The Turnbull Government has announced that Treasury will review the current rules governing early release of superannuation on grounds of severe financial hardship and compassionate grounds.
It will also review whether, and the circumstances in which, superannuation assets should be available to pay compensation or restitution to victims of crime.
The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, said the rules governing early release of superannuation have not changed substantially 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,” Minister O’Dwyer 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.”
An issues paper will be released before the end of this year and the review will make recommendations to Government early in 2018.
The Government is also announcing today that it will transfer the regulatory role of administering the early release of superannuation benefits on compassionate grounds from the Department of Human Services to the Australian Taxation Office (ATO). The transfer is expected to take effect in 2018.
The ATO is responsible for most of an individual’s interactions with the superannuation system — in particular, through its ownership of the superannuation portal for individuals. This change will enable the ATO to provide a more streamlined service to members.
As part of this change, the Government will allow the ATO to notify a superannuation fund when it has authorised early release of superannuation benefits on compassionate grounds.
“This change recognises the existing strong relationship between the ATO and the superannuation industry and reduce the need for manual, paper‑based processes – expediting the release of funds to successful applicants,” Minister O’Dwyer said.
Terms of Reference for a review of the provisions governing the early release of superannuation benefits
Treasury will review whether the current rules governing the early release of superannuation benefits on compassionate grounds and in cases of severe financial hardship (regulations 6.19A and 6.01 of the Superannuation Industry (Supervision) Regulations 1994, respectively) remain fit for purpose.
In making recommendations, it will consider whether these rules appropriately balance the need to:
- preserve superannuation benefits to meet the objective of providing income in retirement to substitute or supplement the Age Pension;
- ensure that superannuation is available for current consumption in certain, limited cases of genuine hardship or where warranted for compassionate reasons; and
- ensure the rules can be administered fairly and effectively.
The review will also consider and make recommendations on whether a perpetrator’s superannuation should be accessible to pay compensation or restitution to a victim of crime; and, if so, the circumstances in which this may be appropriate.
The review will not examine other general conditions of release for superannuation.
Treasury will report to the Government in March 2018.