Friday, March 26, 2010

A Timely Reminder: Early Access to Super schemes are a “Pie in the Sky”


Danni Kirwan, Marketing Executive

Readers of this blog may recall my previous post Beware - Early Access to Super is a SCAM!  However, it would appear that the message is not getting through to everyone, with ASIC announcing earlier this month that an early access to super scam had been awarded the annual Pie in the Sky award. This dubious honour is awarded to the scam or scheme deemed by ASIC to be the “most outrageous, far-fetched or insidious” —which is exactly what these scams promoting early access to superannuation funds are.

The specific scam to be awarded the Pie in the Sky was the Little Super Fund. In what seems to be the typical ploy for perpetrators of such scams, the trustee targeted people experiencing financial hardship who were lured by the false claim that their super fund could be used to ease financial strain or to make large purchases such as new cars or holidays.

When can you access your super early?

As I discussed in my previous blog post, early access to your super is only granted in very limited circumstances – here’s a reminder of what they are:

If applying for early access to super fund on the basis of financial hardship for example, you must prove:
• That you have been receiving welfare benefits continuously for 26 weeks, and;
• That you are unable to meet your day to day living expenses.
If that is the case, then:
• You can only receive up to $10,000 in a 12 month period, and;
• The money withdrawn can only be used to cover your day to day living expenses.
ASIC makes it quite clear that in most cases, you won’t be able to access your superannuation until you retire.

When I initially read that an early access to super scam had been awarded the Pie in the Sky, I was a little surprised. After all, previous winners have included a supposed barrister from Togo offering a share in $10 million to those willing to claim that they were next of kin of a man killed in a tsunami – surely there were more outrageous scams than early access to super?

A worthy winner?

But when I thought about, I realised that in fact might be exactly the point ASIC is trying to make – no matter how widely early access to super scams are publicised, or how unrealistic they may be, people are still being tricked by them. And in many cases tricked out of a significant portion, if not all, of their retirement savings.

More information

You read about ASIC’s Pie in the Sky award and this years winner here.

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