Gaining early access to superannuation

19.101 There are three key forms of superannuation benefits:

  • Preserved benefits—which must be retained in superannuation until ‘preservation age’;[79]
  • Restricted non-preserved benefits—which cannot be accessed until an employee meets a condition of release; and
  • Unrestricted non-preserved benefits—which do not require an employee to meet a condition of release and may be accessed upon request.

19.102 Generally, superannuation funds cannot be accessed before the member reaches the required ‘preservation age’. However, s 79B of the Superannuation Act provides limited grounds for the early release of preserved or restricted non-preserved benefits, on the basis of severe financial hardship or compassionate grounds. These grounds are defined in the SIS Regulations.[80]

19.103 The grounds for early release are limited in order to reflect the policy balance sought: on the one hand, the overriding policy objective that superannuation benefits are to be preserved to provide income for retirement, and on the other, the recognition that certain exceptional circumstances may justify the early release of benefits to a member.

19.104 In the context of family violence, there are a number of additional tensions with respect to early release. For example, in the course of this Inquiry, many stakeholders have emphasised the need to consider the impact of family violence on the financial independence and security, and ultimately safety, of victims.

19.105 The Australian Domestic and Family Violence Clearinghouse (ADFVC) noted that, in their research on the impact of family violence on women’s financial security, the overwhelming majority of women were experiencing financial hardship as a result of the abuse, and that for women who were unable to stabilise their financial situation, the consequence was a downward spiral of debt and poverty. [81]

19.106 The ADFVC also stressed that financial hardship in turn impacts on the safety of victims of family violence. For example, it affects their

decisions to leave the relationship, their capacity to take up safety measures (like locks, alarms, or to relocate), to seek treatment for recovery (e.g. physiotherapy, psychiatric treatment, operations, dental or optical treatment/surgery). Some women spoke about returning to partners because of being unable to support themselves (and their children) on their own.[82]

19.107 In light of concerns about the impact of family violence and financial hardship on victims, it may be appropriate for a victim of family violence to gain early access to superannuation, for example to leave a violent relationship or take measures to ensure their safety.

19.108 Ideally however, as outlined at the beginning of this chapter, social security should be the system through which victims of family violence are able to access immediate financial support.[83]

19.109 For example, Women’s Legal Services NSW argued that victims of family violence should be entitled to early access to superannuation:

only as a last resort. Instead, access to adequate financial support should be improved by addressing issues with social security, employment and victims’ compensation, including access to legal services that can be necessary to access these funds.[84]

19.110 In its submission, ASFA emphasised that it was:

supportive of the need for the Australian community to more broadly support means by which impacted individuals can obtain relief and escape the circumstances of domestic violence. These other means should emerge from the social security framework where urgent and immediate funding could be provided to victims.[85]

19.111 In addition, other concerns include that:

  • the purpose of early release of superannuation to victims of family violence—namely increasing safety through improved financial independence and security­­—may be frustrated if the funds released were accessed at the instigation of, or by, the perpetrator of violence. In particular, in such circumstances early release may deplete a victim’s retirement funds, which may otherwise have been the only source of funds a victim could protect; and

  • women, in particular, are already significantly disadvantaged in the accumulation of adequate superannuation by virtue of the gender pay gap and broken and casual employment histories.[86] In light of this disadvantage, and given that women experience family violence at higher rates than men, early access to superannuation risks compounding the inadequacy of a female victim’s superannuation benefits on retirement. [87]

19.112 With these tensions in mind, in determining what changes can be made to the superannuation legal framework to protect the safety of victims of family violence, the ALRC is considering possible circumstances in which victims may be able to gain early access to superannuation. In particular, the ALRC is considering the extent to which people experiencing family violence can access the existing grounds for early release, and whether an additional ground specifically designed for victims of family violence should be created.

Severe financial hardship

19.113 The Superannuation Act and SIS Regulations provide for early release of superannuation benefits on the grounds of severe financial hardship. Different conditions for early release apply depending on the age of the member, in particular whether the member is under or over ‘preservation age’.[88]

19.114 To satisfy the ground of ‘severe financial hardship’ under regs 6.01(5)(a) and 6.01(5A) of the SIS Regulations, applicants (if under preservation age) must prove:

  • they have been receiving ‘Commonwealth income support payments’continuously for the past 26 weeks; [89]

  • they were still in receipt of those payments at the date of the written evidence provided in support of the application (which must not be more than 21 days prior to the application); and

  • they are unable to meet reasonable and immediate family living expenses.[90]

19.115 If these requirements are satisfied, the trustee may release a lump sum of between $1,000 and $10,000. [91]

19.116 To satisfy the ground of ‘severe financial hardship’ under reg 6.01(5)(b) of the SIS Regulations, applicants (if they have reached preservation age plus 39 weeks) must prove:

  • they have been receiving ‘Commonwealth income support payments’ for a cumulative period of 39 weeks after they reached their preservation age; and

  • they were not ‘gainfully employed on a full-time, or part-time, basis on the date of the application for cashing of his or her benefits, or restricted non-preserved benefits, in the entity’.[92]

19.117 Where a person satisfies these requirements, there is no limit on the amount that can be released.[93]

19.118 The definition of ‘Commonwealth income support payments’ is the same with respect to the requirements for applicants under and over the preservation age. The definition includes income support payments, supplements and pensions, but excludes: Austudy, Youth Allowance paid to a person who is undertaking full-time study, payments made under the Community Development Employment Projects Scheme (CDEP Scheme) and certain drought relief and farm income support payments.[94]The ALRC understands that these payments were excluded on the basis that they were designed to assist in meeting study and other costs, the intention was not to provide full financial support and, where it involves a study related cost, individuals chose to undertake a course of study having regard to the financial consequences of doing so.

