We’ve become more financially conscious, according to a national survey – a rare positive to come out of the pandemic – but COVID-19 has also opened new doors to criminals with designs on our super.
But first, the ‘good’ news.
The third annual release of the Financial Consciousness Index, which tested 3015 Australians on such factors as financial capability, wellness and sophistication, shows that we have become more financially aware and – cue the drum roll – our average score has risen from 49 last year to 51. A score of at least 45 is regarded as a sign of ‘financial consciousness’.
Older Australians largely led the way: 55–64-year-olds improved from 50 to 52, 65–70-year-olds from 50 to 51 and over-70s from 47 to 50. Diminishing superannuation balances as COVID wreaked havoc on stock markets and plummeting bank interest rates can activate a heightened interest in one’s finances.
While retirees posted improved scores for financial consciousness, their associated measure of financial wellness – the degree to which people feel they can meet expenses, have money left over to save and be financially secure – dropped to 44 out of 100, compared with a score of 60 for those who had experienced no change in employment and 42 for those who lost their jobs.
The index found consumer confidence, unsurprisingly, has declined significantly with 64 per cent of Australians lacking in confidence, compared with 51 per cent in 2019 and 46 per cent in 2018.
The survey, conducted by Deloitte Access Economics for Comparethemarket.com.au, found that overall 38 per cent of respondents demonstrated high financial consciousness by scoring over 55, compared with 31 per cent last year. Conversely, a third (33 per cent) failed to meet the basic requirements for financial consciousness by scoring less than 45 – an improvement on the 40 per cent who failed the test last year.
Financial consciousness peaks at 35 to 44 years of age, according to the survey, with that age group scoring 53. Older age groups scored one to two points lower, on average, while 18 to 24-year-olds almost failed, averaging a score of 46.
The index is based on questions relating to what are regarded as the “building blocks to financial consciousness”. They include financial sophistication (the diversity and types of financial products we own, and how we understand the impacts of decisions on our financial outcomes), financial willingness (how motivated we are to be actively involved in financial decision making), financial capability (our awareness and understanding of financial concepts) and locus of control (the degree to which we believe our actions determine our financial outcomes). This year, additional questions sought to understand how individuals were affected by COVID-19.
The report found that employment status and home ownership played significant roles in individuals’ levels of financial consciousness. Employed people scored better than unemployed people, at 54 and 44 respectively, and mortgagors had a higher score (56) than renters (46).
The early release of super (ERS) scheme, set up by the federal government to assist Australians experiencing financial hardship as a result of the pandemic, has become a “honeypot for criminals looking to capitalise on once-in-a-lifetime access”, Business Insider reports.
The Australian Securities and Investments Commission (ASIC) has told a parliamentary committee of a “long list of organisations that have identified scams and cases of fraud relating to the superannuation early access scheme”, including the Australian Federal Police (AFP), the Australian Competition and Consumer Commission (ACCC), the Attorney General’s Department, Australian Prudential Regulation Authority (APRA, the Australian Financial Complaints Authority (AFCA) and the Australian Tax Office (ATO).
ASIC warns of “serious and organised crime targeting early release of superannuation payments, real estate agents encouraging tenants to access ERS to meet rental payments, credit providers advising borrowers to use ERS to meet loan repayments and members of the public being charged fees to access ERS”. It said there had even been instances of schools encouraging parents to use the money to pay tuition fees.
Under the ERS, people experiencing financial hardship were able to withdraw $10,000 from their accounts last financial year, and a further $10,000 this financial year. Treasury estimates that by the end of the year, $42 billion will have been withdrawn.
MoneySmart offers the following advice on how to spot a super scam:
- advertisements promoting early access to super
- offers to ‘take control’ of your super
- offers to invest your super in property
- offers of quick and easy ways to access or ‘unlock’ super.
It says to watch out for emails or calls requesting your personal or account details. “Scammers may pretend to be a company you know, like your super fund, to steal your identity. They may then use this to transfer your super to an account they can access, like a fake SMSF.”
Do you believe your financial consciousness has improved as a result of the pandemic? Have you been targeted by a super scammer of any sort?
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