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Accessing super to pay medical costs

Superannuation  |  11/01/2018  |   5 min read

A growing number of Australians are accessing their superannuation savings early to pay for medical procedures. This can have long term consequences on their retirement plans, and both superfunds and the medical industry have expressed concerns about the practise.  

According to a report in the Australian Financial Review (AFR) $290 million in super was released in 2016-17 to cover medical costs. This compares with $42 million in 2000-2001.

Federal legislation allows early access to superannuation on compassionate grounds, this includes medical treatment, medical transport, home of vehicle modification and palliative care for terminal illness or injury.

According to the AFR report 15,000 Australians applied for early release on medical grounds in the last financial year. The majority of these claims were for IVF treatment and weight loss procedures.

This has raised concerns about superannuation being used to supplement the health system, and the potential long-term impact on people’s retirement savings.

Australian Medical Association President Dr Michael Gannon said these are highly emotive topics and that, “We don’t want vulnerable patients being taken advantage of [and making financial decisions they might regret in the future].”

Acting Federal Treasurer Kelly O’Dwyer noted that the laws regarding early access to super hadn’t been changed for 20 years and a review was currently in place. In a statement to the press she said it was important to strike a balance between compassion and protecting retirement savings.

Equip members who wish to access their super early need to meet the conditions outlined by Federal law and submit a Financial Hardship application form to the fund. The legislation states that any medical procedures must be for an existing condition that is;

  • a life threatening illness or injury
  • causing acute or chronic pain
  • an acute or chronic mental illness, and
  • the treatment is not readily available through the public health system

You can find additional information about these conditions via the ATO website.

It’s worth noting that early withdrawal of funds from super can have serious long term repercussions on your balance. A 35 year old with $50,000 in super and an income of $70,000 per year is on track to retire with approximately $360,000 in superannuation. Withdrawing $10,000 now would see their overall retirement balance drop by $20,000.*


Find out more about Equip's early release policies. Click here. 


*based on the Equip Retirement calculator. Assumes 9.5% employer contributions, retirement age of 65, and an assertive investment option.

This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383.  MySuper Authorisation Numbers 33813823017672 and 33813823017518  (‘Equip’, ‘the Fund’ and ‘the Equip Rio Tinto Fund’).

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