19.119 The definition also excludes other forms of payment including workers’ compensation and transport accident and personal income protection payments due to disabilities. In 2002, the Senate Select Committee on Superannuation and Financial Services identified the potential need for people on these types of payments to be eligible to apply for early access on the basis of severe financial hardship.[95]

19.120 The trustees of a superannuation fund are responsible for determining the release of benefits on the basis of severe financial hardship. APRA provides guidance to trustees in applying the severe financial hardship ground requirements in the form of Superannuation Circular No I.C.2 Payment Standards for Regulated Superannuation Funds.[96] The Circular does not provide any direction for trustees in determining whether, for example, an applicant is unable to meet reasonable and immediate family living expenses.[97]

19.121 There is no prescribed time limit within which funds must process applications for early release on the ground of severe financial hardship.

Issues Paper

19.122 In the Superannuation Law Issues Paper, the ALRC noted that victims of family violence may face difficulty in accessing early release of superannuation on grounds of severe financial hardship.

19.123 The ALRC focused attention on the requirements in relation to applicants under the preservation age. In particular, the ALRC outlined concerns expressed in relation to the requirement under reg 6.01(5) of the SIS Regulations that an applicant must have been receiving Commonwealth income support payments continuously for the 26 weeks prior to making the application for early release. For example, the ALRC outlined that where victims were not previously eligible for social security payments due to income or assets tests, they may only be eligible to receive them once they are no longer considered to be a ‘member of a couple’ and their income and assets are no longer pooled. Accordingly, victims may have to wait at least 26 weeks to become eligible for early access to superannuation. The ALRC noted that this may be the period when they are suffering the most severe financial hardship.

19.124 In 2002, the Senate Select Committee on Superannuation and Financial Services recommended that the Australian Government should consider extending the criteria that govern early access to superannuation. It expressed the opinion that there was merit in the suggestion of increasing the flexibility of the current requirement for 26 weeks continuous receipt of income support payments to 26 out of a possible 40 weeks.[98] In line with that recommendation, in the Superannuation Law Issues Paper the ALRC asked if the SIS Regulations should be amended to require that an applicant, as part of satisfying the ground of ‘severe financial hardship’, has been receiving a Commonwealth income support payment for 26 out of a possible 40 weeks, rather than the current requirement of continuous receipt of payment for 26 weeks.[99]

Submissions and consultations

19.125 As the ALRC only raised issues with respect to applicants under the preservation age in the Superannuation Law Issues Paper, stakeholder responses focused on this issue.

19.126 As a preliminary point, a number of submissions noted that eligibility for early access to superannuation benefits on the basis of severe financial hardship is limited to those who are already in receipt of income support payments.[100]

19.127 The Commonwealth Ombudsman expressed support for the suggested amendment of the 26-week test to 26 out of a possible 40 weeks, stating that:

The suggested amendment would mean that a more consistent and sensitive approach is taken to assist people, including those subject to family violence, to gain early access to their superannuation.[101]

19.128 Similarly, several stakeholders criticised the inflexibility of the 26-week test under reg 6.01(5) of the SIS Regulations, submitting that it may be difficult for victims of family violence to demonstrate continuous receipt for 26 weeks where payments have been stopped or suspended for a range of reasons.[102]

19.129 The Ombudsman’s submission provided a number of examples of cases where a person may experience severe financial hardship but fail the 26-week test, including the following case study.[103]

Case Study

Ms B was employed and also received a Parenting Payment Single from Centrelink. The rate of her payment was affected by her fluctuating employment hardship—in some weeks she did not receive any payment although she remained qualified to receive it. In 2009 she lost her job and the bills began to mount up. She applied to have some of her superannuation released on the grounds of serious financial hardship and requested a Q230 letter [evidencing the receipt of Centrelink payments] from Centrelink. However in the preceding 26 weeks, she had not received continuous payments, therefore Centrelink could not issue the Q230 ...The test did not have the flexibility to take into account the fact that, if averaged over the period, Ms B’s fluctuating income was low enough to receive a payment.

19.130 A fuller discussion of the reasons as to why an income support payment may have been stopped or suspended, the effect of a partner’s income on income support payments, the provision of evidence as to receipt of income support, and submissions in relation to those issues is included in chapters 5 and 7.

