The SMSF Association wants tougher controls around the early release of superannuation benefits, says Association CEO John Maroney.
In its submission to the Treasury review on the early release of superannuation benefits, the Association says it supports reforms in line with the guiding principles that ensures that only people with “genuine hardship claims” and a genuine lack of financial capacity have early access to superannuation.
Maroney says the recent significant increase in access to superannuation on medical grounds (56% is weight-loss surgery) strongly suggests that the yardstick of “genuine hardship” to secure early release is not being met.
“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.
“It’s the Association’s belief that current use of superannuation for most medical treatments is not meeting this criterion.
“We are also concerned that this increase in access of superannuation for medical treatment has been driven by greater public awareness of the ability to access superannuation for medical reasons, a situation that has been potentially exacerbated by some medical professionals promoting this option.”
Maroney says the Association’s preferred option on this issue 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.
“We believe that a tightening of the assessment of financial capacity should solve the problem regarding inappropriate access to superannuation on compassionate grounds.”
He says the Association supports access to superannuation benefits for victims of domestic violence. “We would support this under strict and particular conditions. If someone is suffering genuine hardship because of domestic violence and can’t leave a relationship due to a lack of money, then early access to superannuation should be an option.
“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.”