Raiding super to pay medical bills leaves trail of 'financial damage'

Australians raid $1.4b from superannuation for medical costs as regulators warn of 'predatory' tactics In short: Australians withdrew $1.46 billion from their superannuation on compassionate grounds in 2025-26, with the vast majority used for medical costs. There was a 13-fold increase in the amount withdrawn for dental treatment. Regulators are cracking down on predatory practitioners who inappropriately help people access their superannuation. Australians withdrew a record $1.46 billion from their superannuation last financial year on compassionate grounds, prompting regulators to sound the alarm over "predatory" sales tactics being used by health practitioners. The amount of money raided from retirement nest eggs for compassionate reasons like medical treatment has skyrocketed in recent years, increasing by about 220 per cent since 2018-19. Consumers Health Forum (CHF) CEO Elizabeth Deveny said it was reflective of a health care system which had become increasingly unaffordable. "When people are hit with a health bill on top of the cost-of-living crisis, it's understandable people reach for the only tools available to them," she said. "Increasing numbers of Australians are having to choose between living in pain now or being poor in retirement." Under the Australian Tax Office (ATO) early release rules, Australians can apply to take money out of their retirement funds on compassionate grounds, such as for medical or funeral expenses. Australians withdrew about $1.46 billion from their superannuation on compassionate grounds in 2025-26, with the vast majority of that — about $1.42 billion — used for medical costs including dental work. Super Members Council CEO Misha Schubert said while compassionate release provisions were an important safety net in the system, they were only ever designed to be used in extremely rare circumstances. "We're deeply concerned to see the scale of the financial damage that's being done often to very vulnerable Australians," she said. Almost 65,000 applications for compassionate release of super were approved in 2025-26, which the ATO said was a five per cent decrease from the previous year. ATO Deputy Commissioner Ben Kelly said while that drop was promising, some businesses were still trying to exploit the system. "Our message to individuals and medical practitioners is clear — compassionate release of super should only be considered as a last resort," he said. Total compassionate release of super applications | Financial year | 2018–19 | 2019–20 | 2020–21 | 2021–22 | 2022–23 | 2023–24 | 2024–25 | 2025–26 | |---|---|---|---|---|---|---|---|---| | Applications received | 53,800 | 60,000 | 45,300 | 56,400 | 75,600 | 90,700 | 112,400 | 109,600 | | Applications approved | 31,100 | 33,700 | 29,500 | 34,400 | 41,800 | 53,100 | 67,900 | 64,600 | | Individuals applied | 33,800 | 39,100 | 36,300 | 45,600 | 57,800 | 68,900 | 81,500 | 80,800 | | Individuals approved | 26,900 | 30,000 | 27,200 | 32,200 | 39,600 | 50,000 | 63,300 | 60,900 | | Amount approved ($m) | 456.6 | 523.2 | 472.4 | 573.1 | 761.7 | 1,040.4 | 1,416.0 | 1,456.7 | Source: ATO 'Concerning trend' from health practitioners For the early withdrawal of super to be approved on medical grounds, two medical practitioners need to verify it is necessary to alleviate pain or mental illness, or to treat a life-threatening illness or injury. The ATO has been working with the Australian Health Practitioner Regulation Agency (AHPRA) to crack down on a "concerning trend" of health practitioners, like dentists, encouraging people to withdraw their superannuation inappropriately for services, such as cosmetic dental procedures. "We are concerned by predatory sales tactics that use social media and internet advertising to attract patients for high-cost treatments they do not need or cannot afford," AHPRA CEO Justin Untersteiner said. Over the last year the ATO has ramped up compliance and fined practitioners a total of $1.5 million for making misleading statements so patients could secure early superannuation access. One practitioner was fined around $30,000 for writing a medical report that relied on false clinical information, including an incorrect classification of the patient's condition. A GP found to have engaged in professional misconduct while helping a patient access almost $20,000 of her superannuation for cosmetic liposuction was one of two health practitioners referred to tribunals by regulators, amid almost 100 related complaints between 2019 and April this year. Ms Schubert said there needed to be stronger protections for consumers, calling for a ban on any advertising that promotes access to early withdrawals of super. "We're calling for this to be a real moment for the parliament and lawmakers to step in to protect vulnerable Australians to make sure that they have that strong nest egg of their retirement savings secured for them in retirement," she said. What type of treatments was money withdrawn for? Dental was again the most popular reason for someone to withdraw their superannuation on medical grounds, with $892 million taken out in 2025-26. That is a 13-fold increase since 2018-19, when about $66 million was approved for release. Public health researchers and the peak industry body have told the ABC the dramatic increase in early superannuation withdrawals for dental treatment pointed to "historical neglect" of the public system. Dr Deveny said those gaps in care were being exploited by some providers. "It's completely understandable if you're living in constant dental pain, that you'll do whatever it takes to fix it… I think we need to be careful not to blame people for doing that," she said. Early super withdrawals for IVF have more than doubled in the past eight years, from $36.2 million in 2018-19 to $76.4 million last financial year. Ms Schubert said Australians needed to be aware of the long-term impact of raiding their nest eggs, saying withdrawing $20,000 of superannuation could ultimately cost someone $93,000 by the time they retire, because they lose the compound interest that could have been accrued. Financial Services Minister and Assistant Treasurer Daniel Mulino said the government would continue to monitor the issue, including whether further measures were needed to protect patients. "Australians should not be pressured into accessing their superannuation for unnecessary medical or dental procedures."