The Super Members Council (SMC) has backed fresh regulator warnings over the growing use of early super withdrawals to fund non-essential dental and medical procedures, arguing the practice risks inflicting long-term damage on Australians’ retirement savings.
The industry body said a joint warning from the Australian Taxation Office and the health practitioner regulator reflected mounting concern about operators encouraging people to tap super for treatments that do not align with the purpose of compassionate release rules.
According to the SMC, compassionate access to super was designed as a last-resort measure for people facing critical, urgent or life-threatening medical needs, not as a way to pay for elective or unnecessary procedures.
The council pointed to recent ATO data showing applications for early access to super for dental work have risen sharply, with regulators also flagging concerns about inaccurate medical reports, aggressive sales tactics and unlicensed financial advice being given to patients.
SMC warned the financial hit could be significant, particularly for younger members who lose the benefit of decades of compound returns after pulling money out early.
Its analysis found someone who withdraws $20,000 from super at age 30 for a non-essential dental or medical procedure could end up with $93,000 less at retirement.
The council said the trend highlighted the broader retirement risk of allowing super to be marketed as a payment source for discretionary health treatments, with early withdrawals also increasing the likelihood of greater financial stress later in life and more reliance on the Age Pension.
The SMC is using the latest warning to renew its push for tighter consumer protections, including a ban on advertising that promotes early access to super for non-essential dental or medical procedures, a ban on third-party fees for facilitating compassionate release applications, and stronger warnings about the long-term financial cost of withdrawing savings early.
“We’re deeply concerned by an avalanche of advertising trying to lure Australians to raid their super for non-essential dental and cosmetic procedure — urging people to take their super out early robs them of money they will need to live on for decades in retirement,” said the council’s CEO Misha Schubert.
“Withdrawing super for non-essential dental or medical work can do major financial damage to your retirement savings, and you also pay extra tax if it is withdrawn early.”
“We need stronger consumer protections, including a ban on advertising that pushes people into early withdrawal for non-essential treatments and there must be much clearer warnings about the long-term financial damage.”
