Robert Rushford – Release of Super.
You are sure to get an argument when discussing politics and religion. And when you add policy to the debate, consensus is a long way away!
Which is why it was pleasing to see the major political parties in Australia come together when forming policy around the compassionate release of super program.
The compassionate release of super initiative enjoys the support of both major parties in Australian politics, although quite possible for two different reasons.
I’m guessing the Liberals like the position of user pays, and labour has given in to the notion that the public sector cannot offer an adequate supply of services in ‘some’ healthcare sectors.
This proposition is somewhat one dimensional, but the fact remains BOTH parties have provided policy support for a program that saved the public health purse around $290 million in 2016/17.
The public has a mixed view on the program, ranging from a resignation that the program is needed across sectors with poor public health coverage, to a passionate denial that the program is needed at all.
Release My Super hears these mixed views every day via comments on our blog posts, Facebook page, videos and through our advertising and websites.
Background of the early release of superannuation
Prior to 1997, there was no separate provision for the early release of superannuation benefits on compassionate grounds. In 1997, changes were made to the early release provisions to tighten the eligibility criteria and clarify the circumstances covered by the conditions for release of benefits on compassionate grounds in order to provide a more objective test.
Individuals can apply under multiple grounds, although the documentation required is different for each ground of release. For example, a person seeking early release for medical treatment must provide written evidence from at least two medical practitioners – one of whom must be a specialist – certifying that the treatment or medical transport:
- Is necessary to treat a life-threatening illness or injury, or alleviate acute or chronic pain, or alleviate an acute or chronic mental disturbance; and
- Is not readily available to the individual or their dependant through the public health system.
The total amount released from the superannuation system under compassionate grounds has increased markedly over time, from around $42 million in 2000-01 to around $290 million in 2016-17. Whilst the figures are not yet available for 2020, we can assume that the figure will be dramatically increased due to the social and medical consequences of the Covid pandemic.
But, this represents a small fraction of total superannuation assets – in 2020, we estimate that just over 0.01 per cent of the total $3.5 trillion of assets held in the superannuation system were released on compassionate grounds.
Discussion against the Compassionate Release of Super Program
It is argued that the rapid increase in the early release of superannuation on medical grounds suggests the current rules are too lenient and that the wording of the current regulations is too broad.
Conversely, other stakeholders consider that the current rules are sufficient but that the administration of the early release provisions could be tightened, and the regulations read more strictly.
Arguments against the program are categorised as follows: –
The preservation principle – that such a rapid increase in the release of funds, as well as there being no restriction on the number of times one can apply for early release on compassionate grounds, is putting at risk the objective of superannuation to preserve superannuation benefits to provide income in retirement;
The last resort principle – that funds are being accessed for out-of-pocket expenses even though some treatments and procedures are covered by the Medical Benefits Scheme (MBS) or private health insurance.
The genuine hardship principle – that funds are being accessed for some procedures that should not be considered necessary to address genuine hardship.
Financial capacity
In all cases in which early release of superannuation is sought on compassionate grounds, the individual must satisfy the ATO that they do not have the financial capacity to meet the relevant expense.
Medical treatment grounds for releasing super
The current rules impose evidential requirements before the ATO can be satisfied that money is required for medical treatment or medical transport for the individual or the individual’s dependant.
Specifically, at least two medical practitioners – one of whom must be a specialist – must certify that the treatment:
- is necessary to treat a life-threatening illness or injury, or alleviate acute or chronic pain, or alleviate an acute or chronic mental disturbance; and
- is not readily available to the individual or their dependant through the public health system.
Similar restrictions apply in respect of medical transport. Further, the release will only be available where the individual does not have the financial capacity to meet the medical expense, as mentioned above.
Key issues around the release of super
As discussed earlier, there has been a rapid increase in the number of superannuation benefits released on medical grounds, which is mainly attributable to the rapid increase in the number of applications received and approved.
Although a gradual increase in the amount of superannuation approved is to be expected as the superannuation system matures and account balances grow, the rapid pace of the increase may warrant attention.
Conversely, if the release of superannuation on medical grounds provides a long-term benefit to the individual and is used in cases of undue hardship as a last resort, this may justify the early release of superannuation benefits.
Release My Super
Release My Super specialise in the release of superannuation for drug and alcohol rehab, mental health treatment, and IVF under the compassionate release of super program.
Talk to a real person 1300 090 261
Release my Super is more than a company – we are a team committed to assisting you to understand the rules around the early release of superannuation, based around the “Compassionate Release of Super Program”.
And where possible we will help you gain access to superannuation funds for drug & alcohol rehab, IVF treatment, and mental health treatment.
Robert Rushford – Release of Super.
27 March 2021
