Illegal super schemes - beware of offers to withdraw your super early

About superannuation

Superannuation, or 'super', is money put aside over your working life to provide an income to you in retirement.

Super is important because the more you save, the more money you will have for retirement.

Some people promote super schemes telling you they can help you access your super now to do things like pay off credit card debt, buy a house or car, or go on holiday.

These schemes are illegal and can end up costing you a lot more than the super you access.

If you are approached about a scheme like this, phone us on 13 10 20 immediately for advice and to make sure your super is protected.

If you prefer to speak with us in a language other than English, call the Translating and Interpreting Service (TIS National) on 13 14 50. The service will call us with an interpreter so we can help with your query.

How illegal super schemes operate

Illegal super schemes usually involve someone offering to help you access your super early.

Promoters of illegal super schemes usually:

• claim that you can use your super now for anything you want – which isn’t true
• encourage you to transfer your super from your current super fund into a self-managed super fund (SMSF) that they will often assist you to set up
• tell you how to meet a condition of release by using fraudulent documentation
• charge high fees for the services they provide
• request your identity documents which they can use to steal your identity.

Illegal super schemes often target people who are under financial pressure or who do not understand the super laws.

Taking your super out from any super fund without meeting what is called a ‘condition of release’, or encouraging others to do so, is illegal.

Illegal super schemes may lead to identity theft

If you participate in one of these schemes, you may also become a victim of identity theft. This is when someone uses your personal details and pretends to be you to commit fraud or other crimes.

Once your identity has been stolen and misused, it can take years to fix.

Rollovers to an SMSF

Most illegal super schemes require you to transfer your super from your current super fund into an newly established SMSF. This is called a ‘rollover’.

Before you rollover or transfer your super, contact your super fund. They can advise you whether you can access your super.

We are working with super funds to strengthen rollover processes and protect your retirement savings from illegal schemes.

When you can legally access your super

Generally, you can only access your super when you reach ‘preservation age’ and stop working.

Currently, in Australia, the preservation age is 55 years old for those born before 1July 1960. It then increases gradually. For anyone born after 30June 1964, the preservation age is 60 years old.

There are some special circumstances where you can legally access your super early. These include specific medical conditions or when you are experiencing severe financial hardship.

To work out whether you are eligible to access your super early:

• contact your super fund
• see more about early access.

You do not need to pay an application fee to anyone to legally access your super early.

Temporary residents

As a temporary resident, you may be eligible to have your super paid to you when you leave Australia. This is called a departing Australia super payment (DASP).

You can apply for a DASP if all of the following are true:

• you visited Australia on a temporary visa (excluding visa subclasses 405 and 410)
• your visa is no longer in effect
• you have left Australia

This payment is not available to Australian or New Zealand citizens or permanent residents.

Penalties for illegally accessing super early

Severe penalties apply for illegally accessing your super early. You cannot claim a deduction for any fee a promoter takes from your super.

If you illegally access your super early:

• you may be required to pay interest and penalties on super you have accessed
• it is included in your taxable income, even if you return the super to the fund later

If you have been involved in a scheme, contact us immediately to lodge a voluntary disclosure. We will take your circumstances into account when determining further action.

Members and trustees of SMSFs

A trustee is the person who manages the super fund. The difference between an SMSF and other types of funds is that members of an SMSF are the trustees. This means they run the SMSF for their own benefit.

If you are an SMSF trustee and allow super to be withdrawn early, you:

• may incur administrative penalties
• can be disqualified.

If you are disqualified, you cannot operate as a trustee of an SMSF and your name will be published online.

There may be other penalties, depending on your involvement in the scheme.

Promoters

People who encourage or promote the illegal early access of super are called ‘promoters’. They can be prosecuted by us and the Australian Securities and Investments Commission (ASIC) for breaches of:

• Superannuation Industry (Supervision) Act 1993
• Corporations Act 2001
• Australian Securities and Investments Commission Act 2001.

Breaches may include misleading conduct and giving financial product advice without an Australian financial services licence.

Civil and criminal penalties, including significant fines and jail terms, may be imposed.

Tell us about illegal schemes

If you have been approached by anyone telling you that you can access your super early:

• Stop any involvement with the scheme, organisation or the person who approached you.
• Do not sign any documents.
• Do not provide them with any of your personal details, such as your Tax File Number (TFN) or passwords.
• Urgently phone us on 13 10 20 and advise us of your situation. If you prefer to speak with us in a language other than English, you can call the Translating and Interpreting Service (TIS National) on 13 14 50. The service will call us with an interpreter so we can help with your query.

More information

For more information about super, visit Your superannuation basics.

For more information about when you can and can’t access your super early:

• visit the ASIC websiteExternal Link
• visit Early access to your super
• phone us on 13 10 20 or ASIC on 1300 300 630.

If you prefer to speak with us in a language other than English, you can call the Translating and Interpreting Service (TIS National) on 13 14 50. The service will call us with an interpreter so we can help with your query.

We have information in languages other than English.

What to do if you have you been told you can access your super early and the penalties that may apply if you do.