19th December 2013 – Rather than a simple “yes” or “no”, Sunsuper and other superannuation trustees should be asking the question: “why?”
The Financial Counsellors’ Association of Queensland (FCAQ) has noted that from 1 January 2014, Sunsuper, Queensland’s largest superannuation fund, will no longer allow members to lodge claims for early access to superannuation on the grounds of severe financial hardship.
FCAQ believes that rather than a blanket “yes” or “no” response to claims for financial hardship, superannuation funds should instead be asking the question: “why?”
“Currently under superannuation legislation, superannuation trustees have the discretion to allow members to apply for the early release of some of their superannuation benefits on grounds of severe financial hardship, if the member has been receiving an eligible Centrelink income support payment for at least 26 weeks,” said FCAQ spokesperson Mary McLean.
“Members may not realise, though, that while superannuation trustees have the discretion to allow severe financial hardship claims, they also have the discretion to not allow them. That is the decision that Sunsuper has made and it takes effect from the first of January.”
A primary role of superannuation funds is to provide benefits to members upon their retirement and a primary responsibility as trustee is to manage the investments for that purpose – financial counsellors understand that. However superannuation funds can be more proactive, rather than prescriptive, when dealing with people in financial hardship.
“Rather than superannuation funds saying: ‘yes, you meet the severe financial hardship criteria, here’s your money’, or simply: ‘no, we don’t allow financial hardship claims,’ I would really like to see superannuation funds take the initiative to help their members,” Ms McLean said. “Funds can help their members to both overcome the financial hardship that they are currently experiencing and to avoid experiencing financial hardship in the future. Financial counsellors have a critical role to play in this process.”
Ms McLean suggests that part of the assessment process for a severe financial hardship claim could be an optional session with a financial counsellor. “We provide an independent, unbiased and free service,” she said. “We can work with a client to help them make sense of their current situation, to discuss their options in overcoming financial difficulty, and to advocate for clients with regards to their debts. We can also give clients a wealth of information to help them avoid financial difficulty in the future.”
“Giving superannuation members who are seeking to claim severe financial hardship the option of talking to a financial counsellor could prove to be a win/win for both parties, as it could potentially help superannuation fund members find a way out of financial hardship – without damaging their retirement nest egg. For members who did still need to access their superannuation after the financial counselling session, trustees could at least approve the claim in the knowledge that all other avenues had been explored.”
Anyone who is in financial difficulty can contact a free and independent financial counsellor on 1800 007 007 or visit www.debtselfhelp.org.au
For further comment please contact: Mary McLean on 0400 300 208