You can't unlock your superannuation!

A colleague of mine came across this one this week and David Koch mentioned it in his Sunday paper column today, so it's obviously a wide scale problem.

There are firms out there offering to provide you with access to your superannuation. Now, there are a few ways you can gain access to your super, they are as follows:

• Reach age 55 (up to 60 for those of us who are younger) and permanently retire from the workforce.
• Reach age 65 and still be working.
• Become Totally and Permanently Disabled.
• Use Financial Hardship grounds.

The first two points are fairly straight forward. The third involves the trustee of the super fund deciding that because of a disability you will never return to work, and therefore in effect become 'medically retired'. The third involves applying to the regulators that you require access to some of your super because of an 'extreme' case. By saying that you have got yourself into too much debt does not justify financial hardship, but requiring $10,000 for emergency medical treatment probably would (generally financial hardship grounds grants access to a maximum of $10,000 to $20,000).

Now, it can be seen, that if you are under 55, your super is pretty much locked away. After all, super is there to fund your retirement, not buy you a new boat! However, these shonky operators are offering to roll all of your super into a Self Managed Super Fund, and provide you with access to the funds. Generally, a Self Managed Fund involves setting up a bank account, and as the Trustee of the fund, you are granted access to the account to invest from. The funds in the account are not to be used for your personal lifestyle expenses or "investing" at The Crown Casino! They are to invest in the fund, and regular audits and reporting helps to ensure they are invested appropriately.

I'm not sure how these 'dodgy brothers financial planners' are disclosing themselves, but they are not providing a duty of care to their client to explain that these funds are to be used for investment purposes only. By withdrawing preserved benefits, you are breaking the law and could possibly end up, along with your dodgy adviser, in gaol!

The case I have been made aware of has been reported to APRA. If you are aware of similar schemes, please report them, as at the end of the day, it will only be the unsuspecting consumer who loses out here!