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Submission Early access to superannuation benefits

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					        THE AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY




                         SUBMISSION



                            TO THE

SENATE SELECT COMMITTEE ON SUPERANNUATION AND FINANCIAL SERVICES




EARLY RELEASE OF SUPERANNUATION BENEFITS
       ON COMPASSIONATE GROUNDS




                                                     7 DECEMBER 2001
Release of Benefits on „Compassionate Grounds‟




         EARLY RELEASE OF SUPERANNUATION BENEFITS ON
                   COMPASSIONATE GROUNDS




                             BACKGROUND PAPER




EXECUTIVE SUMMARY

This paper outlines the Australian Prudential Regulation Authority (APRA‟s) role in
the process of early release of superannuation benefits, and in so doing acknowledges
the improvements and contribution, made by APRA staff, often in difficult
circumstances to improve the processes for administering early release of those
benefits.

While the legislative basis and current procedures are set out in some detail, APRA
has taken the view that the administration functions that it undertakes in relation to
early release of superannuation benefits are not “core” to APRA‟s legislative function,
and instead are more aligned to the social welfare charter of an organisation like, say
Centrelink, which is also involved in the process.

This report sets anomalies which have been raised by unsuccessful applicants and a
selection of these requests, with personal information deleted, is attached for your
information.




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PURPOSE

The purpose of this paper is to explain the role of the Australian Prudential Regulation
Authority (APRA) in the processes by which superannuation benefits, normally
preserved until retirement, can be released early, and suggest changes to procedures
and to highlight anomalies in the current rules. The role of APRA will be explained
in the context of the current rules applying to superannuation funds concerning early
release, and the history of their development.

BACKGROUND

The preservation rules for superannuation are applied to superannuation funds by
provisions of the Superannuation Industry (Supervision) Act 1993, (the SIS Act) and
the Superannuation Industry (Supervision) Regulations (the SIS Regulations). The
rules generally require members‟ benefits to remain within the superannuation system
until the member retires from the workforce at or after the preservation age which
applies to the member. The preservation age which varies depending on the
member‟s date of birth, is set out in Attachment 1.

The SIS legislation also requires superannuation funds to pay all benefits when a
member reaches age 65 and is retired, or when the member dies.

Early release of superannuation refers to the limited capacity for superannuation funds
to pay benefits which would otherwise be preserved in the fund.

Prior to 1 July 1997, the SIS legislation (and before 1994, the predecessor
Occupational Superannuation Standards legislation) provided for the Insurance and
Superannuation Commission (ISC) to determine applications by fund members for
early release of their benefits for reasons of financial hardship or for any other
compassionate reason. No other Commonwealth agency was involved in the process
of approving early release on these grounds. The legislation did not require
superannuation funds to exercise any discretion on whether to release benefits early
on the grounds of financial hardship, although in some cases the fund rules permitted
trustee discretion even if the ISC had approved a release.

By 1996 it was becoming apparent that far more public resources were going to have
to be applied to the decision making process. Applications over the two year period
from 1994/95 to 1996/97 had doubled and the ISC noted in 1995 the virtual rubber
stamping of applications for release of amounts less than $5,000, and anecdotal
evidence of systematic rorting of the early release process leading to significant
leakage of superannuation benefits.

In the 1997-98 Budget, the Government announced a number of measures to improve
the effectiveness of the preservation arrangements in ensuring that savings through
superannuation were directed to providing for retirement income.

Among these reforms were measures, taking effect on 1 July 1997, tightening
previous arrangements for the early release of superannuation benefits.


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Several aspects of these proposals were altered, prior to passage through Parliament,
on the recommendation of the Senate Select Committee on Superannuation. In
particular, amendments provided for:
   a transitional period preceding the abolition of the right to benefits on permanent
    departure from Australia,
   a subjective test to be administered by trustees in deciding whether conditions of
    severe financial hardship exist, in addition to the objective test of receipt of
    Commonwealth income support payments for a specified continuous period, and
   the addition of a discretion for the regulator, then ISC and now APRA in deciding
    whether an expense is consistent with one of the prescribed compassionate
    grounds.

The new arrangements were then put in place by amendment of the SIS Act and
Regulations. The current rules for the early release of superannuation are summarised
in Attachment 2.

THE CURRENT RULES FOR EARLY RELEASE

Key changes introduced by the 1997 changes were:
   Replacement of the discretion available to the then Insurance and Superannuation
    Commissioner to approve the release of benefits on „severe financial hardship‟,
    with a test, prescribed in the legislation and administered by the fund itself,
    involving both objective and subjective criteria.
   Reform of the „compassionate grounds‟ condition of release, replacing a broad
    discretion of the then Insurance and Superannuation Commissioner to approve the
    release of benefits on „compassionate grounds‟ with generally objective criteria
    set out in the SIS legislation.
   Reduction in the threshold amount of benefit under which preservation does not
    apply, from $500 to $200.
   Abolition (subject to transitional arrangement) of the previous right of members,
    who could satisfy their fund that they were leaving Australia permanently, to get
    access to their benefits.

Matters considered by the Parliament in introducing these changes are set out in
Attachment 3.

ADMINISTERING THE CURRENT RULES

The administration of the current rules involves superannuation funds, APRA,
Centrelink and a number of other agencies which administer income support
payments, and the Australian Taxation Office (ATO).

Attachment 4 is a summary of the activity of these organisations other than APRA.
The remainder of this paper will explain the role of APRA.




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THE ROLE AND ACTIVITY OF APRA IN THE ADMINISTRATION OF THE
EARLY RELEASE OF SUPERANNUATION

A.      APRAS’S ROLE IN ADMINISTERING THE COMPASSIONATE
        GROUNDS

The prescribed compassionate grounds for the early release of superannuation are
included among the rules for early release. They are described in detail in Attachment
2.

Briefly, they involve release to meet expenses relating to:
    medical treatment not readily available through the public health system, and
     required to address a life threatening condition, acute or chronic pain or an acute
     or chronic mental condition;
    transport to enable access for that treatment;
    avoiding foreclosure on a mortgage on the applicant‟s principle place of residence;
    modification of house or car because of physical disability;
    palliative care of the applicant and palliative care, death, funeral and burial of a
     dependant; or
    expenses consistent with any of these grounds.

APRA must approve an application from a member for early release of some of their
preserved benefits if it is satisfied that one of the prescribed compassionate grounds
applies, and the member does not have the financial capacity to meet the relevant
expense. APRA‟s written approval, given to the member, is a condition of release for
the approved amount and may be used by the fund as justification to release this
amount early. It should be noted that APRA‟s approval is not a sufficient condition
for release; the fund trustees must still determine the matter in accordance with fund
rules.

APRA‟s administration of the early release of superannuation:
1. provides information to the public about the process for early release of benefits,
   dealing with enquiries from the public, and with representations on behalf of
   applicants from members of parliament and others;
2. deals with applications from people who want an early release of superannuation
   benefits; and
3. deals with requests for reconsideration of decisions.
APRA responds to an average of 96,000 telephone enquiries a year about the early
release of superannuation and assesses 12,000 applications a year, at an aggregate cost
in the order of $2.28 million.

1.      Providing information to the public about early release

        APRA provides information about early release of preserved benefits through
        its internet website, through leaflets available from APRA offices, Centrelink,


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      superannuation fund administrators, the offices of members of Parliament and
      community service organisations, and through its responses to telephone,
      written and e-mail enquiries.

      The APRA Website includes a page that explains the early release of
      superannuation, with links to the guidance note to superannuation funds about
      severe financial hardship. The application form used to apply to APRA for
      approval of early release on one of the prescribed compassionate grounds can
      be downloaded from this webpage.

      Most enquiries are telephone calls to the APRA information line, 1300 13 10
      60. This line is answered by APRA‟s call centre in Canberra. For the cost of
      a local call this number can be rung from anywhere in Australia. This number
      is usually provided to members by their superannuation fund, but is available
      in Telstra directories (as superannuation enquiries 13 10 60, pending the
      printing of new directories), on the APRA Webpage, and on APRA‟s
      application form for Release of Benefits on compassionate grounds.

      The APRA call centre currently receives a total of about 12,000 telephone
      enquiries a month. Of these, about 8,000 relate to the early release of
      superannuation benefits, including 2,000 calls a month from applicants about
      progress on their specific application. An unknown proportion of the latter
      group are in response to APRA-initiated calls seeking more information or
      clarification of details included in the application. With APRA‟s increased
      focus on providing a rapid response to applicants, the number of enquiries
      about progress has fallen from an average of 3 to 2 per application.

      The difference between the 6,000 general enquiries about early release
      received each month and the 1,000 applications for early release can be
      attributed to effective self-assessment by enquirers, based on the quality of
      information they receive. An unknown proportion of enquirers may proceed
      to make an application for early release under the financial hardship
      provisions, as they should be referred direct to the administrators.

      Statistics concerning early release of benefit calls are at Attachment 5.

      Contact with the call centre

      In each month since August 2000, at least 90 % of calls to the APRA
      information line have been answered within 10 seconds.

      A caller with a general enquiry can expect to have the early release of benefit
      rules explained briefly, particularly that release to alleviate general financial
      hardship is a matter for their fund, provided that they have been getting
      Commonwealth income support payments for 6 months continuously. If the
      caller refers to their incapacity for work they are reminded to check with their
      fund about their eligibility for a retirement benefit on disability grounds as
      well. They also receive a brief explanation of the prescribed compassionate
      grounds of release which APRA administers.



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Release of Benefits on „Compassionate Grounds‟

      When the caller requests an APRA early release application form, it is sent by
      mail or by fax, unless the caller is able to download the form from the APRA
      website. If the caller doesn‟t request a form but the APRA operator detects the
      possibility that one of the prescribed compassionate grounds might apply, it is
      suggested that the caller downloads the form or alternatively that APRA mails
      an application form to the caller. Application forms are mailed within 24
      hours, or are faxed if the caller requests this.

      Callers who are sent an application form are reminded to check with their fund
      to make sure that the fund is prepared to release money if APRA approves.
      The application form also reminds applicants about this.

      A caller asking about an application that has already been sent to APRA is
      generally helped by the telephone operator who takes the call, subject to
      privacy considerations. The data base used to manage applications is available
      to the telephone operator. If the call is from an applicant wishing to know
      why their application has been rejected in whole or in part, the operator in
      most cases is able to explain this in general terms. There is a facility for a
      message to be sent to the relevant assessor requesting a call back to the caller.

      APRA also deals with written and e-mailed enquiries about the early release of
      superannuation. The APRA e-mail address is included on the APRA website .
      The APRA postal address is available to fund members from their
      superannuation fund and is also on the APRA website.

      In the first 6 months of 2001 APRA received 251 letters or e-mails on the
      topic of the early release of superannuation. Of these 165 were addressed to
      the relevant Minister or to the APRA Chief Executive Officer or were
      representations on behalf of an applicant by a Member of Parliament. These
      often accompany applications, or concerned applicants who have made an
      application and been denied, or about people who have been told by phone
      about the limited grounds of release.

      The remainder are usually general questions about how to obtain an early
      release.

      APRA aims to respond to written or e-mailed enquiries within 48 hours of
      receipt by the call centre. If a substantive reply cannot be provided within that
      timeframe, an interim response is sent with the substantive reply sent within 7
      working days.

2.    Applications from fund members seeking APRA approval for an early
      release on the specified compassionate grounds

      Applications are assessed by the Release of Benefits team in Canberra. A
      team of 5 staff in APRA‟s Canberra office is responsible for determining all
      applications for early release of preserved superannuation benefits. The team
      is co-located with APRA‟s call centre and an administrative support unit. A
      staff member from the legal team has as a primary task the review of
      applications where a person is dissatisfied with the original decision.


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      APRA must be satisfied that a release is required to meet one of the specified
      expenses, taking into account the financial capacity of the applicant. APRA
      must also be satisfied that the amount to be released is reasonable in all the
      circumstances.

      APRA has developed a set of guidelines to assist delegates in making these
      decisions. (Attachment 6).

      The assessment team‟s objective is to assist applicants for early release of
      preserved superannuation benefits to gain access to their benefits when they
      are entitled to do so, in a prompt and professional manner. APRA seeks not
      to depart from the prescribed limitations on early release, but the over-riding
      philosophy is to assist applicants within the restrictions of the prescribed
      grounds, rather than attempt at all costs to eliminate unjustified early release.

      If an application does not address any of the specified compassionate grounds
      it is denied without seeking any more information from the applicant. Our
      goal is to send this letter within 2 days of receiving the application.

      In other cases our goal is to advise an approval in writing within 2 days of
      receiving all the information and documents that we require in order to be
      satisfied whether one of the grounds has been established.

      If an application does address one or more of the specified compassionate
      grounds it is either
       approved without further action, or
       the applicant is contacted to obtain more information needed for the APRA
          delegate to be satisfied that approval is justified.

      An attempt is made by the assessor to telephone the applicant at the time the
      initial assessment is conducted, usually on the day the application is received
      in APRA. If the assessor cannot make contact, another team member tries
      telephoning the applicant on at least two other occasions at different times
      over the next two days. If contact still cannot be made, a letter is sent to the
      applicant specifying the additional information required. Requests for more
      information may happen several times, if an applicant‟s response still does not
      provide sufficient for the delegate to determine whether one of the specified
      grounds has been made out. Based on the response of the applicant and/or the
      nature of the additional information required, the delegate will judge whether
      an approval continues to be a possibility. If not, the applicant will be sent a
      letter denying approval. If the delegate judges that an approval may in due
      course be justified, the file remains open for 3 months from the last request for
      more information. At the end of this period the applicant is advised in writing
      that the application has been closed. The applicant is invited to make another
      application if in the future they consider that they meet one of the specified
      grounds for early release.




