The government’s plan to allow domestic violence survivors early access to their superannuation is a step in the right direction, but will still cost users thousands in the long run.
Assistant Treasurer Stuart Robert announced on Tuesday the government will extend the early release of superannuation to victims and survivors of domestic violence.
“Domestic and family violence can have lasting financial impacts on its victims … early access to superannuation [will] help fund the costs of rebuilding the lives of victims and their families,” Mr Robert said.
The change will allow those in need to withdraw up to $10,000 from their superannuation over a 24-month period “to meet unexpected costs”.
Mr Robert subsequently released draft proposals for the plan on Wednesday afternoon.
The initial announcement has been positively received by advocacy bodies, however estimates provided to The New Daily by superannuation research and advocacy body ASFA show the hidden cost of early withdrawal.
For a woman aged 30, leaving that $10,000 in superannuation would see it grow to $26,500 by the retirement age of 67 – a difference of $16,500.
Additionally, anyone withdrawing that amount of money before the age of 55 can expect to pay 20 per cent of it, $2000, in tax.
Policy still a winner
While the withdrawal of this money before retirement will have an effect on retirement savings, domestic violence cases can often be a matter of life and death, and being able to access this money will make a huge difference to survivors, according to ASFA chief executive Dr Martin Fahy.
“Often, physical violence is accompanied by financial abuse, which can make it difficult for a partner to leave the relationship. On this basis we have advocated for extending early release of superannuation to circumstances of domestic violence,” Dr Fahy said.
Health and community services industry fund HESTA similarly supported the initiative, which chief executive Debby Blakey described as a “vital financial lifeline” for people affected by domestic violence.
“On average at least one woman a week is killed by a partner or former partner. Given the prevalence of family violence in Australia, it’s entirely appropriate early access to super has been extended to victims and survivors,” she said.
However, Ms Blakey added that it’s “vitally important” the government also looks into ways victims of domestic violence can access the perpetrators’ superannuation as part of victims of crime compensation.
Nicole McMahon, general manager of national domestic violence counselling and referral service 1800 RESPECT, said getting the right support can “make all the difference” in cases of financial violence.
“When you consider that approximately one in three women in our community face some sort of violence during their lifetime, ensuring that they get the support that they need is vital,” she said.
“Practical assistance for victim survivors can include: setting up bank accounts; paying bills, rent and accommodation costs, and accessing food and clothing. Financial assistance may help victim survivors feel less trapped in a violent situation that they face.”
ATO to get super powers
Mr Robert also pledged $3.3 million to the ATO to help the tax office develop an “electronic information-sharing system” to give family law courts more visibility of super assets held by all parties brought before the court.
“Getting full visibility of superannuation assets in family law matters can be complex, time‑consuming and costly, often requiring parties to go on ‘fishing expeditions’ using subpoenas and other formal court processes, with no guarantee of success,” Mr Robert said.
“This new system will ensure faster and fairer resolutions of family law property disputes.”
Both ASFA and HESTA supported this measure, with HESTA’s Ms Blakey saying the easier access to information will “help women more fairly split super assets” and support themselves.
“Superannuation is often the only remaining shared asset in a relationship breakdown and it can be very difficult for people to locate their partner’s funds, especially without legal assistance, which can be costly.”
If you or someone you know is impacted by sexual assault, domestic or family violence, call 1800RESPECT on 1800 737 732 or visit 1800RESPECT.org.au In an emergency, call 000.
The New Daily is owned by Industry Super Holdings