The yardstick of “genuine hardship” to secure the early release of superannuation benefits is not being met and needs tougher controls, according to the SMSF Association.
Association chief executive John Maroney said the recent significant increase in access to super on medical grounds, with 56 per cent comprised of weight loss surgery, illustrated the benchmark for genuine hardship was low.
“There has to be an appropriate balance between the primary objective of superannuation – meeting people’s retirement income needs – and having early access to benefits because individuals have no financial capacity outside of superannuation to meet an expense incurred due to genuine hardship,” Maroney said.
“It’s the association’s belief that current use of superannuation for most medical treatments is not meeting this criterion.”
He suggested medical professionals were promoting the option of access to super for medical treatment, which has increased public awareness of the ability to access super for this purpose.
In its submission to the Treasury review on the early release of super benefits, the association said it supports reforms in line with guiding principles that only people with “genuine hardship claims” and a genuine lack of financial capacity should have early access to super.
However, in light of the body’s concerns about the reasons for the early release of super, Maroney said its preferred option is to both “tighten and apply correctly” the financial capacity and hardship aspect of the legislation instead of including safeguards or limits on specific releases.
He said the association supports access to super benefits for victims of domestic violence.
“We also support the concept that a victim of crime should be able to access a perpetrator’s superannuation for compensation. When an individual commits a serious crime, they should not be able to hide behind legislation that protects their superannuation, with our support being based on reasonable restrictions for this access,” he said.