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      Approximately 45% of all ROB applications require more information to be
      submitted before a decision can be made. This is clearly unsatisfactory from
      the perspectives of both the applicant and APRA. APRA is currently in the
      process of obtaining feedback from focus groups to test a revised ROB
      application form, in the expectation that a much higher proportion of
      applications could be determined on the basis of information initially provided
      with the application.

      Attachment 7 sets out statistics for applications dealt with in the period prior to
      1 July 1997 (ie under the old arrangements), and in the period since then.

      During 2001, to 9 November, APRA dealt with 10,417 applications, an
      average of about 1,040 a month.

      One feature of recent years has been a steady increase in the proportion of
      applications approved, from around 30% in 1998, to approximately 50% this
      year. This may be attributed in part to improved information being provided
      to those enquiring about early release, resulting in an increased proportion
      recognising that they would not meet the criteria for release and so not
      proceeding with an application.

      The annual total amount approved for release on specified compassionate
      grounds has grown since introduction of the new rules, from $25 million in
      calendar 1998 to $37 million in calendar 2000. However, by 9 November
      2001 only $27.2 million had been approved so at this stage it seems unlikely
      that the 2000 total will be exceeded.

      The average amount of money approved per application approved so far in
      2001 has been $4,948 for applications approved in full, and $5,258 for
      applications approved in part. This is less than in previous years, consistent
      with a low interest rate environment meaning that less is required for each
      approved release to prevent mortgage foreclosure.

      The amount approved for release by APRA each year on the prescribed
      compassionate grounds is a very small proportion of all superannuation assets.
      The total approved for release by ISC or APRA since 1 July 1997 ($127
      million) is only about 0.02% of total Australian superannuation assets at June
      2001 ($527 billion).

      Superannuation funds themselves are not required to report the amount of
      benefits that they agree to release early. There has been no consolidation of
      the amounts released by superannuation funds on the ground of severe
      financial hardship.

      APRA‟s application management system introduced to coincide with the new
      rules in July 1997 did not track partial approvals or the grounds on which
      applications were made or approved. This feature was introduced in a
      replacement system in January 2001. Attachment 7 includes some of this
      information for 2001.



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Release of Benefits on „Compassionate Grounds‟

      So far in 2001, APRA approved the full amount requested in 32 % of cases.
      Part of the amount requested was approved in 19 % of cases. APRA denied
      approval in 23 % of cases.

      The remaining 26% of cases are mainly where APRA has requested and is
      waiting for more information. Files “younger” than 3 months are still open.


      The data for 2001 in Attachment 7 demonstrates that:
         most approvals were for release to prevent the foreclosure on mortgages
          (61%)
         the other most numerous approvals were for medical treatment or
          funeral/palliative care expenses (14% and 12% respectively)
         the remaining approvals were spread fairly evenly across the other grounds

      An analysis of the successful applications recorded on the previous system
      (using the new applications management system) indicates that the proportion
      of applications approved on the various grounds in 1999 and 2000 was similar
      to the figures above. This is backed up by anecdotal evidence of the assessing
      team.

      APRA has put high priority on improving the customer service that we deliver
      to people asking about or seeking the early release of their superannuation.
      This has been progressed through on and off job training, and a revision this
      year of the processes of handling cases, from initial phone enquiry to the
      process of determining applications.

3.    Dealing with requests by unsuccessful applicants for a reconsideration of
      the decision

      Decisions by APRA in its early release of benefits role are not reviewable
      decisions for the purposes of the SIS Act, and consequently cannot be
      appealed to the Administrative Appeals Tribunal.

      The Commonwealth Ombudsman can investigate the decision to see if it was
      wrong, unjust, unlawful, discriminatory or unfair.

      APRA has established internal procedures to deal with requests by applicants
      for a reconsideration of a decision.

      If an application is approved but for less than the amount requested, or an
      applicant has raised one of the prescribed grounds but an approval is denied,
      the letter of advice to the applicant invites them to seek a review of the
      decision. APRA contact centre staff are instructed to remind callers of this
      option if they ring up to complain and their application history appears to meet
      this criterion.

      If the applicant requests a review, the decision is reconsidered by a legal
      officer who has not been involved in the original decision. During this process

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Release of Benefits on „Compassionate Grounds‟

      the applicant is usually contacted. This often results in the applicant providing
      additional information, not previously considered, which may be sufficient to
      satisfy APRA that an approval is warranted.

      If the original decision is upheld, the letter of advice reminds the applicant of
      his or her right to contact the Commonwealth Ombudsman.

      From 1 January to end of October 2001 614 review requests were received.
      This is 18 % of the original applications approved only in part, or denied,
      during this period. In review, 296 of these were approved, based in every
      instance on the applicant providing further information to support their case.

      Periodically, unsuccessful applicants for early release of superannuation
      secure significant media coverage. In APRA‟s observation, this is helpful to
      the individual only to the extent that it brings forward information not
      previously available to APRA decision makers. On the other hand, such
      coverage tends to be damaging to consumer confidence in APRA‟s prudential
      supervision of the finance sector. To that extent it is regrettable.

SHORTCOMINGS CONCERNING EARLY RELEASE OF BENEFITS

1.    Appropriateness of APRA administering early release

      Assessment of applications for the early release of superannuation funds on
      the prescribed compassionate grounds is the responsibility of APRA in
      consequence of the transfer of administration of the SIS legislation from the
      Insurance and Superannuation Commission to APRA. The cost of
      administering this activity is factored into the calculation of the annual levy
      which is imposed on superannuation entities as part of the APRA funding
      process.

      There are strong arguments that the activity is irrelevant to the core prudential
      supervisory function of APRA, and may fit better with the social welfare
      charter of Centrelink, or the revenue protection functions of ATO. Section 9
      of the APRA Act states:
      APRA is established for the purpose of regulating bodies in the financial
      sector in accordance with other laws of the Commonwealth that provide for
      prudential regulation or for retirement income standards, and for developing
      the policy to be applied in performing that regulatory role.
      In providing this regulation and developing this policy, APRA is to balance
      the objectives of financial safety and efficiency, competition, contestability
      and competitive neutrality.

      The function in relation to early release of superannuation is the only one
      where APRA interacts directly with members of the public, rather than
      financial institutions, as will be noted from the fact that 66% of all calls to the
      call centre relate to early release of benefits.




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      The only real nexus between the activity and APRA is its importance as a
      revenue protection function because it is a component in the administration of
      the preservation rules, and these are designed to ensure that concessionally
      taxed superannuation savings are retained for retirement income purposes. It
      is also an important element of social policy, in that it provides a “safety
      valve” which helps legitimise the general application of strong preservation
      standards. This in turn is important in optimising the interaction between
      retirement saving and the age pension system. Therefore a clear case can be
      made for its nexus with a social welfare activity and social policy.

      In July 1998 APRA wrote to Centrelink to open negotiations for Centrelink to
      administer the ROB provisions, preferably with effect from the end of the
      calendar year.

      APRA‟s legal advice was that such an arrangement could work legally, so
      long as the relevant decision-makers in APRA were seconded to APRA or
      treated as consultants to APRA for the purposes of the APRA Act, since Reg
      6.19A of the SIS Regulations makes specific reference to the person making
      application “to the Regulator” and Centrelink has no role defined under SIS.
      However, with the full support of Treasury to change the legislation at that
      stage, and without considerable cost saving with Centrelink, the issue was not
      progressed.

      At the time the proposal was canvassed, APRA was receiving approximately
      1,100 ROB applications a month, and 2,500 telephone enquiries relating to
      existing applications. Target turnaround time for assessing applications was
      14 days, with a maximum acceptable period of 28 days. At any time there
      could be 400-600 applications on hand at various stages of assessment. By
      comparison, while the application rate has remained unchanged, the acceptable
      turnaround time has been cut to 2 days and the number of inbound calls
      regarding existing applications is approximately 1200 a month.
      The 1998-1999 negotiations identified 7 APRA staff committed to ROB,
      comprising 1 L3 undertaking the review function, 1 L2 and 5L1 staff. Current
      staffing is virtually unchanged.

      APRA still holds the very strong view that despite the fact that service to early
      release of benefit applicants has improved significantly, the function is not
      core APRA function. APRA‟s offices are located within the CBDs of Sydney,
      Canberra, Brisbane, Adelaide, Perth and Melbourne. We have no “on the
      ground” staff in the Northern Territory or Tasmania or in regional Australia.
      However as referred to earlier, the release of benefit function is centralised in
      Canberra.

      In terms of access to early release of benefit applicants, they would be much
      better served by being able to obtain information about and have their
      applications processed through a distributed infrastructure such as Centrelink.
      The Committee previously referred to the advantages of “one-stop-shop” for
      consumers (see recommendation 2, paragraph 2.44 of the Senate Select
      Committee on Financial Services first report on Prudential Supervision and



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      Consumer Protection for Superannuation, Banking and Financial Services –
      August 2001). APRA‟s view is that this is precisely such an opportunity.

      In addition, both Centrelink and the ATO are established with and have the
      infrastructure and available staff to deal with members of the public.

      In relation to the grounds of financial hardship, this requires documentary
      evidence from Centrelink to confirm that the applicant is in receipt of
      Commonwealth Income Support Payments.

      Applicants under compassionate grounds often find themselves in personal
      circumstances where a “one-stop-shop” with the opportunity to obtain
      information of other available avenues for assistance would be extremely
      useful. For example, where applicants seek release of benefit other avenues of
      assistance should be made know to them – again – the “one-stop-shop” would
      be extremely helpful. Many of these applicants require counselling of all
      types, financial, emotional or other advice on the best avenues available to
      them for assistance for them and their families. To assist the Committee grasp
      the complexity of these problems, a cross section of applicants requests is
      provided as an indicative example - see the end of this submission.

2.   Use of agents/ intermediaries

      On 6 November 2001 APRA issued a media release to explain to applicants
      that it is unnecessary to pay for the services of an agent to handle an
      application to APRA for the early release of superannuation. The media
      release is published on the APRA Website (and a copy is attached -
      Attachment 8).

      Briefly, APRA is concerned that people already perceiving themselves as
      being in financial hardship are being charged for what is (to them) a free
      service from APRA. We are aware also of one case where the agent forged
      documents in support of an application (see below).

3.   Fraudulent applications

      When APRA ROB staff recognised that medical certificates offered in support
      of an application appeared to be forged, the matter was referred to the
      Queensland Police. As a result, Timothy Barritt was convicted in 1999 on
      eight charges of forging and uttering documents. Barritt continues to operate a
      business called Super Release, which for a fee arranges applications to APRA
      for the early release of superannuation benefits. The incident is described in
      an APRA media release dated 26 August 1999 and was published on the
      APRA website (copy attached – Attachment 8)

      APRA has been monitoring the incidence of requests for benefit payments to
      pay for the care of terminally ill relatives in overseas countries, to pay for the
      funerals of relatives in overseas countries, and to allow relatives to travel
      overseas to attend funerals. APRA has generally taken a sympathetic
      approach to such applications, where there is apparently independent and


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Release of Benefits on „Compassionate Grounds‟

      expert advice on the medical aspects of the cases and on any cultural
      obligations on applicants. There is evidence to support the possibility that
      some applications on these grounds are being orchestrated. One set has been
      referred to the Federal Police in Victoria for further investigation.

4.    Other devices to circumvent preservation rules

      It is relatively easy to establish self managed superannuation funds and there is
      opportunity for trustees to deal with their own applications for early release on
      financial hardship. There is a clear conflict of interest. The extent to which
      self managed funds are established with the primary purpose of accepting the
      transfer of superannuation benefits from larger public funds in not known, but
      the opportunity thereby exists for illegal early access to benefits.

      In 1999-2000, APRA became aware that Melbourne accountant Ross Zagari
      was approaching companies undergoing restructuring, and offering to enable
      redundant employees to gain access in cash to their superannuation and
      redundancy entitlements. Zagari claimed to establish self managed funds on
      behalf of the employees, and requested that the employer sponsored
      superannuation fund roll the members benefits into that fund. Zagari then paid
      the amount, less a fee, to the member. As relevant provisions of the SIS Act
      are administered by ASIC, APRA referred the matter to ASIC which later
      secured a conviction against Zagari on a number of SIS related charges. Other
      similar schemes have been identified, including some where the promoter stole
      the members‟ money rather than passing it on to them.

5.    Requests for transfer of funds to overseas schemes

      There is steady enquiry to APRA from people complaining that their
      superannuation fund refuses to transfer their entitlements to an overseas fund.
      Australian funds would be in breach of the SIS legislation if they allowed
      benefits to be transferred to a superannuation entity, such as an overseas fund,
      which is not regulated under Commonwealth law.

      Some people, such as UK citizens who are temporary residents in Australia,
      argue that preservation requirements placed on funds in their home country are
      similar or more stringent than Australian rules.

      Attitudes of funds

      APRA expects that the number of frustrated telephone calls that it gets could
      be reduced if superannuation funds took greater care to explain to their
      members that APRA is unable to help with financial hardship unless one of
      the prescribed compassionate grounds is also present. Many callers complain
      that their fund has said that they don‟t meet the definition of financial
      hardship, but that APRA may be able to help. They suffer intense frustration
      when they perceive themselves to be in hardship but their circumstances fit
      none of the prescribed compassionate grounds. We accept, of course, that this
      may expose fund staff to some of the frustrations that are vented on APRA
      staff.


                                                                                    14
Release of Benefits on „Compassionate Grounds‟




                                                 15
Release of Benefits on „Compassionate Grounds‟



6.     Perceived anomalies in the current rules

       Areas more commonly raised by callers and applicants as apparent anomalies
       in the current rules relating to early release of superannuation benefits are
       described below.

       Additional Parenting Payment when paid to the partner of an applicant.