19.131 The Ombudsman also expressed concern that the policy intent of the 26-week test—requiring evidence of a person’s dependence on welfare payments to support a claim of severe financial hardship—was not achieved where people whose payments have been interrupted, but were in no better financial position than those in continuous receipt of income support, were denied access to their superannuation benefits.[104]

19.132 However, in acknowledging the competing policy objectives, the Ombudsman expressed the view that:

I recognise the public interest in the policy intention of preservation of superannuation to fund retirements and believe that this may be accommodated through an appropriate restriction on the amount a person can access.[105]

19.133 Submissions opposing amendment to the 26-week test argued that doing so would potentially increase the ease with which superannuation may be accessed early, thereby eroding the overarching goal of preservation of superannuation benefits. For example, ASFA submitted that the appropriate balance between the need to preserve a superannuation benefit with the recognition of limited appropriate circumstances for the grant of early access had already been achieved. It expressed concern that an alteration of this test may allow ‘a person to qualify for early release where they are currently in employment’.[106]

ALRC’s views

Qualifying period

19.134 The ALRC considers that the current requirement that applicants under the preservation age, have been receiving a Commonwealth income support payment for 26 weeks as part of satisfying the ground of ‘severe financial hardship’, under reg 6.01(5)(a) of the SIS Regulations is unnecessarily restrictive.

19.135 In light of the particular issues faced by victims of family violence in obtaining and remaining on continuous income support, many of which are discussed in more detail in Chapters 6 and 7, the ALRC is concerned that the current formulation may operate to exclude victims of family violence from accessing early release on this ground.

19.136 The ALRC is also of the view that the policy intention underlying the test—requiring evidence of a person’s dependence on welfare payments to support a claim of severe financial hardship—is not achieved where people, whose payments have been interrupted but were in no better financial position than those in continuous receipt of income support, are denied early access to their superannuation benefits.

19.137 Accordingly, and in line with the recommendation made by the Senate Select Committee on Superannuation and Financial Services, the ALRC proposes that reg 6.01(5)(a) of the SIS Regulations should be amended to require that an applicant, as part of satisfying the ground of ‘severe financial hardship’, has been receiving a Commonwealth income support payment for 26 out of a possible 40 weeks.

19.138 In relation to the requirements where an applicant is over the preservation age, the ALRC would be interested in hearing from stakeholders whether there any particular difficulties for a person experiencing family violence in meeting the requirements under reg 6.01(5)(b) of the SIS Regulations as part of satisfying the ground of severe financial hardship.

Definition of Commonwealth income support payments

19.139 The policy underlying exclusion of certain payments such as Austudy, Youth Allowance and CDEP Scheme payments from the definition of Commonwealth income support payments was, in part, that these payments were designed to assist in meeting study and other costs, and not to provide full financial support, and the view that individuals choosing to undertake a course of study must have regard to the financial consequences of doing so.

19.140 However, the ALRC has formed the preliminary view that in order to recognise the need of people—and in particular those experiencing family violence—to re-skill or re-enter the workforce and to ensure that someone in receipt of these payments does not need to withdraw from study in order to qualify for a different form of income support, the SIS Regulations may need be amended so as not to preclude an applicant, who may otherwise be able to satisfy the requirements for early release, from applying for access to superannuation.

19.141 In particular, the ALRC would be interested in stakeholder comment on whether Austudy, Youth Allowance and CDEP Scheme payments should be considered Commonwealth income support payments for the purposes of early access on the grounds of severe financial hardship.

19.142 The ALRC welcomes stakeholder feedback on whether the other forms of payment should be included in the determination of Commonwealth income support payments, for example: drought or farm-related payments; workers’ compensation; transport accident; or personal income protection payments due to disability.

APRA guidance

19.143 As outlined above, the trustees of a superannuation fund are responsible for determining the release of benefits on the basis of severe financial hardship. APRA provides very limited guidance to trustees in determining whether an applicant satisfies the ground of severe financial hardship. In particular, as noted above, Superannuation Circular No I.C.2 Payment Standards for Regulated Superannuation Funds, provides no guidance on determining whether an applicant is unable to meet reasonable and immediate family living expenses.

19.144 The ALRC is interested in feedback from stakeholders as to whether it would be appropriate for APRA to amend the Circular in order to provide guidance to trustees in determining what constitutes a reasonable and immediate family living expense for the purposes of the second part of the severe financial hardship test; and the impact family violence may have on determining whether an applicant is unable to meet reasonable and immediate family living expenses.

19.145 In the alternative, the ALRC considers that APRA could work cooperatively with AIST, ASFA and other relevant bodies to develop guidance for superannuation trustees in the form of model guidelines which include information on, for example, what constitutes reasonable and immediate family living expenses.

19.146 Whether included in the Circular or as a separate publication, the ALRC considers such guidance could:

  • contain a definition of family violence;[107]

  • explain the nature, features and dynamics of family violence;

  • indicate that it may not be appropriate to consider a family’s combined resources and outgoings in determining whether an applicant is suffering severe financial hardship in circumstances of family violence;[108] and

  • indicate that what constitutes a reasonable and immediate living expense may differ in cases involving family violence, for example, where an applicant needs to flee their home.

Time limit

19.147 An application for early release of superannuation made by a victim of family violence is likely only to be made in extreme cases. As a result, the period of time before the victim can access the funds (if early release is approved) should be as short as possible. This issue is also discussed below with respect to time limits for processing of applications for early release on compassionate grounds.

