Early release of super savings under review

On 8 December 2017 the government announced that Treasury will conduct a review of the rules governing the early release of superannuation benefits, including for victims of crime compensation.

The government says the rules governing early release of superannuation benefits have not changed substantially since 1997. “The superannuation system has come a long way since then and it is important to ensure the arrangements remain fit for purpose,” says Kelly O’Dwyer, Minister for Revenue and Financial Services.

The issues paper that was released (the paper can be found here) examines the key issues related to the early release of superannuation benefits under compassionate grounds and severe financial hardship grounds.

The paper also examines whether, and the circumstances in which, an offender’s superannuation assets should be available to cover the needs of victims of domestic violence and pay compensation to victims of crime.

Treasury recognises however that the review of the early release of super needs to be framed by guiding principles. The paper says that every ground of release reflects a trade-off between members’ immediate needs and the long-term objective of building retirement income. “This will never be easy. However, highlighting these trade-offs is important when considering whether the rules should be amended.”

Below are three proposed guiding principles for this review.

  • Preservation: Superannuation benefits should generally be preserved to provide income in retirement to substitute or supplement the Age Pension. Early access to superannuation for other purposes is inconsistent with the preservation principle.
  • Genuine hardship: There will be circumstances where the benefits of early access to superannuation for an individual will exceed the benefits of preserving balances until retirement. The challenge for policy-makers is to identify the point at which the need for compassion outweighs the broader policy objective of the superannuation system.
  • Last resort: Early release of superannuation benefits should generally be a last resort where other sources of financial support have been exhausted. It is not an appropriate replacement for existing health and income support policies.
  • Fair and effective: The rules should be able to be administered fairly and effectively; that is, the rules should be sufficiently clear and objective to allow applications to be dealt with in a timely and consistent fashion, and ensure that similar cases can be treated alike. Rules that are highly subjective in nature will necessarily cause more red tape, expense and difficulty for applicants, trustees and government.

Submissions are open until February 12 (by email to superannuation@treasury.gov.au). Readers who have opinions on changing the early release of super governing rules are also invited to make comments here. Send you thoughts to newsletter@taxandsuperaustralia.com.au, including the subject line “Early release of super”.


Webinar: Superannuation Quarterly Update. 22 March 11am to 12pm. Click here for more details.

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