       The Additional Parenting Payment (Partnered) is included as a
       Commonwealth income support payment for the purposes of early release on
       severe financial hardship. It is paid as income support to the parent who is the
       main carer of the children in a partnership where the total family income is
       low. It is subject to a test of the income and assets of both partners. However,
       if the partner who is the member of a superannuation fund is not the partner
       receiving the parenting payment they will not get any written evidence of
       income support payments from Centrelink in support of their application, and
       consequently the fund will not entertain their application.

       People in gaol or detention, and people getting workers compensation
       payments from an insurance company.

       These people are unable to provide evidence of Commonwealth income
       support payments, because they are not eligible for them. They often can
       satisfy their fund that they meet the subjective test of being unable to meet
       immediate family living expenses. They argue that, but for their
       circumstances, they would meet the objective test of Commonwealth income
       support payments as well.

       People who are entitled to a Commonwealth income support payment but
       voluntarily decline to receive it.

       If also unable to meet immediate family living expenses, these people would
       technically meet the definition of severe financial hardship, whether or not
       they chose to accept the income support payment. Under the current rules
       however, the fund is not allowed to release any benefit, because Centrelink is
       not able to provide the written evidence required.

People who are facing eviction from their home because of rental arrears consider
their circumstances analogous to those facing foreclosure over a mortgaged property.

B.     APRA’S ROLE IN APPROVING A PARTICULAR PURPOSE FOR A
       SUPERANNUATION FUND UNDER SECTION 62 OF SIS

       Section 62 of SIS is called the “sole purpose test” and requires superannuation
       funds to be maintained solely for certain purposes. Generally these are for the
       accumulation of benefits for retirement, disability or death of a member.
       However it also states that the purposes of a fund may include the provision of
       such other benefits as APRA approves.



                                                                                    16
Release of Benefits on „Compassionate Grounds‟

      Applicants occasionally suggest that this discretionary power allows APRA to
      approve the early release of superannuation by particular funds to one of their
      members.

      APRA approvals have been carefully limited to ensure that the intention of
      other SIS provisions is not undermined. APRA‟s position is that this is not
      “backdoor route” for individual members to obtain preserved benefits early
      where they do not meet the existing rules. While there is an APRA approval
      under this Section for certain funds to pay welfare benefits and long service
      leave payments, this was purely a transitional measure. The sole purpose test
      and the preservation rules began applying to funds in 1988 under previous
      legislation, but the rules of some funds had provided other benefits for many
      years. Existing APRA approvals under this provision allow only those
      members who were members prior to 1988 and who commenced to suffer
      hardship or commenced long service leave prior to July 1997, to continue to
      enjoy the benefits that they expected from their fund membership.




                                                                                   17
Release of Benefits on „Compassionate Grounds‟



                A CROSS SECTION OF APPLICANT’S REQUESTS


      A selection of applicant‟s requests where the application has been refused is
      included as Attachment 9 to more directly inform the Committee of individual
      circumstances and the limitations of the current rules, and the reasons for
      APRA‟s decision.




                                                                                 18
Release of Benefits on „Compassionate Grounds‟



                      SUMMARY OF SAMPLE OF REQUESTS


      APPLICATION            REASON FOR APPLYING          REASONS FOR DECISION
        01/8424            General financial hardship      None of the prescribed
                            partially caused by caring      grounds addressed
                                 for elderly parents
        01/8499              To pay car loan to avoid            As above
                              losing a car which the
                                 applicant uses for
                                  accommodation
        01/8594             Financial hardship caused            As above
                               by inability to obtain
                             additional credit. Super
                           Fund will not release more
                           than $10000 in a 12 month
                                        period
        01/8596                  Financial hardship              As above
                                 following divorce
                                      settlement
        01/8609              Bills for car repairs and           As above
                           mobile phone, necessary to
                             overcome geographical
                                       isolation
        01/10536            Specific bills to pay, and           As above
                             family about to breakup
        01/10555           General financial hardship            As above
                           and about to leave work to
                                    have a child
        01/10600           To meet legal expenses for            As above
                            an appeal against a prison
                                       sentence
        01/10602               Replace a written off             As above
                              vehicle and to make a
                           home habitable (Applicant
                             used a copy of the letter
                           that had initially been sent
                                     to the fund)
        01/10627           General financial hardship            As above
                                and assistance with
                            expenses of new business
        01/10806           General financial hardship            As above
        01/10808                      As above                   As above
        01/10825                      As above                   As above
        01/10859           Airfares for family travel ,          As above
                           and wife‟s legal expenses,
                                in circumstances of
                                 financial hardship


                                                                               19
Release of Benefits on „Compassionate Grounds‟


            SUMMARY OF SAMPLE OF REQUESTS (Continued)



      APPLICATION            REASON FOR APPLYING          REASONS FOR DECISION
       01/10863               Family law settlement        None of the prescribed
                           expenses, in circumstances       grounds addressed
                             of potential bankruptcy
        01/10864                Lease about to be                As above
                             terminated and general
                                financial hardship
        01/10868            Financial hardship caused      Insufficient evidence to
                             by incapacity for work       allow release on grounds
                                      (injury)               of medical expenses
        01/10900            For funds to buy a vehicle     None of the prescribed
                                for work purposes             grounds addressed
        01/10908           General financial hardship             As above
        01/10919            Financial hardship caused             As above
                           by inability to work (carer)
        01/10923            To avoid bankruptcy and              As above
                                    repay debts
        01/10936           General financial hardship            As above
                           following reduced working
                                       hours
        01/10965           General financial hardship            As above
                            and marriage breakdown
        01/11053               Business difficulties             As above




                                                                                 20
Release of Benefits on „Compassionate Grounds‟



                                                               ATTACHMENT 1

The preservation ages prescribed by the SIS legislation are:


                Date of birth                            Preservation age
before 1 July 1960                                               55
between 1/7/60 and 30/6/61                                       56
between 1/7/61 and 30/6/62                                       57
between 1/7/62 and 30/6/63                                       58
between 1/7/63 and 30/6/64                                       59
after 30/6/64                                                    60




                                                                              21
Release of Benefits on „Compassionate Grounds‟


                                                                   ATTACHMENT 2

Rules prescribed by the Superannuation Industry (Supervision) legislation which
concern the early release of otherwise preserved benefits.

The legislation generally requires benefits in superannuation funds to be preserved in
the fund until a member reaches retirement on or after the member‟s preservation age.
However the legislation provides for some circumstances in which a fund may pay
benefits earlier than this.


Permanent incapacity
If a member‟s condition meets the definition of permanent incapacity set out in the
SIS legislation, there is no restriction on a fund paying their benefit which is
otherwise preserved.

Temporary incapacity
If a member is unable to work through incapacity which is not permanent, a fund may
pay a non-commutable income stream from benefits that would otherwise be
preserved, within prescribed limits concerning amount and period of payment.

Permanent departure from Australia
If a fund is satisfied that a member departed permanently from Australia before 1 July
1998, and requested that benefits in writing on a date before then, there is no
restriction on a fund paying their benefit which is otherwise preserved.

Severe financial hardship in the case of a person younger than their preservation
age
The fund may release up to $10,000 of otherwise preserved benefits in any 12 month
period if a fund is satisfied that
      based on written evidence provided by a Commonwealth department or
       agency which administers a Commonwealth Income Support payment the
       member is and has been receiving the payment for at least 26 weeks, and
      is unable to meet reasonable and immediate family living expenses.

Commonwealth income support payments are defined in SIS Regulation 6.01. A list
of the income support payments which meet the definition is at the end of this
attachment:

Severe financial hardship in the case of a person who has reached their
preservation age
There is no restriction on the fund paying their benefit which is otherwise preserved
if a fund is satisfied that :




                                                                                        22
Release of Benefits on „Compassionate Grounds‟


                                                     ATTACHMENT 2 (Continued)


      The member is at least 39 weeks older than the preservation age which applies
       to them
      Based on written evidence provided by a Commonwealth department or
       agency which administers a Commonwealth Income Support payment the
       member received the payments for a cumulative period of 39 weeks after
       having reached their preservation age, and
      The member is not gainfully employed for more than 10 hours a week.

Commonwealth income support payments are defined in SIS Regulation 6.01. A list
of the income support payments which meet the definition is at the end of this
attachment.

Compassionate grounds
A fund may pay from otherwise preserved benefits a single lump sum whose amount
is determined by APRA as being reasonably required to meet the expense of a
specified list of services. These are:
      To pay for medical treatment not readily available through the public health
       system for the member or their dependant in respect of
            a life threatening illness or injury;
            to alleviate acute or chronic pain;
            to alleviate acute or chronic mental disturbance;
      To pay for medical transport needed to access the above;
      For payment on a loan to prevent the foreclosure of a mortgage on the
       member‟s own home, or to prevent the exercise of an express or statutory
       power of sale by a mortgagee over the member‟s own home;
      To meet an expense associated with the member‟s palliative care in the case of
       impending death;
      To meet an expense associated with the palliative care, death, funeral or burial
       of a dependant of the member; or
      To meet other expenses if APRA determines that the release is consistent with
       the above grounds.

If APRA is satisfied that a release is required on one of these grounds and that the
member doesn‟t have the financial capacity to meet the expense, APRA is required to
determine an amount that the fund can release. In the case of the mortgage grounds,
the fund is limited in any 12 month period to releasing an amount which is equivalent
to 3 months repayments and 12 months interest on the loan.

APRA cannot be satisfied that the release is required on the mortgage ground unless
the member provides a written statement from the mortgagee, which certifies that sale
of the home is imminent if a specified amount is unpaid, and the amount that equates
to 3 months repayment and 12 months interest on the loan.


                                                                                      23
Release of Benefits on „Compassionate Grounds‟


                                                     ATTACHMENT 2 (Continued)


APRA cannot be satisfied that a release is required for medical treatment or associated
transport, until it sees written certificates from two medical practitioners, one a
specialist, specifying that the medical treatment is for a life threatening illness or
injury, or acute or chronic pain or acute or chronic mental disorder. In the case of
medical treatment, the certificates must say that the treatment is not readily available
through the public health system.

Small amounts
If a fund is satisfied that a member has left gainful employment with an employer that
had been contributing to the fund wholly or partly pursuant to an agreement between
the employer and the fund, and the member‟s benefit is less than $200, there is no
restriction on the fund paying that amount to the member.

Termination of employment with a contributing employer
If a fund is satisfied that the member has ceased gainful employment with an
employer who had at any time contributed on behalf of the member to the fund, the
fund may pay a non commutable life pension or non commutable life annuity to the
member from their benefits that would be otherwise preserved.

Approval by APRA under section 62 of SIS
APRA has approved under this provision:
      Continued provision of welfare benefits that were allowed for under fund rules
       existing prior to 1988;
      Continued provision of long service leave benefits that were allowed under
       fund rules existing prior to certain dates; and
      Provision of demutualisation benefits to members of superannuation funds
       where benefits are based on life policies issued by the National Mutual Life
       Association of Australia and Colonial Mutual Life Assurance Society Ltd
       when they demutualised.

Commonwealth Income Support Payments

The following is a list of payments which meet the SIS definition of a
“Commonwealth Income Support Payment”, for the purposes of early release of
superannuation benefits on the grounds of severe financial hardship. The list was
confirmed as current by Centrelink in November 2001.

      Widow allowance

      Youth allowance (except where Youth allowance is paid to a person who is a
       student undertaking full-time study, and Austudy /Abstudy recipients )

      Newstart allowance



                                                                                      24
Release of Benefits on „Compassionate Grounds‟


                                                   ATTACHMENT 2 (Continued)

     Sickness allowance

     Special benefit

     Partner allowance

     Newstart Mature Age allowance (post 1/7/96)

     Mature Age allowance (pre 1/7/96)

     Mature Age partner allowance (post 1/7/96)

     Parenting payment (partnered) (NOTE: Parenting Payment basic, (from 1 July
      2000 Family Tax Benefit (Part A) is NOT included)

     Parenting allowance (other than non-benefit allowance)

     Age pension

     Disability support pension

     Wife pension

     Carer payment

     Parenting payment (single) previously Sole Parent Pension

     Widow B pension

     Bereavement allowance

     Special Needs pension

     Service pensions

     Drought relief payment under the farm Household Support Act 1992 as in
      force immediately before the commencement of the Farm Household Support
      Amendment Act on 1 December 1997

     Exceptional circumstances relief payment made under the Farm Household
      Support Act 1992

     Payment of salary or wages under the Community Development Employment
      Program (CDEP)




                                                                               25
Release of Benefits on „Compassionate Grounds‟


                                                            ATTACHMENT 3

    MATTERS CONSIDERED BY PARLIAMENT IN INTRODUCTING THE
                     1 JULY 1997 CHANGES

The following is a summary of matters considered by the Government in introducing
the current rules concerning the early release of superannuation benefits.

In March 1996 the Insurance and Superannuation Commission (ISC) received a report
from an external consultant, Ageing Agendas, whom they had contracted to review
the hardship provisions of the Superannuation Industry (Supervision)Act 1994.
Ageing Agendas consulted widely within the community during the review, including
with funds and with financial counsellors. Some key issues identified by Ageing
Agendas were:

      Superannuation fund management were of the view that the system is easily
       abused, pointing to the high level of approvals in ISC statistics.

      The trend in the flow of hardship applications needs to be stemmed because of
       the resource implications for the ISC, the cost to the funds and their members,
       and the effect on retirement incomes policy.

      The resources devoted to the assessment process by the ISC were not
       adequate.

      There should be a role for the Department of Social Security in determining
       applications for release on hardship grounds.

      Participants in the review agreed that there needs to be a move away from
       relative measures of hardship to more objective ones. The report recommended
       a two tier system for assessment, ie an objective test, backed up by a second
       tier that allowed for assessment of merits of the particular within uniform
       national guidelines.

