Discussion paper

Early release of superannuation benefits: under compassionate and financial hardship grounds and for victims of crime compensation

Victims of crimes Compensation Superannuation Australia
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apo-nid173926.pdf 1.03 MB

The Government recognises there should be guiding principles to provide a framework for this review, to assess whether the provisions for early release of superannuation benefits under compassionate grounds and severe financial hardship are fit for purpose.

The principles will not always point in the same direction. 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.

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