Revenue and Financial Services Minister Kelly O’Dwyer has announced Treasury will review the rules controlling the early release of superannuation on severe financial hardship and compassionate grounds.
The review will examine the existing rules to determine if they appropriately balance the need to preserve superannuation benefits to satisfy the objective of providing income in retirement as a substitute or supplement to the age pension, ensure superannuation is available in situations of genuine hardship or where warranted for compassionate reasons, and ensure the rules can be carried out in a fair and effective manner.
In addition, the issue of whether the perpetrator of a crime can have their superannuation used to pay compensation or restitution to the victim or victims of that crime will be evaluated.
According to O’Dwyer, legislation governing this area of the retirement savings system has not significantly changed since 1997.
“The superannuation system has come a long way since then. It is time to review the current arrangements as they relate to severe financial hardship and compassionate grounds to ensure they remain fit for purpose,” she said.
“This review is one of a range of measures the government is progressing to ensure that the rules governing superannuation serve the interests of consumers.”
Treasury is due to report back to the government in March.
The government also announced the ATO will be responsible for the regulatory role of administering the early release of superannuation benefits on compassionate grounds from 2018 onwards.
Previously, the Department of Human Services had been in charge of this function.
The change means that from 2018 the ATO will notify superannuation funds if an authorisation for the early release of superannuation on compassionate grounds has been made.
“This change recognises the existing strong relationship between the ATO and the superannuation industry and reduces the need for manual, paper-based processes – expediting the release of funds to successful applicants,” O’Dwyer noted.