The following is a summary of the issues raised with the Treasurer by the ISC in 1996
in the lead-up to Government consideration of the issues.

       A more objective test of severe financial hardship
       Would result in less „red tape‟ for applicants and be more equitable because
       the release of benefits will be targeted at those who meet objective tests of
       financial need under broad social policy parameters.
       Administrative changes for government would involve increased reliance on
       automated technology, facilitating re-allocation of scarce resources.
       Greater capacity for potential applicants to „self assess‟ would thereby reduce
       volumes of applications




                                                                                       26
Release of Benefits on „Compassionate Grounds‟


                                                     ATTACHMENT 3 (Continued)


      The specification of particular compassionate grounds
      Would reduce the time-consuming and intrusive nature of enquiry required by
      the then Insurance and Superannuation Commissioner‟s office in determining
      the merit of each application.
      Greater capacity for potential applicants to „self assess‟ thereby reducing
      volumes of applications.

      Reduction of the threshold to $200
      The threshold seemed too high given that the legislation now included
      „member protection rules‟ which prevent benefits of less than a thousand
      dollars from being reduced by administrative fees and charges.

      Permanent departure from Australia
      The government considered the situation of non-residents working in Australia
      for relatively short periods, including the difficulties they will face in keeping
      track of small amounts in Australia, and the difficulty for funds in
      administering small amounts. However it regarded the removal of the
      concession as being consistent with overseas practice and would assist
      Australia‟s entry into social security agreements with other countries. Further,
      the problem of non-residents may be overcome by social security agreements
      entered into on a bilateral basis where the rights and obligations imposed by
      each country in relation to non residents can be taken into account.




                                                                                     27
Release of Benefits on „Compassionate Grounds‟


                                                             ATTACHMENT 4

THE ROLE OF AGENCIES (OTHER THAN APRA) IN THE
ADMINISTRATION OF THE EARLY RELEASE OF SUPERANNUATION
BENEFITS

The funds
Superannuation funds decide whether a condition of early release has been met and
whether or not to release a benefit early. This means that before releasing preserved
benefits early they must be satisfied:
      About the permanent or temporary incapacity of the member, or
      that the member is in “severe financial hardship”, or
      that the “less than $200” threshold requirements are met, or
      that the member has terminated employment with a contributing employer so
       that a non commutable income stream may be paid, or
      that the permanent departure from Australia transitional provisions have been
       met by the member, or
      that APRA has approved the release of an amount to the member.

It is important to remember that funds retain the right to decide whether or not to
release any benefit early.

Funds have access to a paper published by APRA on its webpage providing guidance
on how to assess whether a member meets the SIS definition of severe financial
hardship.

APRA Superannuation Circulars are also published on the APRA webpage. The
Circulars I.C.2 “Payment standards for regulated superannuation funds” and I.C.3
“Payment standards for approved deposit funds” are intended among other things to
assist funds and approved deposit funds to understand the SIS provisions concerning
the early release of benefits.


Centrelink and ATSIC involvement in administering Commonwealth Income
Support Payments

As part of the lead-up to the Government‟s decision to introduce the current rules,
Centrelink undertook to issue letters on request to members certifying whether or not
the member has been receiving a Commonwealth Income Support Payment for the
requisite period. These letters are the written evidence on which funds must base their
decision of whether to release on the grounds of severe financial hardship. (Funds
must also consider whether the member is unable to meet immediate family living
expense).




                                                                                      28
Release of Benefits on „Compassionate Grounds‟


                                                     ATTACHMENT 4 (Continued)

In 1998, the payment of wages or salary under the employment scheme of the
Commonwealth that is known as the Community Development Employment Projects
Scheme (CDEPS) were included in the SIS definition of Commonwealth Income
Support Payment. The Aboriginal and Torres Strait Islander Commission (ATSIC) is
thereby involved in providing recipients of these payments with written evidence
needed to demonstrate severe financial hardship to superannuation funds.

Funds, in explaining to members the process for applying for early release on
financial hardship grounds, will normally help members by pointing out the agency
which can provide the written evidence.

Australian Taxation Office

The Australian Taxation Office (ATO) administers a collection system, called the
Superannuation Holding Accounts Reserve (SHAR). SHAR receives small
superannuation amounts from employers who, in making payments in respect of their
employees under the superannuation guarantee arrangements, are unable to find a
superannuation fund or Retirement Savings Account (RSA) that member protects. It
is not a superannuation fund regulated under SIS. The beneficiaries of this fund are
encouraged and given every opportunity to transfer or roll their benefits over to a SIS
regulated superannuation fund.

However the ATO will consider requests from the beneficiaries for early release of
these amounts directly to the beneficiaries in some cases:

      retirement due to permanent disability;

      aged 65 or over;

      receipt of specified Commonwealth income support payments for a certain
       period depending on age;

      an account balance of less than $200 where employment with the employer
       that made the deposit has ended;

      at least 55 years of age and not a resident of Australia for income tax purposes;
       and

              not in employment, or

              in employment but the duties performed are wholly or principally
               outside Australia.

(Source: Webpage “ATO Assist”)




                                                                                     29
Release of Benefits on „Compassionate Grounds‟



                                                         ATTACHMENT 5

TELEPHONE ENQUIRIES HANDLED BY THE APRA CONTACT CENTRE
ABOUT THE EARLY RELEASE OF SUPERANNUATION BENEFITS

                           July to           January July to January
                           December          to June October to
                           2000              2001    2001    October
                                                             2001


ROB General                        42,201     42,435     23,915   66,350
ROB General, per month              7,033        7,073    5,979    6,635
ROB                                16,814     14,701      5,293   19,994
applications
ROB applications per                2,802        2,450    1,323    1,999
month

Applications received               5,535                          9,370
during period



Applicant calls per                      3                            2
applications received




                                                                           30
Release of Benefits on „Compassionate Grounds‟


                                                                   ATTACHMENT 6



                 Superannuation Industry (Supervision) Regulations and
             Superannuation Industry (Supervision) Regulations (Amendment)
                                  SR No. 342 of 1997

                                         and

                      Retirement Savings Accounts Regulations and
                 Retirement Savings Accounts Regulations (Amendment)
                                  SR No. 343 of 1997




 GUIDELINES FOR EARLY RELEASE
         OF BENEFITS
  ON COMPASSIONATE GROUNDS
                                      Version 6




April 2001




                                                                             31
                                                             CONTENTS                                                                              page

INTRODUCTION

Purpose of these Guidelines.........................................................................................................               1
The Legislation............................................................................................................................        1-2

GENERAL COMMENTS
 Financial capacity of an applicant...........................................................................................                    3

 Releases to reimburse applicant who has already paid out expenses...................................... 3

 Releases to repay debts of applicant incurred for payment of expenses.................................                                           3-4

 How much is to be released.....................................................................................................                  4

 Who is a „dependant‟..........................……………………………………………………….                                                                             4-5

PART A
 Medical treatment....................................................................................................................            6-8
 Medical transport.....................................................................................................................           9-10
 Mortgagee foreclosure or power of sale..................................................................................                         11-16
 Modifications to person‟s residence, or vehicle......................................................................                            17
 Person‟s palliative care............................................................................................................             18
 Dependant‟s palliative care, and expenses associated with dependant‟s death, funeral or                                                          19-20
  burial........................................................................................................................................

PART B

Meaning of „consistent with a ground mentioned in paragraphs (a) to (e)‟……………………. 21
Discussion of „consistent with a ground mentioned in paragraphs (a) to (e)‟........…………………….                          21
 consistency with payment for medical treatment.................................................................... 22-23
 consistency with payment for medical transport..................................................................... 24
 consistency with payment to mortgagee to prevent foreclosure, exercise of power of                                  25-27
   sale....
 consistency with payment for modifications to house or motor vehicle................................. 28
 consistency with payment for applicant‟s palliative care........................................................ 29
 consistency with payment for dependant‟s palliative care, death, funeral, burial expenses... 30
Introduction
Purpose of these Guidelines

1.      The purpose of these guidelines is to provide assistance to APRA staff in
administering the „compassionate grounds‟ test described in paragraphs (a) to (f) of
Regulation 6.19A(1) of the Superannuation Industry (Supervision) Regulations (SIS
Regulations). The test is applicable to applications made to the APRA for the early
release of preserved benefits and restricted non-preserved benefits.

2.     In particular, these guidelines explain the specified compassionate ground
described in paragraph (f) of Regulation 6.19A(1) of the SIS Regulations, which
involves a release to „meet expenses in other cases where the release is consistent with
a ground mentioned in paragraphs (a) to (e)‟.

3.     Part A of these guidelines deals with processing of applications for release
made under paragraphs (a) to (e) of Regulation 6.19A(1). Part B of these guidelines
deals with paragraph (f) of Regulation 6.19A(1).
The Legislation

4.      Subregulation 6.19A(1) of the SIS Regulations sets out the six grounds for
release on compassionate grounds in Regulations 6.19A(1)(a) to (f).

5.     There are identical grounds in Subregulation 4.22A(1) of the Retirement
Savings Accounts Regulations (the RSA Regulations).
        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




6.     Regulation 6.19A(1) of the SIS Regulations reads as follows:




A person may apply to the [APRA Delegate] for a determination that an amount of the
person’s preserved benefits, or restricted non-preserved benefits, in a superannuation
entity may be released on the ground that it is required:

(a)    to pay for medical treatment or medical transport for the person or a
       dependant; or

(b)    to enable the person to make a payment on a loan, to prevent:
         (i) foreclosure of a mortgage on the person’s principal place of residence;
              or
         (ii) exercise by the mortgagee of an express, or statutory, power of sale
              over the person’s principal place of residence; or

(c)    to modify the person’s principal place of residence, or vehicle, to
       accommodate the special needs of the person, or a dependant, arising from
       severe disability; or

(d)    to pay for expenses associated with a person’s palliative care, in the case of
       impending death; or

(e)    to pay for expenses associated with a dependant’s:
               (i) palliative care, in the case of impending death; or
               (ii) death; or
               (iii) funeral; or
               (iv) burial; or

(f)    to meet expenses in other cases where the release is consistent with a ground
       mentioned in paragraphs (a) to (e), as the [APRA delegate] determines.




                                        Page 2
        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


GENERAL COMMENTS
Following are guidelines for processing applications made under Regulation
6.19A(1). Officers dealing with these applications MUST READ the relevant
Regulations, in conjunction with these guidelines.
Assessors should keep in mind that applicants for early release of preserved
superannuation benefits have a reasonable expectation that APRA will make decisions
in accordance with the legislation and the applicants‟ financial need. It follows that
decisions must be made promptly. Where further information is required from the
applicant in order to make a sound decision, that should be sought as quickly as
possible, usually by telephone. There may be instances where some further
information may be desirable, but the assessor considers that, on the basis of the
information already available, the additional information is unlikely to result in a
variation to a decision which could be made on the basis of the available information.
In those circumstances the assessor should not pursue the additional information.

Financial capacity of an applicant

1.     Releases can only be approved under the grounds mentioned in Regulation
6.19A(1) if the person does not have the financial capacity to meet an expense arising
from that ground (see Reg. 6.19A(2)).

2.      Details of such financial incapacity are obtained from an applicant‟s responses
to questions 7-11 of the APRA Application Form for Release on Specified Grounds.
If additional information is required in order for the Delegate to make a proper
assessment of the applicant‟s financial capacity, it should be requested.

Claims for release to reimburse an applicant who has already paid the expenses

3.      Such claims are, generally speaking, not payable under the legislation, because
if the money has already been paid by a person (the fund member) in connection with
any of the grounds mentioned in Regulation 6.19A(1), then that establishes that the
person did in fact, have the financial capacity to pay the relevant expenses.

Claims for release to repay debts incurred to pay for relevant expenses

4.    An applicant may have incurred debts in order to pay for the type of expenses
mentioned in Regulation 6.19A(1). The person may have borrowed from a
commercial lender, or used a credit card or borrowed from friends or family members.

5.      The fact of having to borrow money to pay for the relevant expense suggests
that the applicant did not have the financial capacity to meet the expense when it
arose. However, it may have been thought that there would be a capacity to pay for
that expense over the period of the loan.

6.      Where an applicant has run into difficulties with repaying the loan, or credit
card account, a release for the relevant expense can be approved under
Regulation 6.19A(1)(f) (see Part B of these guidelines) as being consistent with any
of the grounds mentioned in paragraphs (a) to (e) of Regulation 6.19A(1) in the
following circumstances:



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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


   the application to APRA for release is made within 3 months of the date of the
    loan or credit card transaction.

In the case where a loan was taken out:
 a statutory declaration is obtained from the lender declaring:-
       the amount of the loan,
       the purpose of the loan (if the purpose is known by the lender e.g. to pay for
        medical treatment, medical transport, to prevent foreclosure etc),
       the amount still owing,
       the date by which repayment was required, and
       the amount required to be repaid.

In addition,
 the applicant supplies evidence that one of the grounds in Regulation 6.19A(1)
   existed and the loan was taken out to meet expenses associated with such grounds;
 the applicant provides evidence of payment for the expenses incurred; and
 establishes reasonable grounds for being unable to repay the loan according to the
   terms of the original agreement.

In the case where a credit card was used, the applicant:
 supplies evidence that one of the grounds in Regulation 6.19A(1) existed and that
   the expense was paid for by credit card;
 supplies evidence of payment for the Regulation 6.19A(1) expense(s); and
 establishes reasonable grounds for being unable to repay the debt in a timely way.

In circumstances where the applicant is not able to provide the above evidence, it may
be possible to approve a release under Reg 6.19A(1)(f) to repay debts incurred to pay
for a relevant expense if the applicant can otherwise reasonably satisfy the decision-
maker that such debts were incurred.

How much is to be released?

