Resist the temptation to dip into super early


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You can be in big trouble if you dip into super early.

We all face financial pressures from time to time: mounting credit card debt, redundancy, perhaps followed by a period of unemployment and therefore no income, while bills, rent or mortgage payments continue to mount regardless.

It's easy therefore to be tempted to dig into your super and use those accumulated retirement savings to climb out of your financial hole now rather than having them sit there paying fees to advisers and fund managers for years. You might think that your super is more use to you now rather than later, and the "easy" fix sits before you, often in the guise of an enticing advertisement in the local paper, popping up on your screen, on social media or even in your letter box.

The person offering this neat solution may claim to be a financial planner, an accountant or a self-managed fund specialist. But you don't really know and they are often none of these.

You call the number and speak to "Justin", who tells you it's easy and above board. A lot of people are doing it, he says. Times are tough. All you need to do is sign some papers to transfer your super into his self-managed fund.

In return Justin promises to give you 90% or 85% of the transferred amount in cash (the rest is his commission) and you will be able to pay your debts. He reminds you that it is your own money and you should be able to use it now. You may be asked to concoct a story about your dire financial position in case the tax office inquires about the transfer. This is because being in debt or wanting to climb out of debt generally isn't a legitimate reason for early access to your super.

You've signed the papers, your money moves out of your fund quick smart - but then nothing happens. The 90% of your super fails to arrive. Justin doesn't answer the phone and you can't trace him or his fund. Your money has disappeared and you are left with your debt, no super and possibly worse - penalties for accessing your super before you are eligible to do so, which is at 55 if you were born before July 1, 1960 and have retired from the workforce.

Even if you get some of your money from Justin, who might have helped himself to a higher proportion of your super, you have broken tax law because early access to super is allowed only in exceptional circumstances. Early release of some super may be allowed on compassionate grounds if you are struck with a terminal disease or if you have suffered extreme financial hardship to the point where you may lose your house.

In the case of illness you have to provide a raft of medical evidence that you won't live to 55 or 60 and need money now to pay for medical treatment or home modifications. Financial hardship is also a tough and lengthy process to prove, and requires providing a detailed list of income and outgoings, debt collection demands and affidavits about your distressed financial state.

Justin knows that if you complain to the authorities you will get no sympathy: you will be told you are a fool, have been scammed and are likely to cop a tax penalty as well. Transferring the money to a self- managed fund and then withdrawing it means that you could face the amount withdrawn being taxed at the top marginal rate because it is no longer housed in an eligible super fund, and have other penalties imposed for early access.


Use your common sense. Your super can disappear in a flash in the hands of the person who promises to unlock your funds and you may have no legal comeback if you have signed documents handing it over.


Respond to ads promising you early access to your super no matter how attractively the proposition is worded.


Contact your fund trustee if you think you need some of your super now to determine under what circumstances you may be able to access your nest egg before retirement.


Expect to receive any compensation if you hand over your funds to an "unlock your super" promoter and never see it again.


Report the scamster to the Australian Securities & Investments Commission (ASIC), which may have received other similar complaints about the scheme.


Be pressured into signing any forms that enable another person to transfer money from your super fund.

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