19.148 There is currently no time limit within which funds must process applications for early release on the basis of severe financial hardship. As a result, the ALRC would be interested in stakeholder experiences in relation to the length of time taken in practice to process applications for early release on the basis of severe financial hardship and, if necessary, what procedural steps could be taken to facilitate the prompt processing of claims, particularly in circumstances involving family violence.

19.149 In saying this, the ALRC is cautious about suggesting procedural steps or imposing time limits with respect to applications involving family violence where this would create a two-tier system, or where it may provide an incentive to disclose family violence as a means to obtain early access to superannuation funds more quickly. The ALRC also acknowledges stakeholder concerns about imposing additional obligations on trustees, in particular requiring them to make decisions about the existence of family violence.

Proposal 19–2 Regulation 6.01(5)(a) of the Superannuation Industry (Supervision) Regulations 1994 (Cth) should be amended to require that an applicant, as part of satisfying the ground of ‘severe financial hardship’, has been receiving a Commonwealth income support payment for 26 out of a possible 40 weeks.

Question 19–5 Are there any difficulties for a person experiencing family violence in meeting the requirements under reg 6.01(5)(b) of the Superannuation Industry (Supervision) Regulations 1994 (Cth) as part of satisfying the ground of ‘severe financial hardship’? If so, what changes are necessary to respond to such difficulties?

Question 19–6 Should the Superannuation Industry (Supervision) Regulations 1994 (Cth) be amended to allow recipients of Austudy, Youth Allowance and CDEP Scheme payments to access early release of superannuation on the basis of ‘severe financial hardship’?

Question 19–7 Should reg 6.01(5)(a) of the Superannuation Industry (Supervision) Regulations 1994 (Cth) be amended to provide that applicants must either be in receipt of Commonwealth income support payments or some other forms of payment—for example, workers’ compensation, transport accident or personal income protection payments because of disabilities?

Question 19–8 Should APRA Superannuation Circular No I.C.2, Payment Standards for Regulated Superannuation, be amended to provide guidance for trustees in relation to:

(a) what constitutes a ‘reasonable and immediate family living expense’ in circumstances involving family violence; and

(b) the effect family violence may have on determining whether an applicant is unable to meet reasonable and immediate family living expenses?

Question 19–9 As an alternative to Question 19–8 above, should APRA work with the Australian Institute of Superannuation Trustees, the Association of Superannuation Funds of Australia and other relevant bodies to develop guidance for trustees in relation to early release of superannuation on the basis of ‘severe financial hardship’, including information in relation to:

(a) what constitutes a ‘reasonable and immediate family living expense’ in circumstances involving family violence; and

(b) the effect family violence may have on determining whether an applicant is unable to meet reasonable and immediate family living expenses?

Question 19–10 In practice, how long do superannuation funds take to process applications for early release of superannuation on the basis of ‘severe financial hardship’? What procedural steps may be taken to facilitate the prompt processing of applications in circumstances involving family violence?

Compassionate grounds

19.150 The SIS Act and SIS Regulations provide—in addition to severe financial hardship—for the early release of preserved benefits and restricted non-preserved benefits on specified compassionate grounds.[109]

19.151 A person may apply to APRA for early access on compassionate grounds where the benefits are required for a category of narrowly defined expenses. A person may apply for the release of benefits where these are required for:

  • medical treatment costs or medical transport costs (in either case, of the person or a dependant);

  • mortgage assistance to prevent the foreclosure or sale of the person’s principal place of residence;

  • costs associated with modifying the person’s principal place of residence, or vehicle, to accommodate the person’s special needs relating to a severe disability (of the person or a dependant);

  • costs associated with palliative care;

  • costs associated with a dependant’s palliative care, death, funeral, or burial; or

  • expenses in other cases where APRA has determined that the release is consistent with one of the foregoing grounds.[110]

19.152 APRA determines applications for early release on compassionate grounds. APRA (or more specifically, the assessor) must be satisfied that the applicant’s circumstances fit into one of the specified grounds outlined above and, also, that the applicant lacks the financial capacity to meet the expenses without a release of benefits.[111]

19.153 The SIS Regulations also require an assessor to have regard to certain other matters before they can be satisfied that a release is required on the medical treatment, medical transport or mortgage grounds outlined above.[112]

19.154 If a person satisfies the requirements, APRA may release a single lump sum which APRA is satisfied is an amount reasonably required, taking account of the ground upon which the application was made and the applicant’s financial capacity.[113]

19.155 APRA’s Guidelines for Early Release of Superannuation Benefits on Compassionate Grounds (Guidelines) provide guidance to APRA assessors.[114] The Guidelines do not currently refer to the impact family violence may have, for example, on whether an applicant lacks the financial capacity to meet the relevant expenses without a release of benefits. The Guidelines provide that an assessor is required to assess this in light of the evidence provided by the applicant, that assessors may require further information from the applicant and that the evidence should be ‘sufficient to satisfy a reasonable person that the person has met the conditions for release’.[115]

Time limits

19.156 The Guidelines provide that ‘given the nature of the applications, assessors should keep in mind that applicants have a reasonable expectation that APRA will make decisions promptly’.[116]

19.157 APRA’s material for applicants requesting early release on compassionate grounds indicates they aim to process applications within 14 working days (5 days for initial letter and 10 days for application) but it could be up to 30 working days in busy periods. Currently applications can be made using postal mail, fax or email.[117]

Submissions and consultations

19.158 In the Superannuation Law Issues Paper, the ALRC asked whether the SIS Regulations should be amended to provide a specific compassionate ground to enable the early release of superannuation benefits to a victim of family violence. The ALRC envisaged that this would involve amendment to the purposes for which a person may apply for the release of benefits on compassionate grounds to allow early access where required for family violence-related purposes.

