APRA slams early release schemes

Superannuation fund members have been warned against engaging the services of individuals or companies promoting early access to retirement benefits and threatened with severe penalties if they do.

TheAustralian Prudential Regulation Authority(APRA) says obtaining an unlawful release would be a criminal offence and incur taxation liabilities and financial penalties under the Income Tax Assessment Act.

APRA expressed concern over recent advertising campaigns in a number of states and the substantial fees being charged by the promoters, usually in the form of a percentage of the member’s benefit.

The regulator says Federal Government legislation permits the early release of benefits only in very limited circumstances, but the advertisements have resulted in growing enquiries about early release schemes.

The warning follows recent charges levelled against two men on Queensland’s Gold Coast who operated Super Release, a business which assisted superannuation members to redeem their benefits.

Brought by theAustralian Securities and Investments Commission(ASIC), the charges alleged the men made misleading statements to secure the payment of super benefits, though the circumstances for early release did not meet the conditions set out under the Superannuation Industry (Supervision) Act.

By law, the final decision for early release of benefits to members lies with their superannuation fund, where permitted under the fund’s governing rules as well as under superannuation legislation.

Members can only apply according to their individual circumstances, with the only two grounds for release being financial hardship or specified compassionate grounds.

Any payout, usually limited to no more than $10,000, can only be used for things like medical treatment, palliative care, mortgage repayments to prevent a sale, or modifications of home or car due to disability.