An increasing number of Australians are using their superannuation to cover medical bills as healthcare expenses rise. According to data from the Federal Treasury, the value of super being released on compassionate grounds has increased from around $42 million, in 2000-2001, to $290 million in 2016-2017, with the majority of this being spent on medical expenses.
Furthermore, the number of people using part of their retirement savings to cover medical costs increased by five times over the past six years, from approximately 4,000 people in 2011 to about 22,0000 in 2017.
"The number of people using part of their retirement savings to cover medical costs increased by five times over the past six years, from approximately 4,000 people in 2011 to about 22,0000 in 2017."
Australian Medical Association president Michael Gannon highlights that using super in this way could undermine the overall effectiveness and aim of the superannuation system. Gannon stated that “We don’t oppose regulations that allow the early release of superannuation on medical grounds under compassionate circumstances, but we don’t think superannuation is the appropriate safety net to subsidise inadequate health funding.”
Meanwhile, Revenue and Financial Services Minister Kelly O’ Dwyer has urged Treasury to review the terms and conditions around the early release of superannuation.
RFi Group data suggests that, in addition to dipping into super, Australians are also dipping into their savings, with around 3 in 5 savings account holders withdrawing money from their savings, with 29% doing so to cover unexpected expenses.