7.       Column 3 of Schedule 1 to the SIS Regulations refers to the „cashing
restrictions‟ in respect of the ground available under Regulation 6.19A(1)(b) (see
paras. B10- B13 on pages 13-14) and in respect of all the other grounds.

8.     The amount which can be released under all the other grounds i.e. under
paragraphs (a), (c), (d), (e) and (f) of Regulation 6.19A(1) is:

„A single lump sum, not exceeding an amount determined, in writing, by the [APRA
delegate], being an amount that:
(a)     taking account of the ground, and of the person’s financial capacity, is
reasonably required’.

9.     This issue of appropriate amounts for release is further discussed in Parts A
and B in relation to the relevant grounds for release.
7. Who is a ‘dependant’?




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


10.     The issue of who is a „dependant‟ is relevant in Regulations 6.19A(1)(a), (c)
and (e) under which releases are permitted to pay for a dependant‟s medical treatment
or medical transport; to modify an applicant‟s house or motor vehicle to accommodate
a dependant‟s special needs arising from their severe disability; to pay for palliative
care, or for expenses associated with a dependant‟s death, funeral or burial.

10.1 Section 10 of the SIS Act defines „dependant‟ as „in relation to a person,
includes the spouse and any child of the person‟. „Spouse‟ is defined in section 10 of
SIS, in relation to a person, as including another person who, although not legally
married to the person, lives with the person on a genuine domestic basis as the
husband or wife of the person. „Child‟ is defined in section 10 as including an adopted
child, a step-child or an ex-nuptial child of the person‟ Excluded as dependants would
be children who are wards of a State or Territory or foster children, because foster
children remain dependants of the State or Territory. However, depending on the
facts of a particular case, a foster child may become partly dependant on a foster
parent, where the foster parent (as well as the State or Territory) contributes to the
support of the child. In such cases, a foster child may qualify as a dependant on the
basis of financial dependency. Otherwise, there is no test of financial dependency in
relation to a spouse or child.

10.2 Persons other than spouses and children could be dependants of the fund
member for the purposes of Regulations 6.19A(1)(a), (c) and (e), depending on the
facts of a case. Such persons, who will generally need to show they are wholly or
partly financially dependant on the member, could include:
 elderly parents or grandparents;
 an ex-spouse who is receiving maintenance for themselves or their children;
 a homosexual partner of the member;
 brothers or sisters.

10.3 APRA officers should not automatically reject a claim that a person is a
dependant merely because that person is not a spouse or child of an applicant.
Dependency should be assessed on the particular facts of a case, with financial
support generally being the most significant criterion. It would be unusual for a
person to be a „dependant‟ in a legal sense unless they rely on the ROB applicant for
financial support.

10.4 Factors, which are relevant to the existence of dependency, include:
 the age of the person;
 any characteristics of the person which may make them more dependant upon
   others e.g. health, disability;
 the relationship of the person to the applicant;
 the caring arrangements in place for the person;
 whether or not the person is working;
 the person‟s income; and
 the financial support provided to the person by the applicant.


11.    Each of the grounds is now discussed in turn.




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PART A

Regulation 6.19A(1)(a)

This permits release to pay for medical treatment or medical transport for the person
or dependant

Medical Treatment
Whose Medical Treatment is covered?

A1.    The release is for medical treatment for the person or dependant (for full
explanation of who is a „dependant‟ see paras 10 – 10.4, pp 4-5).


What type of medical treatment is covered?

A2.   Regulation 6.19A(3) describes the medical treatment that is covered. It is
medical treatment which has been certified by two medical practitioners (at least one
of whom must be a specialist) as medical treatment which:

(a)    „is necessary to:
               (i) treat a life threatening illness or injury; or
               (ii) alleviate acute, or chronic, pain; or
               (iii) alleviate an acute, or chronic, mental disturbance; and

(b)            the treatment is not readily available to the person, or the dependant,
               through the public health system’.


A3.    Both certificates (i.e. of each registered medical practitioner) must therefore
cover both points (a) and (b). As „dental treatment‟ can be „medical treatment‟ for
the purposes of subregulation 6.19A(1)(a), the evidentiary requirements of
subregulation 6.19A(3) must be met in such cases by 2 dental practitioners, at least
one of whom is a specialist.

8. What is the meaning of ‘not readily available through the public health
   system’?

A4.    Regulation 6.19A(3) provides that money can be released for medical
treatment only if it is not readily available to the relevant person through the public
health system.

A5.    „Readily‟ is defined in the concise Macquarie Dictionary as „promptly,
quickly, easily‟.

A6.     Medical treatment may, in a particular case, be available through the public
health system. This does not mean that the application should automatically be
rejected. The issue is whether or not it is readily, or promptly, quickly and easily
available.


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A7.     Depending on the nature of the illness, the waiting time for, or the availability
of, the public health treatment, can be either prompt and quick or not. In one case, a
3-month wait could be acceptable and in another, a 48-hour wait, unacceptable.

How much should be released?

A8.     Before making a decision, the APRA delegate should examine the accounts
and/or letters advising of future expenses of doctors and service providers for medical
treatment and/or medical transport.

A9.    Schedule 1 to the SIS Regulations (see columns 2 and 3 for Item 107 -
compassionate grounds) indicates that the amount which can be released is a „single
lump sum‟, being:
     ‘A single lump sum, not exceeding an amount determined, in writing, by the
     APRA delegate, being an amount that:
           (a) taking account of the ground and of the person’s financial capacity,
                 is reasonably required;’

A10. A release from the fund is restricted to „a single lump sum‟. This does not
mean that a fund can only release once for compassionate grounds. The phrase means
that each time a decision is made by an APRA delegate to agree to a release, the
trustee of the fund can release money in a lump sum, not in many separate amounts,
e.g. to pay all the various service providers separately.

A11. To avoid unnecessary applications being made to APRA, officers should, as a
matter of sensible administrative practice, take into account:

 accounts for unpaid expenses;

 estimates provided by doctors and service providers of likely medical treatment
  expenses for the foreseeable future. Generally this will cover no more than 12
  months of treatment, with the applicant being invited to reapply if further treatment
  is necessary.

A12. If no evidence is provided of anticipated future expenses, the only money that
should be released would be to pay for past expenses, which remain unpaid.

A13. If further major expenses arise after an APRA decision is made, an applicant is
not prevented from approaching APRA again for a further release under Regulation
6.19A(1)(a).
9. What if the medical condition involves a severe disability but falls short of the
    medical conditions described in Reg. 6.19A(3)?

A14. A severe disability does not, of itself, meet the standard for medical treatment
set down in Reg 6.19A(3). However, it may do so if it causes „life threatening illness
or injury‟ or „acute, or chronic pain‟, or „acute, or chronic mental disturbance‟. An
applicant may be blind and consequently severely disabled. However, blindness is
not a condition fitting the description in Reg. 6.19A(3)(a), that is, it is not of itself a



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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


„life threatening illness or injury‟, or one which generally involves „acute, or chronic
pain‟, or „acute, or chronic mental disturbance‟.

A15. Therefore, benefits generally cannot be released under Reg. 6.19A(1(a), to pay
for medical treatment in respect of blindness or other disability since the issue of
severe disability is not relevant as a test under Reg. 6.19A(1)(a).




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Regulation 6.19A(1)(a)
Medical Transport
What is covered under medical transport?

A1.1 Regulation 6.19A(7) says that „medical transport‟ means transport, for medical
attention, by land, water or air. The medical attention or treatment must be of the type
mentioned in Regulation 6.19A(3)(a) i.e. where it is „necessary to treat a life
threatening illness or injury; or to alleviate acute, or chronic, pain; or to alleviate an
acute, or chronic, mental disturbance‟.

A1.2 Payment for medical transport by taxi, ambulance, plane etc is clearly covered
by regulation 6.19A(1)(a). Paragraph (a) could also cover release of benefits to pay
for the purchase of a reliable 2nd hand motor vehicle, or for repairs to an existing
motor vehicle to ensure that it is roadworthy, to transport an applicant or his or her
dependant in connection with the necessary medical treatment.

When should officers accept such claims for medical transport?

A1.3 ONLY when the medical treatment for which the medical transport is
required, has been certified as necessary to treat a life threatening illness or injury; or
to alleviate acute, or chronic, pain; or alleviate an acute, or chronic, mental
disturbance.

How much should be released?

A1.4 Based on information obtained from doctors and service providers as to the
nature and frequency of medical treatment required, sufficient to cover the cost of the
relevant mode of transport to access the treatment. This could include quotes for the
cost of a second hand vehicle (less trade-in on existing vehicle if applicable) or the
cost of repairs to an existing vehicle, together with an estimate of running costs where
applicable.

What if an applicant‟s medical treatment or medical transport expenses are to be
covered by insurers or by another source?

A1.5 Applicants who apply for early release of their benefits to pay for expenses
associated with medical treatment or medical transport may, in fact, have cover for
such expenses under Workers‟ Compensation, Health Insurance or other forms of
insurance.

A1.6 The Application Form for Early Release of Benefits is designed to ensure that
clients provide information as to whether insurers or other parties are paying for their
medical treatment/medical transport expenses. Where it is not clear from the Form,
whether this is the case or not, this information should be sought from the applicant.

A1.7 Reg6.19A (1)(a) only enables the release of benefits where they are „required
…to pay for medical treatment or medical transport‟. If the money to pay for these
items can be obtained from another source, e.g. an insurer, then the money is not



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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


„required‟ for medical treatment or transport and a decision should be made to refuse
release of benefits under Reg6.19A (1)(a).

A1.8 Although it may take some time for insurers to pay for medical
treatment/transport expenses, the medical service providers will usually not deny
medical treatment/transport to an applicant because they know that insurers will
eventually cover those expenses.




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          EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




Regulation 6.19A(1)(b)

This permits release to enable a person to make a payment on a loan, to prevent either
foreclosure of a mortgage on the person‟s principal place of residence; or to prevent
exercise by the mortgagee of an express, or statutory, power of sale over that
residence.

B1.     This type of release is to assist the person (i.e. the fund member) who is living
in the property and is named on a registered mortgage as mortgagor in connection
with a loan secured against the property. It is not available to assist a dependant or
relative of that person. The type of mortgage relief envisaged under this provision is
generally intended to apply to loans taken out for the purchase, and/or renovation, of
the principal residence and not to loans taken out for business purposes.

When is a release under this ground permitted?

B2.    Regulation 6.19A(1)(b) is very specific about the circumstances in which the
APRA delegate can approve the release. All of the following circumstances must
exist:

 that the release will be used to make payments on a loan (in fact, on a mortgage);
   and
 the loan repayments will prevent either:
 a foreclosure of a mortgage1 on the person‟s principal place of residence; or
 exercise by the mortgagee of an express, or statutory, power of sale2 over the
     person‟s principal place of residence.
10. What is the meaning of ‘principal place of residence’?

B3.    „Principal place of residence‟ is not defined in the Superannuation Industry
(Supervision) Act 1993 (the SIS Act), the SIS Regulations or the Schedule to the SIS
Act.



1
  „Foreclosure‟ in simple terms means - that a mortgagee (e.g. a bank) becomes the owner of a house
over which it held a mortgage.

The legal description of „foreclosure‟ applies when a mortgagor (borrower) has failed to pay off a
mortgage debt within the proper time. The mortgagee (lender) is then entitled to bring an action in the
Supreme Court asking it to make an order that a day be fixed on which the mortgagor is to pay off the
debt, and in default of payment on that day, the mortgagor may be „foreclosed of his equity of
redemption‟ (i.e. he will lose the mortgaged property). This is called a foreclosure order nisi. If the
mortgagor does not comply with the Court‟s order, the Court‟s order nisi becomes „absolute‟ and then
the mortgaged property will belong to the mortgagee. (Osborn‟s Concise Law Dictionary. 8th edition)
2
  A „power of sale‟ is the right of a person (e.g. a mortgagee) to sell the property of another and apply
the proceeds of sale in satisfaction of a debt or claim due to him from that other. Thus a mortgagee has
a power of sale of the mortgaged property, where the mortgage is made by a deed, as soon as any of the
mortgage money has become due. (Osborn‟s Concise Law Dictionary). An express power of sale
arises if the mortgage document provides for a power of sale in default of mortgage conditions (e.g.
repayments). A statutory power of sale arises for a mortgagee where a statute permits this.


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B3.1 Whether a property is a person‟s principal place of residence depends on the
facts of the particular case. Essentially, a principal place of residence is one in which

a person dwells permanently or has dwelt for a considerable period of time. It is
where one has his or her settled or usual abode. It could include a caravan or portable
home situated in a permanent caravan park. The fact that the person may leave from
time to time, for the purpose of business or pleasure, does not necessarily mean that
that place stops being a „principal place of residence‟.

B3.2 By contrast, if a person intends to rent out their home as an investment, for a
longer period, that property could cease to be their principal place of residence. It is
all a question of a person‟s intentions about returning there or not and for how long
they are away.

B3.3 An example would be where an applicant has a home in Sydney with a
mortgage over it. His mortgagee permits him to rent the property out for 12 months.
The applicant is living in a rented house in Queensland at the time of his application.
Although he is working temporarily in Queensland, he intends to return to his Sydney
home after that temporary employment finishes.

B3.4 The period of the lease granted over his Sydney home, 12 months, is not a
relevant factor, in itself, for determining whether or not there is an intention to return
there. This is because leases are generally made for 6 or 12 months. What is relevant
to determining whether the Sydney property continues to be the principal place of
residence is a combination of various factors, such as the fact that the employment in
Queensland is on a temporary basis; and there is an intention to return to the Sydney
property in the foreseeable future.

