Cash-strapped Australians are raiding their superannuation funds early to help cover major medical expenses, with dental costs driving a meteoric rise in early withdrawals.
More than double the number of Australians are tapping into their super early compared to before COVID’s temporary release scheme, up a massive 126 per cent.
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Dental is driving the trend, with more than 33,000 Australians approved to pull an average $26,500 from their super last financial year, well ahead of other medical procedures, weight loss and IVF.
“There has been a meteoric rise,” Canstar data insights director Sally Tindall said. “The cost-of-living crunch is taking its toll.”
While the number of approved applications fell slightly last year, a record $1.4 billion was paid out on compassionate grounds.
The federal government is warning it is cracking down on practitioners who encourage early super access to fund cosmetic procedures.
The ATO and Australian Health Practitioner Regulation Agency (AHPRA) are worried unscrupulous practitioners are using pressure tactics, “encouraging their patients to seek access to superannuation for cosmetic reasons and often even inflating the cost of those services,” said AHPRA CEO Justin Untersteiner.
Accessing super funds early should be a last resort, with finance experts warning a few thousand dollars taken now could cost way more down the track when you need it most.
The Super Members Council found a saver withdrawing $20,000 super at age 30 for a non-essential procedure could be $93,000 poorer at retirement.
“People do access superannuation early on compassionate grounds, particularly for chronic and acute health conditions and that’s a really important safeguard that we support,” Untersteiner said.
