SMC welcomes ATO warning on early super withdrawals for non-essential dental and medical procedures

The Super Members Council welcomes the Australian Taxation Office and health practitioner regulator warning Australians to be wary of “dodgy super dental offers” and “predatory behaviours” that urge people to withdraw super early to pay for unnecessary or overly expensive dental and medical procedures.

Their joint warning is an important message to protect Australians from being misled into draining their retirement savings for treatments that fall well outside the intent of the compassionate release rules.

Compassionate early access to super is designed as a last‑resort safety net for people facing critical, urgent or life-threatening medical needs — not a funding source for elective or non‑essential procedures.

Recent data cited by the ATO shows a sharp rise in applications to access super early for dental work in particular, alongside concerns about inaccurate medical reports, aggressive sales tactics and unlicensed financial advice being provided to patients.

The Council warned these practices can leave Australians significantly poorer in retirement, with the loss of decades of compound investment returns.

Withdrawing super early can cost workers tens of thousands of dollars by retirement, even for relatively modest amounts taken out earlier in life, increasing people’s financial stress, seriously eroding their retirement income, and placing more pressure on the Age Pension.

The Council’s analysis shows a person who withdraws $20,000 from their super at 30 for a non-essential dental or medical procedure could have $93,000 less at retirement due to the loss of compounding returns.

The regulator warning highlights the need for stronger consumer protections to stop Australians being targeted by misleading advertising and fee‑charging intermediaries promoting early access to super for non‑essential treatments.

The Council has long called for:

• a ban on advertising that promotes early access to super for non‑essential medical or dental procedures;
• a ban on third‑party fees for facilitating compassionate release applications; and
• clearer, stronger consumer warnings about the long‑term financial damage caused by early withdrawals.

“We’re deeply concerned by an avalanche of advertising trying to lure Australians to raid their super for non-essential dental and cosmetic procedure — urging people to take their super out early robs them of money they will need to live on for decades in retirement,” says the Council’s CEO Misha Schubert.

“Withdrawing super for non‑essential dental or medical work can do major financial damage to your retirement savings, and you also pay extra tax if it is withdrawn early.”

“We need stronger consumer protections, including a ban on advertising that pushes people into early withdrawal for non-essential treatments and there must be much clearer warnings about the long-term financial damage.”