Government proposes “refinements” to superannuation early access rules

Nest egg, superannuaiton, SMSF, retirement
Share this article:

The Government is consulting on draft changes to the early access to superannuation rules, following from a review.

Late in 2017 the Government started a review into the early access rules. The Government has now released draft proposals in response to some of the issues raised.

The Government seemingly found no systemic issues with the use of superannuation to pay for medical treatment. The consultation paper for the original review of early access rules noted the “rapid increase in the use of superannuation for medical treatment”. The review found “mixed views” from stakeholders, and so proposed “refinements” to improve the integrity of the system.

More broadly, “consultation did not indicate any widespread view that the current rules are fundamentally flawed or require profound change”.

“The Review has concluded that the existing arrangements governing early release on compassionate and severe financial hardship grounds remain broadly appropriate. However, the Review also considers that there is scope to change the current arrangements at the margins to ensure they operate as intended.”

It is proposed in the issues paper that a new compassionate ground for release be created, allowing victims of domestic and family violence to access up to $10,000 in super over a 24 month period.

Despite being listed as a “proposed” change in the issues paper, the Government strongly supports it as it was one of the two measures in the recently announced Women’s Economic Security Package.

It is also proposed that the compassionate grounds be extended to explicitly reference:

  • dental treatment for a life threatening condition or acute and chronic pain
  • purchase of disability aids and modified vehicles

The definition of ‘severe financial hardship’ would also be relaxed, reducing the number of qualifying Commonwealth income support payments from 26 consecutive weeks to 26 cumulative weeks out of 40.

Additionally, multiple releases of super would be permitted on severe financial hardship and domestic and violence grounds, “so that applicants are not incentivised to withdraw the maximum amount at once”.

Other changes are proposed to “strengthen the integrity of the current arrangements and ensure that superannuation is accessed as a last resort in cases of hardship”.

In mid-2018 the Government consulted on two models allowing victims of crime to access the superannuation of perpetrators. It is unclear what progress has been made on this proposal.

The consultation period on the issues paper is open until 15 February 2019.

Want to be kept up-to-date with SMSF and Superannuation changes, why not subscribe to our Newsletter?

This article, as with all content on this site, is for informational purposes only, and is not legal, financial, tax or other advice. Please read our Terms and Conditions of Use.

Share this article: