Superannuation or Super is a method of saving for retirement where an employer must pay a percentage of his employees’ earnings into the employees’ super account. This money paid by the employer is invested in the employees’ super fund until the time the employees retires.
There are several criteria that form various types of super funds that an individual can choose from before deciding to consider an account. An individual has the option of
- Choosing an account with lower fees
- Comparing your fund's performance with others
- Combining accounts if you have more than one
- Checking your insurance before you change funds
- Knowing what’s involved before deciding whether to choose an SMSF
- Being wary of anyone offering to withdraw your super early
Budgeting your Income and Expenses
Having a budget helps an individual feel in control of one’s own money where he/she can put aside money for big bills when they arrive, and plan savings to achieve their money goals. For this, one does not require specialisation in accounts or software to set up one’s own budget. An individual has to simply start by looking at where he/she stands right now and where they want to be after a certain period of time.
First of all, work out why you want to do a budget and decide where you want your money to go in the accomplishment of your goals which could be your new house, your child’s education or anything. Later, one can keep track of his/her own regular expenses and spending habits that shall help in setting up a budget.
Fees Calculation to Avoid Unwanted Losses
Generally, people are not aware of the fees that are charged by their super fund; however, a greater number of super fund members are mindful of investing in a fund with better investment performance since it shall generate a greater retirement balance.
Fee is an important aspect of a superfund that can impact your retirement balance, and not many know about this. A superfund might promise above-average investment returns; however, if it charges above-average fees, then there are high chances that an individual could retire with less money as compared to someone in a fund with similar returns but lower fees.
A small difference of 0.2% or 0.5% might feel to be having no or less impact but can weigh heavy on your retirement balance. Individuals putting their money in the superfunds should carefully assess the information related to fees and also do some calculations to avoid unwanted losses.
Scams in Superfunds Amid COVID-19
While the current times are filled with uncertainties for the individuals, people have been rethinking and replanning their super funds. It is not only the individuals that are eyeing support from their money in super funds but also the scammers that are targeting people’s hard-earned money through scams.
Scammers are taking undue advantage of individuals that are going through financial hardship due to the COVID-19 by making attempts to steal the superannuation of the individuals or by extending unwarranted services and charging a fee for the same.
According to Moneysmart, most of these scams begin with an unanticipated call stating to be from a superannuation or financial service provider. They can reach up to you through online platforms, phone or email and offer to withdraw your super or transfer it to a self-managed super fund (SMSF) so that you can access the money, which is probably a scam.
Some out of the variety of excuses that the scammers use to request information about your superannuation accounts include the following:
- Offering to help you access the money in your superannuation
- Ensuring you’re not locked out of your account under new rules
- Checking whether your superannuation account is eligible for various benefits or deals
These types of scams have become common during the challenging times of COVID-19 since eligible people that are affected by the COVID-19 pandemic are allowed to access their super fund for up to $10,000 of their super funds value in 2019-20 and a further $10,000 in 2020-21.
Individuals need to be vigilant for scammers who could take advantage of the current COVID-19 situation and be wary of offers to assist you that can access your superannuation or high-return investment opportunities. Since scams can take multiple forms, few indications of a super scam can be
- Advertisements advocating early access to your super
- Offers to grant you control of your super
- Offers to invest your super in property or alternate investment vehicles
- Offers of fast and simple ways to gain access to or unlock super
These luring offers and advertisements might reach you through emails or calls and request you to trade your personal bank account or super account details. You might as well want to share the details with them as they pretend to be the actual representatives of a company you know like your super fund, for stealing your identity and can further utilise this information to transfer your Super to an account they have access to.
With growing uncertainties and need to secure their money, individuals need to be more vigilant about such calls and offer since the only way to apply to withdraw your Super is through my.gov.au, subject to your eligibility under the new COVID-19 early release scheme.
People who are nearing retirement or are dependent on their super money need to be more careful about such events and protect their personal information and not share their myGov account details with anyone.
Steps like shredding your documents and being vigilant on social media can help to prevent identity theft.
Another way to avoid such an event is to check the licence of the super fund manager. A scammer shall not have a licence authorising him to set up or manage super funds and the same can be verified from ASIC's website or use APRA's Disqualification Register to check whether someone has been disqualified.
Few general tips that can help to protect you from these types of scams can be as follows:
- Avoid giving your superannuation information to anyone who contacts you by offering to help you access your superannuation early under the new arrangements by the government
- Take your time and verify the fund manager’s identity by calling the relevant organisation directly or on the website of organisations like ASIC and APRA.
- Keep track of the information shared by Scamwatch to warn about superannuation scams.