Recently released government data has revealed a rapid increase in the number of Australians dipping into superannuation early to pay for medical bills, mainly for weight-loss surgery.
The data revealed that last year more than 15,000 people accessed over $200 million from superannuation to fund medical bills. Over the past six years, there has been a five-fold increase in applications for early super release on medical grounds, drawing criticism from the peak body for doctors.
“We don’t oppose regulations that allow the early release of superannuation on medical grounds under compassionate circumstances, but we don’t think superannuation is the appropriate safety net to subsidise inadequate health funding,” said Australian Medical Association President Michael Gannon.
In other figures, the Financial Planning Association of Australia estimates a person in their 40s accessing $10,000 today would forfeit $42,000 in retirement savings over 20 years. A person in their 30s accessing $10,000 today would reduce their retirement savings by about $180,000, the association said.
The Federal Government has already ordered Treasury to reconsider early release of superannuation rules and report back by March 2018.
“The current rules governing early release of superannuation on financial hardship and compassionate grounds have not changed substantially in the last 20 years,” the Minister for Revenue and Financial Services, Kelly O’Dwyer, told The Australian.
“For this reason, the Government has announced it will review these rules to ensure they are fit for purpose and strike an appropriate balance between protecting people’s retirement savings and giving a lifeline to those facing genuine hardship, whilst ensuring the rules can be administered fairly and effectively,” she said.
What do you think? Should stricter early release of superannuation rules be introduced?