A sudden surge in Australians accessing their superannuation early has raised alarms about potential misuse of the system. The Australian Taxation Office (ATO) and the Australian Health Practitioner Regulation Agency (AHPRA) are increasingly concerned about the rapid growth in requests, many of which relate to medical procedures. While the compassionate release of super is meant to assist those in urgent need, the dramatic rise in applications is prompting closer scrutiny.
Over $1.4 billion was withdrawn from superannuation funds last year alone, with the ATO reporting a sharp increase in requests for early access under the “compassionate grounds” provision. This provision is designed to cover critical medical treatments and other urgent financial needs, but with a notable rise in applications, the question arises: Is the system being misused?
A Surge in Compassionate Release Requests
According to ATO deputy commissioner Emma Rosenzweig, requests for early superannuation access have more than doubled in the past two years. The rise is largely attributed to medical expenses, such as treatments for chronic pain and life-threatening illnesses. In the 2024-25 period, there were a total of 93,500 applications, with 30% of them rejected due to not meeting the criteria for compassionate release.
The rules are clear: superannuation should only be accessed for critical medical needs, such as alleviating pain or treating life-threatening conditions. Cosmetic procedures and routine medical treatments do not meet these standards, and yet, such requests continue to increase, raising suspicions that some applicants may be using the system to cover non-essential procedures. The ATO and AHPRA are now working together to investigate these trends and ensure the system is not exploited.
Unnecessary Treatments and Financial Incentives
A growing concern is the role of healthcare professionals in this rising trend. According to Justin Untersteiner, CEO of AHPRA, some practitioners may be encouraging patients to undergo expensive or unnecessary treatments to take advantage of the compassionate release process. These medical reports, which are essential for accessing early super, must be based on patient need, not financial incentives.
New guidance has been issued to doctors and dentists to help combat these issues, ensuring that any medical recommendations made are rooted in genuine patient need and not influenced by potential financial gain. The penalties for breaching these standards range from cautions to referrals to tribunals, underscoring the importance of maintaining ethical medical practices.
Withdrawing funds from superannuation before retirement carries serious long-term consequences. Australians could lose substantial amounts of retirement savings, potentially compromising their financial future. While the compassionate release scheme was intended to help those in genuine need, misuse of the system could ultimately undermine its integrity and purpose.
In light of these developments, both the ATO and AHPRA are intensifying their efforts to safeguard superannuation funds from misuse, ensuring that early access is granted only in cases of genuine need.
