House of Representatives

Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011

Second Reading Speech

Senator FEENEY (Victoria-Parliamentary Secretary for Defence)

The Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011 introduces amendments which will transfer responsibility for the general administration of the early release of superannuation on compassionate grounds from the Australian Prudential Regulation Authority and Commissioner of Taxation, to the Chief Executive Medicare. This Bill provides for a change in administrative responsibility for this function, current policy in respect of the early release of superannuation will not change.

Early Release of Superannuation on Compassionate Grounds

The purpose of superannuation is to provide benefits for members on retirement after reaching their preservation age, or for their dependents in the event of the member's death. However, a member's preserved superannuation benefits may be released before preservation age in some strictly limited circumstances, including on compassionate grounds.

Compassionate grounds are defined in the Superannuation Industry (Supervision) Regula­tions and the Retirement Savings Accounts Regulations, and cover expenses in respect of medical treatment, medical transport, modifica­tions necessary for the family home or motor vehicle due to severe disability, palliative care and funeral expenses. Funds may also be released on compassionate grounds to prevent the fore­closure of a mortgage or exercise of a power of sale over the member's principal place of residence.

The regulator may also approve the release of benefits where the regulator determines that the release would be consistent with one of the specified compassionate grounds.

As I have already noted, this Bill does not change the criteria for early release.

Administration of the Function

When a person is seeking to access their preserved superannuation benefits on compassionate grounds, they can apply to the regulator for a determination that an amount of their benefits can be released. The final decision on whether a release is permitted rests with the trustees of the person's fund, subject to the governing rules of the fund.

APRA is the regulator for all APRA-regulated superannuation funds, and is therefore responsible for the administration of early release of superannuation on compassionate grounds for these funds. The Commissioner of Taxation is the regulator in respect of self managed superannuation funds.

Administration of the function involves the operation of a call centre and assessing and ruling on each application for release. This function does not fit well with APRA's legislative role as the prudential regulator of the Australian financial services industry. The Government considers that this function would be administered more cost effectively by an agency which deals with other elements of income support and has an efficient customer support infrastructure.

The Government has determined that Medicare Australia is the agency best placed to take on the function. Medicare Australia was chosen as it can develop the function as a companion activity to the Small Business Superannuation Clearing House and it has use of existing technology and experience in electronic business transactions which provides significant potential to streamline the program.


Medicare Australia is currently undertaking the general administration of early release on compassionate grounds under delegation from APRA. Administration was outsourced by APRA through a service agreement between APRA and Medicare Australia. As a consequence, Medicare Australia has gained a comprehensive under­standing of the function ahead of the formal legislative transfer.

This Bill represents the second stage in the transfer process. It will give effect to the formal transfer of the function from APRA to Medicare Australia.

Part 1 of Schedule 1 to the Bill will amend the Superannuation Industry (Supervision) Act 1993 and the Retirement Savings Accounts Act 1997 to provide that the Chief Executive Medicare is the regulator for the purposes of the general administration of making determinations in respect to the release of superannuation benefits on compassionate grounds.

Part 2 of Schedule 1 will amend the Australian Prudential Regulation Authority Act 1998 to allow the function to continue to be funded by superannuation industry levies.


The transfer of responsibility for this function is a machinery of government change, with no financial impact, and no compliance cost to business.

Medicare Australia is better suited to administer this function, and after it becomes formally responsible for administration of early release on compassionate grounds, there may be scope to considerably streamline the function.

Full details of the amendments are contained in the explanatory memorandum.

Debate adjourned.