Overview: A Growing Trend in Compassionate Super Withdrawals
Thousands of Australians are tapping into their retirement savings on compassionate grounds, with the latest figures showing more than $1.4 billion approved for medical, dental, and related expenses in the 2024-25 financial year. This marks another notable rise from prior years and underscores a broad shift in how Australians access super to cover health costs.
The ATO notes that the majority of approvals in recent years have been for medical treatment or transport, and last year’s data closely mirror that pattern. Dental procedures emerged as the single largest category, underlining a persistent gap in public funding for dental care in Australia.
Regulators Respond: Curbing Misuse in Compassionate Release
Both the Australian Taxation Office (ATO) and the Australian Health Practitioner Regulation Agency (AHPRA) have voiced concerns about business models and practitioner practices that appear to misuse compassionate grounds to fund expensive or non-essential treatments. Deputy Commissioner Emma Rosenzweig warned that access to super on compassionate grounds is permitted only in tightly defined circumstances — typically for critical medical and dental procedures, not cosmetic or elective treatments.
In response, AHPRA and the Dental and Medical Boards of Australia issued new guidance to ensure assessments are thorough and patient-centered. The aim is to restore trust and ensure that decisions are in the patient’s best interests, free from financial incentives that could distort medical necessity.
What’s Driving the Surge?
The amount approved for medical reasons in 2024-25 reached roughly $1.37 billion, up from just over $1 billion in 2023-24 and far higher than the $389 million seen in 2018-19. Dental care accounted for $817.6 million of that total, a figure that highlights the outsized burden dental costs place on households when public subsidies are limited.
Other notable categories included weight loss and IVF treatments, which together comprised a meaningful portion of the non-dental medical approvals. Analysts emphasize that the dental funding gap, coupled with rising healthcare costs, makes early access to super an appealing option for many families. However, this also raises questions about long-term retirement security, especially for women who historically have faced greater retirement savings shortfalls.
Who Is Accessing Super Early?
Demographic data show that people aged 31–55 accounted for the largest share of compassionate withdrawals, representing about three-quarters of approvals in 2024-25. Income brackets between $45,001 and $120,000 were responsible for more than 60% of transfers, with Queensland, New South Wales, and Victoria leading in regional uptake.
Gender trends indicate women remained slightly more likely than men to access super early (54% vs 46%). Still, the gap has been narrowing since 2018-19, when women accounted for 64% of withdrawals. Experts warn that while early access can provide necessary relief, it may reduce future super balances and retirement security, particularly for women and other vulnerable groups.
What Consumers Should Know
For an early withdrawal to be approved, two medical practitioners must confirm the necessity — for alleviating pain, treating a life-threatening condition, or addressing significant mental health needs. Critics say some practitioners may submit reports that overstate necessity or align more with financial gain than patient welfare. The ATO notes that around 30% of medical withdrawal applications were rejected last year for not meeting compassionate criteria, underscoring the need for accurate documentation.
Health advocacy groups, including Super Consumers Australia, emphasize that while compassionate access can be essential, patients should seek independent medical opinions and understand the long-term implications for retirement funds. The regulator’s stance remains clear: access is a last resort, not a routine funding mechanism for elective procedures.
What Comes Next?
With rising costs and ongoing debates about the adequacy of health coverage, regulators are likely to intensify oversight and policy guidance. The shared objective is to safeguard vulnerable consumers while ensuring that legitimate medical needs are met. For individuals considering early access to super, professional counsel and thorough medical validation are essential to avoid compromising future financial security.
