The Government has officially announced a review of early release of superannuation.
This includes a review of the rules around early release of superannuation on financial hardship or compassionate grounds. The review will also consider if and how superannuation should become available to pay compensation or restitution to the victims of crime.
Minister for Revenue and Financial Services Kelly O’Dwyer had said in November that the Government intended to review early release of super, following media reports that superannuation was being used to shield assets from victims of crime.
Announcing the review, Minister O’Dwyer said the superannuation early release rules had not change substantially since 1997.
“The superannuation system has come a long way since then. It is time to review the current arrangements as they relate to severe financial hardship and compassionate grounds to ensure they remain fit for purpose,” Minister O’Dwyer said.
“This review is one of a range of measures the Government is progressing to ensure that the rules governing superannuation serve the interests of consumers.”
The Government plans to release an issues paper before the end of the year and the review is due to give its report by March 2018.
Admin of early release super to move from DHS to ATO
Minister O’Dwyer also announced that responsibility for administering the early release of superannuation on compassionate grounds will move from the Department of Human services to the ATO. This change is expected to take effect in 2018.
“This change recognises the existing strong relationship between the ATO and the superannuation industry and reduce the need for manual, paper‑based processes – expediting the release of funds to successful applicants,” said Minister O’Dwyer.
The ATO notes that this will require changes to legislation and regulations.
“Until these law changes have been enacted, administration of this programme will remain with DHS. Any enquiries relating to applications for early release of superannuation on compassionate grounds should continue to be directed to DHS,” said the ATO.
The Terms of Reference for the review are:
Terms of Reference for a review of the provisions governing the early release of superannuation benefits
Treasury will review whether the current rules governing the early release of superannuation benefits on compassionate grounds and in cases of severe financial hardship (regulations 6.19A and 6.01 of the Superannuation Industry (Supervision) Regulations 1994, respectively) remain fit for purpose.
In making recommendations, it will consider whether these rules appropriately balance the need to:
- preserve superannuation benefits to meet the objective of providing income in retirement to substitute or supplement the Age Pension;
- ensure that superannuation is available for current consumption in certain, limited cases of genuine hardship or where warranted for compassionate reasons; and
- ensure the rules can be administered fairly and effectively.
The review will also consider and make recommendations on whether a perpetrator’s superannuation should be accessible to pay compensation or restitution to a victim of crime; and, if so, the circumstances in which this may be appropriate.
The review will not examine other general conditions of release for superannuation.
Treasury will report to the Government in March 2018.