Moves to crack down on the use of superannuation for non-critical medical procedures has been welcomed by a consumer group, which has called for bans on promoting such access and more detailed information on how withdrawn funds are being used.
The Super Members Council (SMC) stated it supported the ATO’s warning on the misuse of rules to access super on compassionate grounds, but noted more could be done to address the drivers behind making withdrawals early for non-critical dental and cosmetic treatments.
“SMC urges the government and regulators to take further action to strengthen consumer protections and crack down on advertising that seeks to lure Australians to withdraw super early and subvert the safeguards in super,” the member advocacy group said.
“This should include a ban on advertising that promotes early access to super for non-essential medical or dental treatments, a ban on third-party fees for facilitating compassionate release applications and stronger, clearer consumer warnings about the impact of early withdrawals on retirement savings.
“We are particularly concerned by a growing avalanche of advertising luring Australians to withdraw super for non-essential treatments, often without clear warnings about the long-term financial harm.
“These promotional materials, mostly generated by third-party operators who charge fees to fill out applications, undermine the purpose of super — to give Australians financial security in retirement.”
The council added there should also be stronger transparency and more data reporting on who is being targeted for early access.
“The ATO currently publishes headline figures on compassionate access, but more granular data — such as the types of procedures funded, claimant demographics and long-term financial harm to consumers — is essential to inform policy protections for Australians,” it said.
“The compassionate release framework must not be used to make Australians poorer in retirement.
“Analysis by SMC shows a person who withdraws $20,000 from their super at age 30 could be left with $93,000 less at retirement.”