B3.5 In assessing whether a property not currently occupied by an applicant is
his/her principal place of residence, APRA officers will need to ascertain:

   how long the person has not lived in the property;
   why they have not lived in the property;
   whether they intend to resume living in the property;
   when they intend to resume living in the property; and
   what is the basis of their current accommodation e.g. are they renting, or do they
    own that property.

What evidence is required for release on the mortgage ground?

B4.     Regulation 6.19A(5) says that the APRA delegate cannot be satisfied that
money is required on the ground mentioned in paragraph (1)(b) unless the person
gives to the APRA delegate a written statement from the mortgagee that:

       ‘(a) payment of an amount is overdue; and
       (b) if the person fails to pay the amount, the mortgagee will:
            (i) foreclose the mortgage on the person’s principal place of residence;
                  or
            (ii) exercise its express, or statutory, power of sale over the person’s
                  principal place of residence’.


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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




B5.    Regulation 6.19A(6) says that:

‘A statement made under subregulation (5) must include the following information:

      (a)   the amount that is equal to 3 months’ repayments under the mortgage;
            and
      (b)   the amount that is 12 months’ interest on the outstanding balance of the
            loan at the time the statement is made’.

B6.    Practice in dealing with applications for the release of benefits under
Regulation 6.19A(1)(b) has shown that there have been instances of false and/or
misleading claims. In the case of mortgage foreclosure the applications have
sometimes been supported by written material, from lending institutions, which has
been misleading or otherwise incomplete.

B7.    To confirm that foreclosure action in relation to the applicant’s principal
place of residence is actually in train, and to satisfy the requirements of Regs
6.19A(5) and (6), the applicant should provide the following:

       1. A written statement from the mortgagee containing the following
          information:
               that $x is overdue;
               that the mortgagee is about to exercise its powers under the
                  mortgage;
               that if $x is not paid the mortgagee will foreclose or exercise its
                  power of sale;
               the amounts for the ‘3 months’ repayments’ under the mortgage
                  and ‘12 months’ interest on the outstanding balance of the loan’;
                  and
               the street address of the secured property.

       2. A copy of a „Notice of Demand‟, „Notice of Default‟ or similar (this does
          not have to be a „Notice of Foreclosure‟) issued to the applicant by their
          lending institution. Lending institutions have differing names for these
          notices but they can best be described as the last letter or notice issued by a
          mortgage provider prior to legal action being taken for non payment of
          arrears.

How much can be released?

B8.    The purpose of release on this ground is to prevent foreclosure or exercise of a
power of sale. In most cases, this will be achieved by release of, in the first instance,
the amount of arrears specified in the notice of default issued by a mortgage provider.

B9.    However, as a matter of good administrative practice, the circumstances of
each applicant should be assessed as to financial capacity to service mortgage loans in
the near future. Where, because of specific factors, such as a period of unemployment



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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


or illness, an applicant may not be able to meet repayments for some time, an amount
may be released to assist in meeting forseeable commitments.

B10. However, Schedule 1 to the SIS Regulations (see columns 2 and 3) says that in
each 12 month period (beginning on the date of first payment), the amount that can be
released is one which:


      ‘does not exceed the sum of:
            (i) 3 months’ repayments; and
            (ii) 12 months’ interest on the outstanding balance of the loan’.

B11. Therefore the APRA delegate can agree to a release of a maximum of no
more than the sum of 3 months‟ repayments and 12 months‟ interest (in these
Guidelines referred to as the „permitted amount‟), on the outstanding balance of the
loan in each 12-month period, beginning on the date of the first payment.

B12. It should be noted, however, that the cashing restriction applies in respect of
each individual application. If two people have a joint loan secured by a mortgage
and both apply for a release of benefits, then the total amount that could be released to
them in any 12-month period would be a total of 3 months‟ repayments on the loan
and 12 months‟ interest on the outstanding balance of the loan for each of the
applicants at the time of the relevant application.

B13. Any release in the above circumstances would be subject to assessment of the
amount „reasonably required‟ to prevent foreclosure and the financial capacity of the
applicant to meet the expense. Where one party to the mortgage has received a release
sufficient to prevent mortgagee action for say, six months, then the other party would
need to establish reasonable grounds for a further release to be granted for the same
mortgage within that period. Reasonable grounds could include a situation where
evidence is provided that the first party has obtained a release but has decamped
without making any payment on the loan.

Will release of the permitted amount always prevent foreclosure or power of sale?

B14. Where release of the permitted amount will not prevent foreclosure, the
condition in Reg 6.19A(1)(b) is not satisfied and so no release can be granted.

B15. If a mortgagor falls into arrears again in the same year that the permitted
amounts have been released under paragraph (b), then a foreclosure or power of sale
could still occur, depending on the terms of the mortgage or statute. Where the
applicant has already accessed the maximum allowable release, no further release can
be approved.
11. Should benefits be released where foreclosure or exercise of a power of sale
    will not or may not, in fact, be avoided, notwithstanding release?

B16. Regulation 6.19A(1)(b) provides in effect that a person may apply to APRA
for a release of their benefits on the ground that it is required to enable them to make a
payment on a loan to prevent:



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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


               (i)    foreclosure of a mortgage on the person‟s principal place of
                      residence; or
               (ii)   exercise by the mortgagee of an express, or statutory, power of
                      sale over the person‟s principal place of residence.

B17. Regulation 6.19A(2) provides that APRA must determine in writing that a
person has satisfied the condition of release mentioned in Regulation 6.19A(1)(b) if it
is satisfied that the release is required on a ground mentioned in (1) and the person
does not have the financial capacity to meet the expense arising from that ground.

B18. The combined effect of Regulations 6.19A(1) and (2) is that an APRA officer
should not agree to release benefits unless he/she is satisfied that the amount to be
released is actually sufficient to prevent foreclosure or exercise of the power of sale
(in this part of the Guidelines referred to as „mortgagee action‟).

B19. In other words, it would not be a proper exercise of the power to release
benefits up to the amount permitted in Item 107 of Schedule 1 to the SIS Regs. if that
amount falls short of the amount actually required by a mortgagee to prevent
mortgagee action.

B20. The requirements of Regulations 6.19A(5) and (6) (see paragraphs B4 and B5
above) do not specifically require APRA to obtain confirmation from a mortgagee
that the payment of the amount which can be released will actually prevent mortgagee
action in the immediate future (or indeed for any period of time).

B21. Where the amount which can be released pursuant to Item 107(b) in the
Schedule might be insufficient to pay all the arrears outstanding under the mortgage,
APRA should obtain confirmation (either directly or indirectly from the mortgagee)
that payment of the permitted amount will prevent mortgagee action in the immediate
future. The APRA Application Form for Early Release indicates that mortgagees
should provide this confirmation.

B22. There would be no compulsion on either the applicant or the mortgagee to
state whether payment of the permitted amount would prevent mortgagee action.

B23.      However, if an APRA officer is not given information on which he/she can
reasonably conclude that payment of the permitted amount to the mortgagee will
prevent mortgagee action in the immediate future, then the ROB application should be
rejected.

B24. Regulations 6.19A(5) and (6) do not limit the information that APRA can
request. Where it is appropriate, other information may be requested in addition to
that described in paragraphs B4 to B7 and B21 above.

What if a mortgagee is threatening to exercise a power of sale where there is
more than one loan involving more than one mortgage, and possibly over more
than one property?

B25. Frequently, an applicant may have more than one loan secured by one
mortgage or by more than one mortgage.


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B26. These mortgages may all be registered over the principal place of residence
(situation A). Alternatively one mortgage over the principal place of residence may
secure more than one loan – the loans may relate to various different properties.

B27. Alternatively, one of the mortgages may be registered over the principal place
of residence and other mortgages may be registered over another property or
properties (situation B).


Situation A
B28. If the requirements of Reg. 6.19A(5) are met in respect of either or both
mortgages (or loans), then benefits may be released under Reg. 6.19A(1)(b) in respect
of both mortgages (or loans). The cashing restrictions stated in Schedule 1 will apply.
That is, in respect of each mortgage, the amounts that comprise 3 months‟ repayments
and 12 months‟ interest on the outstanding balances can be released.

Situation B
B29. Sometimes, a finance provider will threaten mortgagee action against the
principal place of residence unless both mortgages, secured over the principal place of
residence and another property, are brought into order.

B30. As the purpose behind Reg. 6.19A(1)(b) is to prevent foreclosure or exercise
of a power of sale of the principal place of residence, if payment of arrears on two or
more loans or mortgages, even if they are secured over different properties, is required
to prevent such action over a principal place of residence, then benefits may be
released under Reg. 6.19A(1)(b) to pay arrears on those two or more mortgages,
subject to the cashing restrictions referred to in Schedule 1 in respect of each and
every mortgage. This means that in respect of each of the mortgages or loans, the
amount that is equal to 3 months‟ repayments and 12 months‟ interest on the
outstanding balance or the mortgage on the principal place of residence can be
released.

B31. However, release in such a case can only be considered where the applicant
can show that those additional assets, other than the principal place of residence,
cannot be used to satisfy the mortgagee‟s demands for repayment, or that disposal of
those assets would not be feasible in the short term.

B32. This contrasts with the situation involving mortgagee action where the
mortgage is secured over an investment property, and foreclosure will relate only to
the investment property. Release is not permitted in these circumstances.

Situation C- loans involving overdrafts

B33. Where an applicant seeks release of benefits to pay all or part of an overdraft,
secured by a mortgage over his or her principal place of residence, to prevent
mortgagee action, the situation falls squarely within the standard set out in Reg.
6.19A(1)(b). However the „overdraft situation‟ does not readily „fit‟ the cashing
restrictions set out in Item 107 in Schedule 1 to the SIS Regs. because overdrafts are
rarely repayable by instalments. Rather, the entire amount of the overdraft is


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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


repayable on demand. Where full repayment of an overdraft is stipulated, banks may
not be prepared to accept repayment programs which involve monthly principal and
interest payments or to provide information as to the amount equal to 3 months‟
repayments and 12 months‟ interest on the balance of the overdraft (as specified in
Regs. 6.19A(5) and (6)).

B34. Where a mortgagee is threatening action against the principal place of
residence unless an overdraft is brought into order, or the full amount repaid, then
benefits may only be released under Reg. 6.19A(1)(b) up to the maximum allowable
under the cashing restrictions. Where an applicant has not provided the statement
specified in Reg. 6.19A(6), for whatever reason, APRA cannot be satisfied that
money is required under paragraph (b) and so no release can be granted.

B35. However, where, for instance, the Bank is unable to supply a monthly
instalment figure, it may be possible to release the amount equal to 12 months‟
interest providing the current interest rate is stated.




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




Regulation 6.19A(1)(c)

This permits release to modify the person‟s principal place of residence, or vehicle to
accommodate the special needs of the person, or a dependant, arising from severe
disability.

C1.      The release is to assist the person (fund member) or a dependant.
(refer to paragraph 10 on page 4, for clarification of who is a dependant).

C2.    The release can be for modifications to the person‟s principal place of
residence (see paragraph B3, pp.11-12) or the person‟s vehicle.

Types of modifications which would be accepted

C3.     It is not possible to provide an exhaustive list, but the types of modifications
accepted would include releases for such things as expenses for putting in ramps in
the home, lowering kitchen benches and modifying bathroom fittings. Modifications
to a motor vehicle could include installing a wheelchair rack on top of the car or
replacing pedals with levers.

C4.    The release is conditional upon there being a severe disability (physical or
mental), with consequent „special needs‟.

When should APRA accept claims for modifications?

C5.    The Regulations do not specify what evidence is required from an applicant
requesting a release under this ground.

C6.    However, generally speaking, the following evidence should be provided by
an applicant:

 a letter from a treating doctor, possibly supported by a professional carer, or
  therapist, outlining the nature of the disability and the desirability of having
  modifications done to the house and/or vehicle; and
 quotations for the cost of the modifications from service providers.




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         EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




Regulation 6.19A(1)(d)

This permits release to pay for expenses associated with the person‟s palliative care,
in the case of impending death

D1.     The release is in connection with the person’s own palliative care.

What types of expenses are palliative care expenses?

D2.     „Palliative‟ is defined in the Macquarie Dictionary as „1. serving to palliate.
2. something that palliates.‟ „Palliate‟ is relevantly defined as „to mitigate or
alleviate‟.

D3.     Palliative care expenses could include:

   accommodation costs of a hospice;
   costs of the nurses and doctors involved in the palliative care;
   pain killing drugs; and
   cost of home palliative care.

When should APRA accept claims relating to palliative care expenses?

D4.  The Regulations do not specify the evidence required to support such claims.
However, an applicant should supply:

 a doctor‟s certificate confirming that the person is terminally ill.

Generally speaking, the following should also be provided, where relevant:

 quotations from the palliative care providers (doctors, nurses, counsellors, etc.);
 quotations from the hospice for accommodation;
 quotations relating to home palliative care.

D5.     APRA officers should, however, be flexible in these circumstances. Where it
would be unduly intrusive to require quotations, or where there is less than $5,000 in
the applicant‟s superannuation fund, the assessor should make a reasonable judgement
as to the amount to release.




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         EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




Regulation 6.19A(1)(e)

This permits release to pay for expenses associated with a dependant’s palliative
care, in the case of impending death; or expenses associated with the dependant’s
death; or funeral; or burial.

E1.  The release is for the dependant’s expenses, not those of the person (i.e. fund
member). See paragraph 10 on page 4 for clarification of who is a dependant.

What types of expenses are palliative expenses; and expenses associated with death,
funeral and burial?

E2.     Examples of palliative care expenses are provided at paragraph D3.

E3.     Examples of expenses associated with death, include:

   autopsy costs;
   death certificates;
   transport of deceased body to the site of burial;
   cremation costs.

E4.     Examples of expenses associated with a funeral include:

 fees of the funeral service;
 the costs of hiring out the church for the funeral ceremony (if the church charges
  for this);
 special cultural requirements.

