Australians have raided almost $1.6 billion from their retirement funds to pay for medical treatment in the past three years.
The revelations have left health policy experts outraged that superannuation nest eggs are being used to fund life-changing treatment.
Super fund members are allowed to apply to the Australian Taxation Office (ATO) for early access to some of their retirement savings on compassionate grounds, such as for medical treatment or transport.
However, figures obtained by the ABC show that the early release of super on medical grounds is now almost 20 times higher than 2010–11 levels, when about $25 million was approved for release.
Prior to the pandemic, in the 2018–19 financial year, the ATO signed off the early release of $390 million from super funds for medical treatment.
But by the next year – which includes the first few months of the pandemic – that had ballooned to $476 million.
Overall, between July 2018 and June 2021, almost $1.6 billion was approved for release by the ATO on medical grounds, for just over 100,000 claims, as people were left with few options but to tap into their super to treat crippling conditions.
Honorary enterprise professor at the University of Melbourne Stephen Duckett said the figures were highly concerning.
“It is outrageous that Australians are taking $1.6 billion dollars out of their super funds to pay for care that should be available relatively quickly in the public sector,” he said.
“Australia’s Medicare system means that people shouldn’t have to ride their own savings to get the care they need. And we should have a system where people can get access to elective procedures in a timely way, be it in the public or the private sector.”
‘Extremely frustrating’: Australians forced to use super to treat crippling conditions
Canberra public servant Natalie Dunn has endometriosis, an often painful and debilitating condition where tissue similar to the lining of the uterus grows outside of the uterus.
In her case it is extensive, growing in several places including around her diaphragm and chest, and she experiences shortness of breath, frequently coughs up blood and has even had collapsed lungs as a result.
The 37-year-old has already had three previous surgeries for endometriosis, and now needs a fourth.
The specialised surgery is likely to cost around $10,000 and she said she has been left to dip into her retirement funds.
“I’ve already had three surgeries that have cost thousands of dollars each and with the cost of living at the moment, I’m struggling to pay the bills as it is,” she said.
“So if you’re living in pain, then you’ve got to make a decision about, ‘Well, I don’t have the savings. Where can I get the money from?’ Do you draw down on your mortgage? Or do you take money out of your superannuation? That’s really the only option that’s available to you.”
We need to look carefully at the system: AMA
Australian Medical Association president Steve Robson said the reasons why people withdrew money from their super varied.
Common reasons were for dental work, bariatric surgery and IVF treatments.
Professor Robson said people were also increasingly accessing super for elective surgery where they otherwise faced long waits for treatment in public hospitals.
“I think it’s a big concern that people have to withdraw money from super to afford surgery,” he said.
“That’s a lot of money. And that’s a lot of people’s future that’s been taken out of what should be an investment for the retirement and being used now.
“We have a public system that should be providing this – we need to look very carefully at the system in Australia to make sure we manage the financial impact on Australians.”
Ms Dunn is among those who have paid to get private treatment.
She said that allowed her to avoid a lengthy wait and choose a gynaecologist who specialised in endometriosis.
“If you go public, you sometimes are looking at an 18-month or two-year wait for your surgery, which is a really long time when you’re in pain. So going private is often just the only option unless you want to be spending a lot of time in pain,” she said.
“It’s extremely frustrating.”
Financial experts have long argued that those withdrawing their money now sacrifice long-term compound interest on their superannuation balance that may contribute to a more comfortable retirement.
In a statement, a spokesman for assistant treasurer Stephen Jones said the government had no plans to change the rules around compassionate early access rules for superannuation.
Shadow health minister Anne Ruston said all Australians have the right to access their super to help pay for medical treatments, arguing that the Coalition invested record funding in the health system while in power.
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It is easy to say we shouldn’t have, but the reality is some of us had to. This wasn’t taken out to have a holiday or buy a new car, but to pay for health services. In my case it was either pay for health treatments or wait 26 months in a queue, during which time the ailments might get worse and even become untreatable..
We were using our savings to survive, so pulling a big chunk (read most) of my super out to cover the medical costs was the only option.. While a financial planner suggested take a reverse mortgage on our home, they didn’t get the fee you pay for this is much more than I was getting from my super fund. It didn’t make sense and hoping for a great super return when this was not the current experience.
As pensioners, our lot has got worse and regardless of nice top ups, the system is ignoring those of us who due to age and circumstance, retired without big super balances. It ignores the pension was meant to provide a livable pension, not an emergency for those who couldn’t somehow fund retirement themselves.
If various politicians hadn’t robbed the pension fund over the years and watered down its original concept, it would have ample funds to pay a pension as it was envisaged it would. Same politicians have protected their super paid for by the people.