Allowing early release of superannuation on compassionate or hardship grounds is tantamount to putting client best interests first, according to the Financial Planning Association (FPA).
The FPA has used a submission to the Treasury on the early release of superannuation benefits to argue that “if there is no other viable option, there is a moral obligation to support individuals through the immediate hardship over the objectives of the superannuation system and the preservation of their savings for retirement.”
“This should be seen as an investment in an individual’s recovery, health and well-being,” it said.
“Superannuation trustees’ fiduciary obligation applies to its members as a whole, including consideration about the sustainability and stability of the fund, which can conflict with what is in the best interest of an individual member,” the submission said. “However financial planners have a professional obligation to put their client’s interest first and are required by law to ensure their advice is in the best interest of the client.”
The submission said the FPA’s policy framework mirrored these obligations – “our first policy pillar is to act in the public interest at all times.”
“The health and well-being of Australians is paramount. We would even argue that the long term financial position of an individual does not matter if their health and well-being is severely suffering,” it said. “If an individual is in legitimate need and has exhausted all other options for support, the system and processes must make it easy for them to gain early release access to their superannuation savings, with dignity, care and compassion.”
“We acknowledge that there may be some individuals who may try to take advantage of the early release system, however the rules and conditions of early release should not be created to target the few who are considering doing the wrong thing to the detriment of individuals in legitimate need of early access to their superannuation savings.”
“We support the intent for the Government to make the rules clearer and more consistent for all parties, with clear boundaries for what is considered a legitimate claim,” the submission said. “However, the system must focus on enabling those with legitimate claims to access their superannuation savings with ease, and encourage care and compassion to be employed by trustees and their representatives rather than suspicion of fraudulent behaviour.”