E5.     Examples of expenses associated with a burial include:

 the cost of a coffin;
 the cost of a tomb;
 cemetery fees.

When should APRA accept claims under Regulation 6.19A(1)(e)?

E6.    The Regulation does not indicate that evidence of these expenses should be
provided. However, generally speaking, the following types of evidence should be
obtained:

 in relation to palliative care, certification from a doctor that the dependant is
  terminally ill;
 quotations from the service providers of palliative care (the qualifications noted at
  paragraph D5 apply here also), of the funeral service and the burial service.
Claims in relation to funeral expenses for ‘dependants’




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


E7.     An issue in this sensitive area is whether the funeral expense has been incurred
for a ‘dependant’ of the applicant. The definition of ‘dependant‟ under section 10 of
the SIS Act is not all embracing and thus does not preclude APRA from applying
legal tests under the general law. Primarily, the test in this matter, which has been
adopted in these guidelines (see paragraph 10, page 4), is whether the person was a
spouse or child of the applicant, or was wholly or partly financially dependant on the
applicant. Problems may arise in assessing whether other relatives are dependants of
applicants. APRA also recognises that there may be social and cultural obligations on
applicants that might support the notion that the person was the applicant‟s dependant.

Therefore, in assessing whether to release for funeral expenses where the deceased is
other than a spouse or child, APRA officers should look for evidence of one or all (as
appropriate) of the following:

   Payments by the applicant to, for or on behalf of the alleged dependant including,
    but not limited to, copies of bank statements, cheques, bank drafts, electronic
    transfers etc.
   Information, with supporting evidence, of cultural obligation that may exist in the
    applicant‟s country of origin (the applicant should explain, in detail, why he or she
    is obliged to pay. Would Embassy staff or religious and community leaders
    support the assertion?).
   Any further information which the applicant can provide which may assist in
    resolving the issue of dependency, such as the alleged dependant‟s age, state of
    health, any disability, caring arrangements in place for them, whether they were
    working, what income or pension they received etc.




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


PART B
Regulation 6.19A(1)(f)
Meaning of phrase ‘consistent with a ground mentioned in paragraphs (a) to (e)’

1.     The phrase means that when an applicant requests the early release of his/her
superannuation benefits, and the type of release requested does not „fit‟ within any of
the grounds referred to in Regulation 6.19A(1)(a) to (e), it may nevertheless be
accepted by an APRA officer under Regulation 6.19A(1)(f) if:

 the purpose or objective of the requested release is compatible with the purpose or
  objective of any of the other grounds for release covered by Regulation
  6.19A(1)(a) to (e).

2.      The rest of Part B provides a more detailed explanation about the phrase
„consistent with a ground mentioned in paragraphs (a) to (e)‟ and provides examples
of claims for release which could and could not be accepted under Regulation
6.19A(1)(f).

‘Consistent with a ground mentioned in paragraphs (a) to (e)’

3.      „Consistent‟ is defined in the Macquarie Dictionary as:
      ‘(1) agreeing or accordant; compatible; not self-opposed or self-
           contradictory;
      (2) constantly adhering to the same principles, course, etc’.

4.      In the context of subregulation 6.19A(1)(f), „constantly adhering to the same
principles, course‟ is taken to mean accepting a claim where the purpose or objective
of release is compatible with the purpose or objective underpinning any of the other
grounds mentioned in paragraphs (a) to (e).

5.     In assessing applications under paragraph (f), it is therefore necessary to
understand the purpose or objective behind the grounds for release referred to in
paragraphs (a) to (e).

6.      Consistent with the Explanatory Memorandum to the legislation, Regulation
6.19A(1)(f) is to be interpreted narrowly. This means that although releases under (f)
need to be compatible with the other kinds of permissible releases, there are limits to
what is permissible under (f). It is impossible to define those limits, except by way of
examples of cases involving permissible and non-permissible releases under (f).

7.      Sometimes, the words used to describe a release requested under paragraph (f),
will indicate whether or not such a release has a purpose or objective which is
compatible with the purposes and objectives of paragraphs (a) to (e) of Regulation
6.19A(1).

8.      Whenever there is a possibility of accepting a claim either under paragraph (f)
or under another paragraph of Regulation 6.19A(1), it is advisable to test the claim
against the criteria for the main paragraph, before having recourse to paragraph (f).




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


                                                             Consistency under Reg.
                                                       6.19A(1)(f) with - medical
                                                       treatment
12. Objective of Regulation 6.19A(1)(a)

F1.     The objective of this regulation is that a person (the applicant) and his or her
dependants should not be denied medical treatment in the very serious circumstances
mentioned in Regulation 6.19A(3) (i.e. for life threatening illness or injury, or to
alleviate acute or chronic pain or to alleviate acute, or chronic, mental disturbance)
and where the treatment is not readily available through the public health system).
13. Not consistent with medical treatment

F2.     A claim that money is required to be released to pay for employing staff, or for
other costs associated with running a business while the applicant is receiving medical
treatment of the kind mentioned in Regulation 6.19A(3), is not consistent with the
objective of ensuring that medical treatment is provided. It goes beyond this objective
- and becomes a new objective- i.e. that businesses should continue while the
proprietor of the business is receiving medical treatment.

F3.     Similarly, a claim that money is required to be released to a person receiving
medical treatment to enable that person to pay for ongoing childcare, in circumstances
where the person is unable to do so himself or herself and has no family support to
rely on in this regard, would not be consistent with the regulation 6.19A(1)(a) ground.
This claim is based on a different objective in that it relates to disability support as
distinct from obtaining medical treatment.

F4.    A claim that money is required to be released in order to repay debts, so that
available monies can be spent on medical treatment, is also inconsistent with the
ground mentioned in Regulation 6.19A(1)(a), as the objective of such a release is the
payment of non-medical debts.
14. Consistent with medical treatment

F5.      Other types of releases can, in certain circumstances, be consistent with
releases for medical treatment i.e. if they have the same objectives (viz. treating for
life threatening illness, or to alleviate acute or chronic pain etc) and the words used to
describe them are consistent with the „pay for medical treatment‟ terminology.
„Treatment‟ would include surgical and non-surgical treatment such as obtaining
special drugs and could also include releases to pay for medical aids:
 wheel chair,
 special type of bed
 special type of furniture

F6.     APRA may not release benefits to alleviate financial hardship. However, in
cases where APRA receives properly documented medical evidence that a person is
suffering life threatening illness or acute, or chronic, mental disturbance which is
exacerbated by his/her inability to meet pressing financial commitments, then
consideration can be given to releasing funds to alleviate the person‟s medical
condition. Release in this situation is generally permitted only in circumstances where
the person has a history of serious medical problems, in particular where there is
medical evidence of suicidal ideation.


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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




F7.    Consideration can be given to releasing funds to ensure a person‟s access to
required medical treatment. This may include costs of childcare, travel of relatives to
and from hospital, or additional accommodation costs for relatives staying in hospital
where these expenses are necessarily incurred to enable access or to assist the
successful outcome of the treatment. So long as APRA receives properly documented
medical advice that this is necessary, these expenses can be considered consistent with
the ground mentioned in the regulation 6.19A(1)(a).

F8.     Generally, all these expenses should be met under paragraph (f), only if the
same evidentiary requirements as are applicable to release for medical treatment are
met, that is, a statement conforming with Reg 6.19A(3) is obtained from two medical
practitioners, at least one of whom must be a specialist.




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


                                                             Consistency under Reg.
                                                       6.19A(1)(f) with - medical
                                                       transport
15. Objective of Regulation 6.19A(1)(a)

F9.     The objective of this ground is that the person (the applicant) and his or her
dependants should not be denied transport, by land, water or air, to obtain medical
treatment of the kind mentioned in paragraph (a) of Regulation 6.19A(3) viz. where
the treatment is necessary to treat a life threatening illness or injury; or to alleviate
acute, or chronic, pain or to alleviate an acute, or chronic mental disturbance.

F10. Payment for medical transport by taxi, ambulance, plane etc is clearly covered
by regulation 6.19A(1)(a).
16. Consistent with medical transport

F11. In circumstances where a person must relocate to access medical treatment
more readily, or to seek alternative living conditions for properly documented medical
reasons, the removal costs associated with relocation are consistent with the
objectives of the grounds mentioned in subregulation 6.19A(1)(a).

17. Not consistent with medical transport

F12. Examples of expenses that are not consistent with medical transport expenses
would include:

 the travel and hotel costs of persons other than the applicant or carer and the person
  receiving the medical treatment;
 the hotel costs of the applicant who has been transported inter-state or overseas to
  obtain the medical treatment where that person was required to convalesce in a
  hotel after such treatment.




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




                                                            Consistency under Reg.
                                                      6.19A(1)(f) with - action by
                                                      mortgagee

Objective of Regulation 6.19A(1)(b)

F13. The ground mentioned in subregulation 6.19A(1)(b) allows release to make a
payment on a loan, to prevent foreclosure of a mortgage or the exercise by the
mortgagee of a power of sale over the principal place of residence of the
superannuation fund member. The type of mortgage relief envisaged under this
provision is generally intended to apply to loans taken out for the purchase, and/or
renovation of that property, and not to loans taken out business purposes.

F14. Consequently, the scope of this ground is quite limited. It does not apply to
prevent people losing their homes in all the circumstances in which people can lose
their homes, but only where there is an arrears on a loan secured by a mortgage.
People can and do lose their homes because they go bankrupt, or because they run up
debts that result in court judgments being registered against the property. If the
legislative intention had been to prevent the loss of a principal residence in all cases,
and whatever the amount of superannuation benefits required, then paragraph
6.19A(1)(b) would have been more broadly expressed and Item 107 of Schedule 1
would have been differently drafted.

F15. It must be inferred therefore that paragraph (1)(b) is limited to preventing loss
of a person‟s home where there are loan arrears to the extent that foreclosure is
threatened, and where release of an amount up to (but not exceeding) the limit set by
Item 107 will prevent the foreclosure.

F16. Consequently, the wording used in subregulation 6.19A(1)(b) indicates that
the real objective i.e. saving the principal place of residence is confined to those
circumstances where there is a foreclosure or exercise of a power of sale threatened
by a mortgagee.
18. Not consistent with action by mortgagee

F17. A claim for a release to enable an applicant to pay out monies, pursuant to a
Family Court order, (in default of which the family home is to be sold), or a claim for
a release to enable an applicant to pay creditors who are not mortgagees, (in order to
prevent bankruptcy or other court proceedings), is not consistent with the ground
referred to in subregulation 6.19A(1)(b). The respective objectives of such claims e.g.
to comply with a Family Court order and to pay creditors who are not mortgagees, are
not compatible with the purpose of paragraph (b) i.e. preventing foreclosure or power
of sale by a mortgagee (see para. F20 below).

F18.   Release in these cases is therefore not permitted under paragraph (f).

F19. Another example where release would not be permitted under paragraph (f)
would be where benefits are requested to enable a tenant to pay overdue rent to a
landlord, who is threatening eviction from premises which the tenant considers to be
his/her principal place of residence. The rented premises may be the principal place


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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


of residence, but the purpose of such a release (e.g. to prevent eviction from rented
premises), is not compatible with the purpose of payment on a loan to prevent
foreclosure or power of sale over a home which is owned by an applicant.
19. Consistent with action by mortgagee

F20. Situations where release is considered consistent with the mortgage ground
include:

   to pay expenses incidental to mortgagee action e.g. expenses to cover a
    mortgagee‟s legal and other costs, if any, associated with impending foreclosure
    or exercise of a power of sale. Where arrears equal the maximum amount
    permitted to be released under Schedule 1 of the SIS Regulations i.e. the 3
    months‟ repayments and 12 months‟ interest on the outstanding balance of the
    loan, it may be necessary to release additional amounts under paragraph (f) to
    cover legal expenses to stop foreclosure or exercise of a power of sale proceeding.

   to pay a local Council arrears of rates owing to it, in order to prevent the Council
    from exercising its power of sale under statute e.g. Local Government Act, and
    where the Council has already indicated it will exercise its power of sale.

F21. As mentioned above, there are limits on what releases are permissible under
paragraph (f) of Reg. 6.19A(1). Why then is release permitted to pay arrears in
Council rates, in default of which the Council will exercise its statutory power of sale,
and release not permitted to save a family home, where it is required to be sold
pursuant to a Family Court order or where a trustee in Bankruptcy has the right to sell
the property as a result of Bankruptcy proceedings? Put simply, some of the reasons
for distinguishing these types of cases are:

   where property is to be sold by a Council, there are arrears of periodical payments
    in relation to the property (cf. mortgage payments); both a mortgagee and a local
    authority have a power of sale over the principal place of residence in
    consequence of non-payment of arrears; and, generally speaking, the amount
    owing on a mortgage and the amount of rates owing to a Council can be relatively
    small, in relation to the total value of the property, for the power of sale to exist;

 where property is required to be sold as a result of a Family Court order, there is no
  express or statutory power of sale involved; on the contrary, the Family Court
  order does not confer a power of sale...it imposes an obligation on a party to sell;

 where property can be sold by a trustee in bankruptcy, the power of sale arises
  after the Bankruptcy Court has vested the property (specifically, the person‟s
  equity in his or her home) in the trustee in bankruptcy - therefore the legal interest
  in the property in those circumstances no longer belongs to the person, so loss of
  the property, „the principal place of residence‟, cannot be prevented in the sense
  envisaged under Reg. 6.19A(1)(b). Alternatively, if an application for early release
  is made prior to the time that property vests in the trustee in bankruptcy, release is
  not permitted because no express or statutory power of sale exists;

 there is a principle arising under bankruptcy legislation and SIS that preserved or
  restricted non-preserved superannuation benefits are, generally speaking, protected


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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


   from claims by creditors in bankruptcy proceedings; to permit release under (f) in
   connection with bankruptcy proceedings would conflict with this principle.

