Treasury has announced it will conduct a review of the rules governing the early release of superannuation benefits.
An issues paper has been released for public consultation, examining the key issues related to the early release of superannuation benefits under compassionate grounds and severe financial hardship grounds. The review will consider whether the current criteria for financial hardship are too strict.
The paper also examines whether, and the circumstances in which, an offender’s superannuation assets should be available to pay compensation to victims of crime.
Early release of superannuation benefits on compassionate grounds is currently governed by Regulation 6.19A of the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations). This sets out the circumstances in which superannuation may be released upon compassionate grounds and works in conjunction with Schedule 1 of the SIS Regulations, which sets out, for certain grounds of release, the maximum amounts and permitted frequency of release. Equivalent regulations are contained in Regulation 4.22A of the Retirement Savings Account Regulations 1997 in respect of Retirement Savings Accounts (RSAs).
Benefits may be released on compassionate grounds to meet expenses in respect of the following (for the applicant or the applicant’s dependant):
• medical treatment;
• medical transport;
• modifications necessary for the family home or motor vehicle due to severe disability; and
• palliative care.
Funds may also be released on compassionate grounds to prevent foreclosure of a mortgage or exercise of a power of sale over the member’s principal place of residence; or to pay for expenses associated with a dependant’s death, funeral or burial.
Potential new grounds
The review will consult on whether the current grounds for early release of superannuation benefits should be expanded to include new grounds including dental expenses, medical aids and rental expenses.
Another potential new ground for early release is for victims of domestic violence, where an individual is experiencing a situation of family violence or financial abuse by a domestic partner.
Any expansion of the grounds will be considered in the context of the guiding principles including that early release of superannuation benefits should generally be a last resort where other sources of financial support have been exhausted. It is not an appropriate replacement for existing health and income support policies.