Renters, domestic violence victims could benefit from early super release

By Lucy Dean

December 21 2017
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Treasury has published its consultation paper on the early release of superannuation benefits, and access for domestic violence victims and renters is up for discussion.

Renters, domestic violence victims could benefit from early super release

Minister for Revenue and Financial Services Kelly O’Dwyer said on Wednesday that she looks forward to “working with stakeholders to ensure that the rules governing early release of superannuation benefits remain fit for purpose”, and that Treasury would review the early release rules to consider victims of crime and domestic violence, people in need of medical assistance and those behind on mortgage repayments.

In a foreword, Ms O’Dwyer said, “Key issues that stakeholders have raised with me include: whether the mortgage foreclosure ground should be extended to rental eviction [and] whether the current rules for release on grounds of severe financial hardship appropriately balance the need for simplicity and consistency with fairness.”

Questioning the ramifications of broadening early release provisions, the review asked: “Is there a fundamental difference between meeting mortgage payments and meeting rental payments which would warrant a difference in treatment (for example, in respect of the asset available to mortgagees once all repayments have been made)?”

The review acknowledged stakeholder views that current early release allowances for people behind on mortgage repayments is “inconsistent” as renters in similar levels of hardship do not have that option.

It also registered stakeholder opinion that “renters and mortgagees should have equal access to their superannuation benefits as they are in similar situations (that is, both might lose their home)”.

However, it also put that the current early release for mortgagors behind on payments was permissible because of the “preservation principle”; a mortgage promotes eventual ownership of a long-term asset, while renting does not.

Among discussions of early release for weight loss treatment, mental illness and recompense for victims of crime, the review also considered early access for victims of domestic violence.

“Early access to superannuation benefits may reduce financial security in retirement and exacerbate the savings gap between men and women. The government recognises the difficulties facing victims of domestic violence and provides support through timely and targeted assistance, including through the welfare system,” it said.

“There is a trade-off between the principles of ‘genuine hardship’ whereby superannuation may help meet short-term financial needs, and ‘preservation’ of income for retirement. It is an open question whether early release for victims of domestic violence should be considered as a ‘last resort’ where other forms of assistance have been inadequate.”

However, the review also noted that the Australian Law Reform Commission does not consider early access for domestic violence victims to be appropriate.

The review put to stakeholders whether there are situations “outside of the current compassionate grounds” in which early access for victims of domestic violence could be permissible.

Earlier this month, industry fund HESTA called for family violence to be considered for early release.

“We agree with the government that it’s high time current arrangements relating to the early release of superannuation on financial hardship or compassionate grounds be reviewed,” HESTA CEO Debby Blakey said.

“It’s also encouraging that the government is going to look at making superannuation available to pay compensation or restitution to victims of crime. Family violence victims and survivors are victims of crime and they too should be able to access the perpetrators’ super to assist their recovery and rebuild their lives.”

Continuing, she noted that financial barriers can often prevent women from leaving violent relationships.

“In the context of the tragic fact that each year in Australia, on average, at least one woman a week is killed by a partner or former partner, this review needs to consider the immediate needs of those seeking to escape or recover from family violence,” Ms Blakey said.

“Women already retire with almost half the super of men, and they shouldn’t have to use their super for this purpose. But family violence is one of the rare situations in which short-term financial needs are more compelling than the need to preserve superannuation for retirement.”

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