19.159 Stakeholders were broadly supportive of the inclusion of family violence for the purposes of early access to superannuation. However. it was unclear whether stakeholders supported the inclusion of family violence as a purpose for which early access to superannuation on compassionate grounds may be required, or the establishment of an entirely new and separate ground of family violence which, because of its nature, would be considered a compassionate ground for early release.

Overarching issues and policy tensions

19.160 The overarching issues and policy tensions in relation to early access to superannuation highlighted by stakeholders were discussed earlier in this chapter. Stakeholders reiterated two key points in the context of early release.

19.161 First, stakeholders emphasised that early access to superannuation should be considered as a last resort;[118] and that, as a first priority, the social security system should be strengthened to allow for the provision of urgent and immediate financial assistance to victims of family violence.[119]

19.162 Secondly, submissions stressed the need to consider this issue in the broader context of the financial position of women generally at retirement, as well as the particular economic situation of victims in situations of family violence.[120]

Family violence and early release

19.163 Broadly speaking, many stakeholders were supportive of the inclusion of family violence as an additional ground for early release of superannuation benefits on compassionate grounds, emphasising the importance of early access to financial resources to enable people experiencing family violence to remove themselves from situations of harm.[121]

19.164 On the other hand, some stakeholders reiterated the overarching policy concerns as the basis for opposing the inclusion of an additional ground, emphasising the importance of preservation of superannuation benefits until retirement, and argued that this policy objective should prevail over expanding grounds for early release.[122]

19.165 However, in considering the potential for any new ground of release, stakeholders emphasised that the eligibility criteria and evidentiary requirements for release would require careful consideration.[123] For example, the ACTU supported making any additional ground for early release ‘subject to the same eligibility criteria as the existing compassionate grounds covered by the Act’.[124] The Ombudsman submitted that careful consideration of the types of information applicants might reasonably be required to provide to the regulator in support of their application was required and that any evidentiary requirements introduced

should take into account the difficulties that people experiencing family violence may have in disclosing this fact and the types of evidence that might realistically be available to them in the situation.[125]

ALRC’s views

19.166 The ALRC considers that there are two key areas in relation to which it is necessary to make comment. The first is the current operation of the compassionate grounds, and the second relates to options for reform of the compassionate grounds, specifically to account for early release for purposes related to family violence.

Current administration of compassionate grounds

19.167 At the outset, the ALRC acknowledges that the purposes for which an applicant may seek early release on compassionate grounds are narrow and involve the exercise of very limited discretion by APRA. That said, where a compassionate ground may otherwise be made out, the ALRC considers that the Guidelines and time limits may be two areas in which the administration of compassionate grounds may be amended to account for applicants experiencing family violence.

19.168 As outlined above with respect to early release on the basis of severe financial hardship, an application for early release of superannuation made by a victim of family violence is likely to be made only in extreme cases. As a result, the period of time before the victim can have access to the funds—if early release is approved—should be as short as possible. While the Guidelines remind APRA assessors that applicants have a reasonable expectation that their application will be dealt with promptly, the ALRC considers that up to 30 working days, even in busy periods, is a long period for processing applications where this may compromise the ability of applicants to take measures to protect their safety.

19.169 In saying this, the ALRC is cautious about suggesting procedural steps or imposing time limits with respect to applications involving family violence, where this would create a two-tier system or where it may ‘incentivise’ disclosure of family violence as a means to obtain access to superannuation funds more quickly. The ALRC also acknowledges potential concerns about imposing additional obligations on APRA assessors: in particular, requiring them to make decisions about the existence of family violence.

19.170 Accordingly, the ALRC would be interested in stakeholder experiences in relation to the length of time taken in practice to process applications for early release on compassionate grounds, and comments on what procedural steps could be taken to facilitate the prompt processing of claims, particularly in circumstances involving family violence.

19.171 The second issue arising in relation to the current administration of the compassionate grounds relates to the content of the Guidelines. The Guidelines do not currently make any reference to the impact that family violence may have, for example, on whether an applicant lacks the financial capacity to meet their expenses without an early release of benefits. The ALRC considers APRA should amend the Guidelines to ensure that they:

  • contain a definition of family violence;[126]

  • explain the nature, features and dynamics of family violence; and

  • indicate that it may not be appropriate to consider a family’s combined resources and outgoings in determining whether an applicant lacks the financial capacity to meet the expenses without a release of benefits in circumstances of family violence.[127]

19.172 The ALRC notes that the inclusion of such information would necessarily result in a need for additional training of APRA assessors in considering family violence-related information.