20. Releases to repay debts incurred in connection with repaying mortgagees

F22. Where a loan was obtained to assist with repayments to a mortgagee to prevent
foreclosure or exercise of a power of sale, a release to repay this debt may be
consistent under paragraph (f) with Regulation 6.19A(1)(b) provided generally that
the recommended time limit and evidence as described at paragraph 6, pages 3-4,
applies. The amount released in this situation should generally be no more than the
prescribed „3+12‟ statutory limit.

Can Reg. 6.19A(1)(f) be used to ‘top up’ the repayment and interest amounts
available under Item 107 to Schedule 1 of the SIS Regs. to ensure that a sufficient
amount is made available to prevent mortgagee action?

F23.   The answer is no.

F23.1 Regulation 6.19A(1)(f) provides that benefits may be released „to meet
expenses in other cases, where the release is consistent with a ground mentioned in
paragraphs (a) to (e), as APRA determines‟.

F23.2 It cannot be argued that releasing „top up‟ monies under Reg. 6.19A(1)(f) to
enable a person to make sufficient payments to prevent mortgagee action is
„consistent‟ with the ground mentioned in Reg. 6.19A(1)(b) since, in fact, it serves the
same purpose or ground. Reg. 6.19A(1)(f) specifically refers to „other cases’,
meaning cases other than those listed in Reg. 6.19A(1)(a) to (e). In other words,
release under Reg. 6.19A(1)(f) is only intended to be used where none of the
circumstances described in sub-paras. (a) to (e) of Reg. 6.19A(1) is an available
ground for release.




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




Consistency under Reg. 6.19A(1)(f) with - modifications to residence, vehicle, to
accommodate special needs
21. Objective of Regulation 6.19A(1)(c)

F24. The objective of this ground is to ensure that the special needs of severely
disabled persons or their dependants are met. Paragraph (c) however, limits the
circumstances in which this purpose can be met to release for modifications to the
person‟s principal place of residence or their vehicle.

F25. Permitted under Regulation 6.19A(1)(c) would be expenses such as putting in
ramps in the home or lowering kitchen benches. Modifications to a motor vehicle
could include installing a wheelchair rack on top of the car or replacing pedals with
levers.
22. Consistent with modifications to residence, vehicle

F26. Some examples of expenses consistent under paragraph (f), with grounds for
release under Regulation 6.19A(1)(c) include:
 costs for specialists‟ advice on necessary modifications;
 costs of architects‟ and draftsman‟s‟ drawings;
 costs of obtaining necessary Council approval for modifications to the house;
 costs of extra insurance or registration permits in respect of a modified vehicle; and
 where a person has become totally disabled and lives in a house which cannot be
   suitably modified, or has a car which cannot be suitably modified, then the costs of
   relocating to a new home or purchasing a substitute car, fitted out with all the
   necessary modifications may be consistent with this paragraph (c) ground.

F26.1 Examples include where the money is required to move house, to upgrade or
to buy a house which is modifiable e.g. to move from a multi-storey to a single storey,
so that ramps can be installed. However, this provision cannot be interpreted as
allowing a person to materially alter his or her asset position. Therefore, the value of a
substitute house or vehicle purchased (exclusive of the cost of modifications) should
be reasonably comparable with that of the original house or vehicle.

F26.2 In the case of purchasing a house which can be modified, or which already has
had the necessary modifications made to it, the amount which could be released as a
maximum, would be the difference in the amount left from the proceeds of the sale of
the first house (i.e. after payment of associated expenses such as legal costs and
agent‟s commission) and the cost price of the comparable house purchased. The
actual amount released would depend on the applicant‟s financial needs.

F26.3 The same principle, as to the amount, which can be released, applies to motor
vehicles sold and purchased to accommodate the special needs of a severely disabled
person.
23. Not consistent with Regulation 6.19A(1)(c)
F27. Examples of releases not consistent with the grounds for release under
Regulation 6.19A(1)(c) include:
 modifications to the person‟s holiday home, away from their principal place of
   residence.



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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


                                                             Consistency under
                                                      Reg.6.19A(1)(f) with -
                                                      applicant’s palliative care
24. Objective of Regulation 6.19A(1)(d)

F28. The objective of this ground is to ensure that applicants who are facing death
are not denied palliative care

F29. „Palliative‟ is defined in the Macquarie Dictionary as „1. serving to palliate; 2.
something that palliates.‟ „Palliate‟ is also relevantly defined as „to mitigate or
alleviate‟.

F30.   Palliative care expenses include:

 accommodation costs of a hospice;
 costs of the nurses and doctors involved in the palliative care; and
 pain killing drugs.
25. Consistent with palliative care

F31. In view of the impending death of the applicant, in assessing applications
under paragraph (f), i.e. in assessing whether or not an expense would be „consistent
with‟ palliative care expenses, a broad and generous interpretation should be given to
what is „consistent with‟ palliative care expenses. The following type of expenses
could be considered to be consistent:

 accommodation/hotel costs of a relative who wishes to remain near the hospice
  (the presence of a relative could be expected to alleviate the suffering associated
  with death);
 travel costs of close relatives so they can be near the dying person, if that is what
  the dying person wishes.




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




                                                              Consistency under Reg.
                                                      6.19A(1)(f) with - dependant’s
                                                      palliative care, death, funeral,
                                                      burial expenses

Objective of Regulation 6.19A(1)(e)

F32.   The objectives of this ground are:
     (i) to ensure that dependants of a person are not denied palliative care, in the
           case of impending death;
     (ii) that expenses associated with the dependant‟s death are paid;
     (iii) that the expenses associated with a dependant‟s funeral are paid; and
     (iv) that the expenses associated with a dependant‟s burial are paid.
26. Consistent with dependant’s palliative care, death, funeral, burial expenses

F33.   Expenses consistent with those mentioned in paragraph (e) would include:

 the cost of transporting the deceased to the city or country where the burial is to
  occur;
 travel costs of immediate family members to attend the funeral. Sometimes,
  release to pay for the travel costs of non-family members may be appropriate (e.g.
  a long-term carer). This will require discretion, according to the particular
  circumstances of the case.

F34. Expenses consistent with the palliative care expenses of a dependant child
could include:

 expenses to pay for „last wishes‟ of the dying dependant person. If it is a child, e.g.
  the costs of a trip to Disneyland by a dying child and his or her parents. This
  could, in some cases, if it is requested, alleviate the psychological pain of a dying
  child.




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS




                                                          ATTACHMENT 7

STATISTICAL SUMMARY OF EARLY RELEASE OF BENEFIT
APPLICATIONS DEALT WITH BY ISC/APRA


BEFORE 1 JULY 1997


In 1996 the Insurance and Superannuation Commission conducted an analysis of its
activity during 1993/94, 1994/95 and 1995/96, in administering the applications for
approval that it received from fund members seeking early release of benefits under
the financial hardship ground and the compassionate ground. At that time (pre 1 July
1997) the SIS legislation stated that the ISC could approve early release on those
grounds. No other Commonwealth agency, and no superannuation funds, were
involved in the process of approving early release on these grounds. Some results of
the analysis were:



                                     1993/1994        1994/1995        1995/1996
Rounded number of applications         26,000           32,500           49,000
Amount approved for release         $83 million      $113million       $170million
Applications approved in full           82%
Applications approved in part           9%
Applications denied                     9%
Main reasons for applications
To meet weekly commitments              60%
To pay immediate debts                  30%




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                                                   ATTACHMENT 7 (Continued)

FROM 1 JULY 1997 TO 31 DECEMBER 2000

From 1 July 1997, the role of the Insurance and Superannuation Commission was
more limited and more specific, and the role was taken over by the Australian
Prudential Regulation Authority in July 1998. In particular, ISC/APRA was no longer
required to assess general financial hardship in making its decisions. This was an
issue for Commonwealth.

The following table provides details of applications dealt with by the ISC/APRA in
the period from 1 July 1997 to 9 November 2001.

                        1997            1998            1999            2000             2001
                                                                                     November
Number of               1574            4476            5222            6099             5388
applications
approved
Number of               1917            4719            4126            3651             2439
applications
denied


Number of               1226            3528            2639            1127             2590
applications
not finalised

Other                     370           1084              922             480

Total                   5087           13807           12909           11357            10417
applications

Amount           $8,604,956 $25,794,623 $29,195,486 $37,062,127 $27,285,528
approved for
release

Percentage              30.94           32.42           40.45           53.70           51.72
approved
Percentage              37.68           34.18           31.96           32.15           23.41
denied
Percentage              24.10           25.55           20.44            9.92           24.86
incomplete
Balance (%)             7.27            7.85            7.14            4.23
                      100.00          100.00          100.00          100.00           100.00

Average $          $5,466.94       $5,762.87       $5,590.86       $6,076.75         $5,064.13
approved




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NOTES (See next page)


                                                               ATTACHMENT 7 (Continued)

NOTES CONCERNING PRECEEDING TABLE
The applications described as “Not finalised” are the applications where ISC/APRA could not be
satisfied that a ground for release had been met, had asked the applicant for more information and has
left the file open on that basis. In recent years all such cases have been “aged out”, ie after about 3
months the applicant has been advised in writing that the file has been closed, and invited to submit a
new application.

The applications described as “Other” are applications which were not proceeded with for various
reasons, eg duplicates, sent to APRA in error, or being withdrawn by the applicant. With the
introduction of a new applications management system from January 2001, duplicate and misdirected
applications are weeded out before they are entered into the database, and applications where the
applicant decides not to proceed are counted as “not finalised”.

The application management system used to the end of December 2000 did not provide data about the
grounds on which the application was made or approved




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                                                 ATTACHMENT 7 (Continued)

ADDITIONAL INFORMATION FOR THE PERIOD 1 JANUARY 2001 TO 9
NOVEMBER 2001



APPROVALS, BY GROUND
             Approved       Amount Approved      Amount
                 in full approved in  in part approved in
                                 full                part
Medical            571 $2,807,717        189    $978,998
treatment
Medical            232 $1,288,161         92    $509,412
transport
Modification       131 $1,060,579         51    $446,994
of home or
vehicle
Funeral or          406 $1,684,883            241   $942,876
palliative
care
Mortgage          1920 $9,292,153            1354 $7,351,733
assistance
Expenses            115    $567,211            86   $354,814
consistent
with above
Other                 0           $0            0          $0
No criteria           0           $0            0          $0
specified


TOTALS            3375 $16,700,703           2013 $10,584,825

                                          PERCENTAGE
REJECTED (A)                   2,439        23

NOT YET DECIDED,               2,590
WITHDRAWN, OR
AGED OUT


TOTAL                         10,417
APPLICATIONS

NOTES
(A) No breakdown of rejections by ground is available in
current data




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                                                ATTACHMENT 7 (Continued)



APPLICATIONS                NUMBER     PERCENTAGE
APPROVED AND                                 OFALL
DENIED                                APPLICATIONS
Total approved in               3,375           32
full
Total approved in               2,013                 19
part
Total denied                   2,439                  23
Total amount             $27,285,528
approved

APPROVALS BY GROUND                     PERCENTAGE
                                                OF
                                         APPROVALS
Medical                           760           14
Medical transport                 324            6
Modification of                   182            3
house/vehicle
Funeral/palliative                647                 12
care
Mortgage                         3274                61
Consistent with                   201                 4
TOTAL                            5388               100




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                                                                    ATTACHMENT 8




Australian Prudential Regulation Authority



Media Release                                                    Number: 01:41

Date: 6 November 2001                          Embargo:For immediate release



  Call your super fund first for early release of super
It has come to the attention of the Australian Prudential Regulation Authority (APRA)
that at least one company has been widely promoting itself as having assisted
thousands of Australians in gaining early release of their superannuation benefits.
Several others have been advertising similar services.

APRA CEO Graeme Thompson said, “We are very concerned that companies are
charging needy clients fees for making applications for early release of their
superannuation benefits.

“People facing exceptional circumstances may apply directly to APRA for the early
release of superannuation benefits, after checking their fund‟s regulations. The rules
for early release are quite clear. An intermediary is not necessary.”

Superannuation is designed to provide for retirement. As a general rule, benefits are
not intended to be available until people retire from the workforce at age 55 or later.
However, the Government has recognised that people in severe financial hardship, or
who face other problems specified by Government legislation, may have a legitimate
need to access some of their superannuation early.

The rules of each superannuation fund determine if an early release of benefits is at all
possible. If a fund does allow the early release of benefits, in most cases people can
recognise for themselves whether an application is likely to be successful. To qualify
on grounds of severe financial hardship, a person must satisfy the fund trustee that he
or she cannot meet reasonable living expenses, and provide a letter from Centrelink
stating that he or she has been in receipt of a Commonwealth income support payment
for a continuous period of 26 weeks.

The approval of APRA is required prior to any release for other specified grounds,
which are limited to critical medical treatment not readily available through the public
health system, palliative care, and mortgage repayments where the payment will
prevent the mortgagee from foreclosing.




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        EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


For those superannuation fund members who meet these conditions, APRA seeks to
make the process of application as easy as possible so members can apply on their
own behalf. It is not necessary to pay fees to any organisation for the release of this
money.

“There are very specific conditions under which benefits can be released,” said Mr
Thompson, “I suggest that any person who has a genuine need should contact their
superannuation fund to determine what those conditions are before submitting an
application to APRA.”

For further information contact:      Gloria Peterson
                                       Public Affairs Manager
                                       02 9210 3385 or 0419 250 286




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EARLY RELEASE OF SUPERANNUATION BENEFITS ON COMPASSIONATE GROUNDS


                                                      ATTACHMENT 9




  SELECTION OF APPLICANTS REQUESTS




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