Growing Pressure as Compassionate Withdrawals Hit New Heights
Thousands of Australians are accessing their superannuation on compassionate grounds, with the latest figures showing a sharp rise in approvals for medical-related withdrawals. In the 2024-25 financial year, more than $1.37 billion was approved for medical reasons, climbing from just over $1 billion the previous year and edging closer to the $1 billion mark more than a decade after the scheme began. The trend, led by dental work and other medical needs, has prompted heightened scrutiny from regulators who warn that some practitioners and agents may be exploiting the system.
What Counts as Compassionate Access?
Under Australia’s compassionate release provisions, individuals can withdraw from their superannuation to cover medical, dental, palliative, disability, or home foreclosure costs in narrowly defined situations. To qualify for early access on medical grounds, two medical practitioners must verify that the procedure is necessary to alleviate pain, treat a life-threatening condition, or address mental health concerns. The ATO notes that while early access is permitted, it is intended for limited, critical circumstances rather than cosmetic or elective treatments.
Dental Costs Dominate the Spend
The data highlight a striking trend: dental procedures are by far the largest category of compassionate withdrawals. In 2024-25, dental-related approvals amounted to about $817.6 million. Beyond dentistry, treatment for weight loss (around $254.9 million) and in vitro fertilisation (IVF) (roughly $74.2 million) also saw increases from the prior year. The dental surge has become a central talking point for consumer groups who say gaps in health coverage drive people to tap super funds, sometimes under challenging financial circumstances.
Regulator Alarm Over Misuse
Regulators are concerned that some health practitioners and agents are falsely promoting compassionate access to pay for expensive or unnecessary procedures. Deputy Commissioner Emma Rosenzweig emphasised that not every medical claim warrants early withdrawal, and accuracy in medical reporting is critical. ATO data show that about 30% of medical-treatment applications were rejected in the last year for not meeting compassionate release requirements.
In response, the Australian Health Practitioner Regulation Agency (AHPRA) and the Dental and Medical Boards issued new guidance. The aim is to ensure thorough assessments by appropriately skilled practitioners and to protect patients’ best interests from financial incentives. The guidance reinforces that practitioners should base recommendations on medical necessity and patient wellbeing, not potential payments or fee-driven outcomes.
Who Is Accessing Early Withdrawals?
Demographic patterns reveal that people aged 31–55 accounted for about 75% of compassionate withdrawals in 2024-25. Those with annual incomes between $45,001 and $120,000 represented more than 60% of approvals. Geographically, Queensland led with about 31% of approvals, followed by New South Wales (28%) and Victoria (25%). Women remained slightly more represented than men (54% vs 46%), a gap that has narrowed since 2018-19 when women were 64% of withdrawals.
What This Means for Retirement Security
Experts warn that dipping into super early can have lasting consequences for retirement savings, especially for women who already face long-term savings gaps. Advocates stress that while compassionate access serves genuine needs, it should not undermine financial security later in life. Consumer groups argue that broader health system reform—particularly around dental coverage—could reduce the need to use super funds for routine or elective care.
Healthcare advocates encourage individuals to seek a second medical opinion and to explore all available funding options before tapping super. Xavier O’Halloran, CEO of Super Consumers Australia, noted reports of patients being massively overcharged for procedures. He urged vigilance from patients and practitioners alike, stressing that ethical practice and informed consent remain paramount even in financially distressed circumstances.
What Comes Next?
With regulator bodies issuing new guidance and watchdogs monitoring practice, the landscape around compassionate super withdrawals is likely to evolve. The ATO and AHPRA say ongoing compliance checks and clear reporting will be essential to protect vulnerable Australians while maintaining access for those with legitimate medical needs.