Options for reform

19.173 The ALRC considers there are two possible approaches to achieve the suggested inclusion of family violence as a ground upon which an applicant may seek early release. These are: to include family violence as a purpose for which an applicant may apply for early access on compassionate grounds; or the creation of a new ground of early release on the basis of family violence.

19.174 If reg 6.19A of the SIS Regulations were to be amended to add family violence to the existing list of purposes for which an applicant may apply for early release on compassionate grounds, the ALRC considers that it should be subject to the same eligibility criteria as the existing purposes. The ALRC would be interested in stakeholder comments on how any such amendment should operate in practice, including the types of:

  • family violence-related costs that should be included under the new purpose; and

  • evidence an applicant may be required to provide in support of their application.

19.175 Another approach may be to establish a new separate ground of early release. While the ALRC considers that the inclusion of a new ground may supplement the limited existing provisions for early release, the ALRC has several concerns with respect to establishing a new ground, including in relation to:

  • the overarching policy tensions referred to above; and

  • the impact an additional early release ground may have on superannuation funds, if they were to administer the new ground, though it appears that APRA would be the most appropriate body within the current system to administer any new ground.

19.176 The ALRC welcomes submissions on whether a new ground of release is appropriate and, if so, how any such ground would operate in practice. For example:

  • which body should be responsible for administering the new ground—APRA, individual funds or some other body;

  • what criteria should apply;

  • what evidence should be required;

  • if individual funds administer the new ground, should there be common rules for granting early release on the new ground; and

  • what appeal mechanisms should be established—for example, should appeals and/or complaints go to the SCT or the Ombudsman?

Question 19–11 In practice, how long does APRA take to process applications for early release of superannuation on compassionate grounds? What procedural steps may be taken to facilitate the prompt processing of applications in circumstances involving family violence?

Proposal 19–3 APRA should amend the Guidelines for Early Release of Superannuation Benefits on Compassionate Grounds to include information about family violence, including that family violence may affect the test of whether an applicant lacks the financial capacity to meet the relevant expenses without a release of benefits.

Question 19–12 Should reg 6.19A of the Superannuation Industry (Supervision) Regulations 1994 (Cth) be amended to provide that a person may apply for early release of superannuation on compassionate grounds where the release is required to pay for expenses associated with the person’s experience of family violence?

Question 19–13 Should the Superannuation Industry (Supervision) Regulations 1994 (Cth) be amended to provide for a new ground for early release of superannuation for victims of family violence? If so, how should it operate? For example:

(a) which body should be responsible for administering the new ground;

(b) what criteria should apply;

(c) what evidence should be required;

(d) if individual funds administer the new ground, should there be common rules for granting early release on the new ground; and

(e) what appeal mechanisms should be established?

Other issues

19.177 In addition to the issues and proposals outlined above, there are a range of other areas of more general application in relation to which amendments may further protect the financial independence and security of victims of family violence. These include:

  • application forms for early release;

  • training and education in the context of applications for early release;

  • appropriate ways of contacting applicants for early release who have disclosed family violence;

  • time limits for funds to respond to complaints about applications for early release; and

  • data collection and system integrity measures.

Application forms for early release

19.178 In light of many of the questions and proposals outlined above with respect to early access to superannuation, the question arises as to what is the most appropriate way to make provision for applicants to disclose family violence where they consider it is relevant to their application for early release. For example, in demonstrating severe financial hardship, or that they lack the financial capacity to meet particular expenses, an applicant may need to indicate that their partner’s income should not be considered. One such way may be through amendment to application forms for early release. The ALRC would be interested in stakeholder feedback on whether application forms for early release currently include some area, box or similar under which an applicant could disclose family violence where it is relevant to the application for early release. If they do not, should they do so, and if so, how?

Training

19.179 Throughout this Inquiry, stakeholders have consistently emphasised the need to complement proposals for reform with appropriate education and training. In light of some of the questions and proposals outlined above, which would necessarily result in APRA (and possibly superannuation fund) staff having to consider issues of family violence in determining whether to grant early release, it is necessary to consider the training needs of those staff.

19.180 As a result, the ALRC would be interested in stakeholder feedback on what training is currently provided to APRA and superannuation fund staff, and whether family violence and its impact on the circumstances of an applicant could be included, either as a specific component of existing training, or as a separate type of training.

Contacting applicants

19.181 In situations involving family violence, an applicant victim may have made an application for early release of superannuation for the purposes of, preparing to leave a violent relationship. In such circumstances the safety of the victim may be jeopardised in circumstances where the superannuation fund or APRA contacts the victim in relation to their application.

19.182 For example, the Guidelines provide that when additional information is required in relation to an application, it should be sought ‘as quickly as possible, usually by telephone’.[128]

19.183 The ALRC would be interested in hearing about:

  • ways superannuation funds and APRA currently contact applicants; and

  • whether there is, or should be, some mechanism or process in relation to applications involving family violence that would ensure the safety of victims. For example, inclusion of a ‘safety flag’ on a member or applicant’s file that would alert anyone accessing the file to be conscious of the need to ensure information about any early release application is only disclosed to the applicant, and in a safe and appropriate manner.

