannuation funds (SMSF) and rolling their prudentially-regulated funds into them.
The victims then pay the scammer a fee from the self-managed fund before being assured using the money for everyday use is allowed.
It’s understood the word-of-mouth scam, which targets people with a limited understanding of superannuation rules and small to medium-sized retirement funds, has been operating in workplaces on the edges of Sydney, Melbourne and Brisbane.
The ATO picked up on the scam after irregularities in superannuation fund data began to be detected six months ago.
However, due to its grass-roots and whispered promotion, it is proving difficult to track and contact victims before it’s too late.
The ATO wants to warn both the promoters of the scam and people thinking about accessing their super early, that the scheme is illegal.
Promoters can be prosecuted by both the ATO and the Australian Securities and Investments Commission and if found guilty slapped with $900,000 fines.
Victims risk not only spending their retirement benefits early but could also be hit with a tax bill and thousands of dollars in fines.
Under Australian law, workers can generally only legally access their retirement savings once they turn 65 or if they’re born before July 1, 1960, at 55, which is called preservation age.
The ATO wants people who are approached by super scammers to seek advice from a professional advisor or contact the tax office before filling in any paperwork.