19.184 The ALRC is conscious that the release of information is already governed in part by the Privacy Act 1988 (Cth).

Time limits for fund responses to complaints

19.185 Where the trustee of a superannuation fund has made a decision, for example, to deny an application for early access, an applicant may make a complaint to the SCT that the decision is or was unfair or unreasonable.[129]

19.186 However, under s 19 of the SRC Act, the SCT can only deal with a complaint under s 14 if:

(a) a complaint about the same subject matter was previously made to an appropriate person under arrangements for dealing with such complaints made under section 101 of the [SIS Act]; and

(b) the complaint so made was not settled to the satisfaction of the complainant within 90 days or such longer period as the Tribunal allows.[130]

19.187 Section 101 of the SIS Act provides that trustees have a duty to establish arrangements for dealing with inquiries or complaints and that an inquiry or complaint will be dealt with within 90 days after it was made.[131]

19.188 Where a complaint about a fund not granting an application for early release is made by a victim of family violence, it is likely the application was made in circumstances where time is of the essence. A three month waiting period for a response, prior to being able to make an application to the SCT, appears to restrict access by individuals to a review mechanism in circumstances where they require urgent consideration of their complaint.

19.189 While the ALRC acknowledges the administrative considerations involved in imposing a shorter timeframe, and the view that urgent payments may be more appropriately made available through the social security system,[132] the ALRC would be interested in feedback from stakeholders as to the impact of the 90 day period on applicants who are experiencing family violence and whether a 30 day period may address any concern about the length of the waiting period.

Data collection and systems integrity

19.190 As outlined in Chapter 2, systems integrity is an important theme underlying this Inquiry. The early release of superannuation benefits is currently allowed in certain limited circumstances outlined above. If a new ground for early release of superannuation on the basis of family violence were introduced (and potentially, in any event) the ALRC considers it would be useful to introduce some data collection mechanism to:

  • ensure system integrity—that is, to avoid applicants making multiple applications for early release on different grounds or from different funds; and

  • provide comprehensive data, the availability of which would provide a sound evidence base upon which the government could make policy in this area.

19.191 This is consistent with the guiding principles developed in the course of the Super System Review with respect to the need for high quality research and data.[133]

19.192 The ALRC welcomes feedback on how such data should be collected, particularly in light of Super Stream reforms and standard business reporting, whether APRA is the most appropriate body to collect any such data and how it should be available.

Other issues

19.193 Finally, the ALRC welcomes comment on any other issues of relevance to the treatment of family violence in Commonwealth superannuation law.

Question 19–14 What amendments, if any, should be made to application forms for early release of superannuation to provide for disclosure of family violence where it is relevant to the application?

Question 19–15 What training is provided to superannuation fund staff and APRA staff who are assessing applications for early release of superannuation? Should family violence and its impact on the circumstances of an applicant be included as a specific component of any training?

Question 19–16 In practice, how do superannuation funds and APRA contact members or those who have made an application for early release of superannuation? Is there, or should there be, some mechanism or process in place in relation to applications involving family violence to deal with safety concerns associated with:

(a) contacting the member or applicant; or

(b) the disclosure of information about the application?

Question 19–17 Should the 90 day period for a superannuation fund to respond to a complaint by a member be reduced to 30 days?

Question 19–18 Should there be central data collection in relation to applications for early release of superannuation in order to identify:

(a) the extent to which funds are being accessed early on the basis of any new family violence ground, including numbers of applications and success rates; and

(b) whether there are multiple claims on the same or different funds?

If so, which body should collect that information, and how?

Question 19–19  Are there any other ways in which superannuation law could be improved to protect those experiencing family violence.

[79] Preservation age ranges from 55 to 60 depending on date of birth.

[80]Superannuation Act 1976 (Cth) s 79B; Superannuation Industry (Supervision) Regulations 1994 (Cth) reg 6.01.

[81] ADFVC, Submission CFV 26, 11 April 2011.

[82] Ibid.

[83] See chapters 5–8 of the Discussion Paper.

[84] Women's Legal Services NSW, Submission CFV 28, 11 April 2011.

[85] Association of Superannuation Funds of Australia, Submission CFV 24, 8 April 2011.

[86] Australian Council of Trade Unions, Submission CFV 39, 13 April 2011.

[87] See, eg, Australian Law Reform Commission, Equality Before the Law: Justice for Women (Part 1), Report 69 (1994).

[88]Superannuation Act 1976 (Cth) s 79B; Superannuation Industry (Supervision) Regulations 1994 (Cth) sch 1, reg 6.01(5).

[89]Superannuation Industry (Supervision) Regulations 1994 (Cth) reg 6.01(2).

[90] Ibid reg 6.01(5), (5A).

[91] Ibid sch 1, pt 1.

[92] Ibid reg 6.01(5)(b).

[93] Ibid sch 1, pt 1.

[94] Ibid reg 6.01(2). The ALRC understands that from 1 July 2009, CDEP participants were required to apply for other income support payments but that CDEP participants who were earning CDEP wages at 30 June 2009 can continue to receive wages until at least 1 April 2012, as long as they remain eligible: Centrelink, Community Development Employment Projects <www.centrelink.gov.au/internet/internet.
nsf/services/cdep.htm> at 5 July 2011.

[95] Senate Select Committee on Superannuation and Financial Services—Parliament of Australia, Early Access to Superannuation Benefits (2002).

[96] Australian Prudential Regulation Authority, Superannuation Circular No I.C.2: Payment Standards for Regulated Superannuation Funds (2006).

[97] Ibid.

[98] Senate Select Committee on Superannuation and Financial Services—Parliament of Australia, Early Access to Superannuation Benefits (2002), [4.36]–[4.40].

[99] Australian Law Reform Commission, Family Violence and Commonwealth Laws—Employment and Superannuation Law, ALRC Issues Paper 36 (2011) Question 30.

[100] See, eg, Commonwealth Ombudsman, Submission CFV 16, 6 April 2011.

[101] Ibid.

[102] Welfare Rights Centre NSW, Submission CFV 70, 9 May 2011; Commonwealth Ombudsman, Submission CFV 16, 6 April 2011; WEAVE, Submission CFV 14, 5 April 2011; Northern Rivers Community Legal Centre, Submission CFV 08, 28 March 2011; Australian Institute of Superannuation Trustees, Consultation, by telephone, 13 May 2011.

[103] Commonwealth Ombudsman, Submission CFV 16, 6 April 2011.

[104] Ibid.

[105] Ibid.

[106] Association of Superannuation Funds of Australia, Submission CFV 24, 8 April 2011.

[107] As recommended in proposal 3–2 of this Discussion Paper.

[108] This is linked to the issue of separation under one roof in the context of social security considered in chapter 6.

[109]Superannuation Act 1976 (Cth) s 79B; Superannuation Industry (Supervision) Regulations 1994 (Cth) reg 6.19A(1).

[110]Superannuation Industry (Supervision) Regulations 1994 (Cth) reg 6.19A(1). In Flanagan v APRA [2004] FCA 1321 1321, Sackville J explored the meaning of ‘consistent with’ and concluded it was necessary to find out the purpose or objective underpinning the other grounds for release and then the assessor must identify the essential criteria under the new/proposed ground to determine whether they are met. The Guidelines also contain examples of permissible and non-permissible releases under the final ground: Australian Prudential Regulation Authority, Guidelines for Early Release of Superannuation Benefits on Compassionate Grounds (2010) 52-65.

[111]Superannuation Industry (Supervision) Regulations 1994 (Cth) reg 6.19A(2).

[112] See Ibid reg 6.19A(2)-(5).

[113] The sum must not exceed an amount determined by the Regulator being an amount that: a) taking account of the ground and of the person’s financial capacity, is reasonably required; and b) in the case of the mortgage ground, does not exceed an amount equal to the sum of 3 months’ repayments and 12 months’ interest on the outstanding balance of the loan: Ibid column 3, pt 1, sch 1.

[114] Australian Prudential Regulation Authority, Guidelines for Early Release of Superannuation Benefits on Compassionate Grounds (2010).

[115] Ibid, 8.

[116] Ibid,12.

[117] Australian Prudential Regulation Authority, Website <http://www.apra.gov.au/> at 4 July 2011.

[118] Women's Legal Services NSW, Submission CFV 28, 11 April 2011; ADFVC, Submission CFV 26, 11 April 2011.

[119] Women's Legal Services NSW, Submission CFV 28, 11 April 2011; Association of Superannuation Funds of Australia, Submission CFV 24, 8 April 2011.

[120] Australian Council of Trade Unions, Submission CFV 39, 13 April 2011; ADFVC, Submission CFV 26, 11 April 2011. This issue is discussed in more detail earlier in the chapter.

[121] Australian Council of Trade Unions, Submission CFV 39, 13 April 2011; Women's Legal Services NSW, Submission CFV 28, 11 April 2011; ADFVC, Submission CFV 26, 11 April 2011; Joint submission from Domestic Violence Victoria and others, Submission CFV 22, 6 April 2011; WEAVE, Submission CFV 14, 5 April 2011; Australian Institute of Superannuation Trustees, Consultation, by telephone, 13 May 2011.

[122] Association of Superannuation Funds of Australia, Submission CFV 24, 8 April 2011.

[123] Australian Council of Trade Unions, Submission CFV 39, 13 April 2011; Commonwealth Ombudsman, Submission CFV 16, 6 April 2011.

[124] Australian Council of Trade Unions, Submission CFV 39, 13 April 2011.

[125] Commonwealth Ombudsman, Submission CFV 16, 6 April 2011.

[126] As recommended in Proposal 3–1 of this Discussion Paper.

[127] This is linked to the issue of separation under one roof in the context of social security considered in Chapter 6.

[128] Australian Prudential Regulation Authority, Guidelines for Early Release of Superannuation Benefits on Compassionate Grounds (2010), 12.

[129]Superannuation (Resolution of Complaints) Act 1993 (Cth) ss 14, 15. Section 15 outlines who may make such a complaint.

[130] Ibid s 19.

[131]Superannuation Industry (Supervision) Act 1993 (Cth) s 101.

[132] For example, through a crisis payment. For discussion of social security measures see chapters 5–8.

[133] J Cooper and others, Super System Review Final Report: Part One—Overview and Recommendations (2010), Overview 4.