‘Shocked’: Dentists advertise superannuation raids as early withdrawals spike

Millions more are being withdrawn for dental work as doctors push it as a service.

Millions more are being withdrawn for dental work as doctors push it as a service. Photo: Getty

Australians are being warned about the dangers of raiding their superannuation as tax office data shows a surge in people using retirement savings for dental work.

Approved super withdrawals for dental work have spiked by more than $250 million between 2018 and 2023 – rising by 83 per cent in 2022-23 alone, according to government data reported by AAP.

The Dental Board of Australia is now worried about complaints that dentists are advertising early super withdrawals to clients, with the internet littered with inducements from clinics across the nation.

One firm even advertises helping Australians raid their retirement savings as a service and has partnership deals with dozens of dental clinics for procedures such as root canals, braces and implants.

Financial adviser Dawn Thomas said she was “baffled” by the online advertisements, which present myriad testimonials on web pages that don’t disclose key information about financial risks.

Thomas explained that financial advisers wouldn’t even be allowed to present super withdrawal to clients without telling them in detail the potential to lose tens of thousands in retirement and tax too.

“I’m shocked,” Thomas said of the ads.

“Are they giving financial advice?”

An example of an online ad spruiking super withdrawals.

Costs of raiding superannuation

Avenues for accessing superannuation early have existed for years, but are tightly controlled by the Australian Taxation Office (ATO) and can only be granted under strict compassionate grounds.

That’s because it can have immense financial consequences, as demonstrated during Covid-19 when Australians collectively lost billions in potential savings after the Morrison government unlocked accounts before unveiling taxpayer income support.

Modelling by the Super Members Council (SMC) earlier this year estimated up to $85 billion in potential savings was lost from $38 billion in early super withdrawals under the scheme.

Thomas explained that withdrawing super early is damaging because of compound interest; whereby the money put in super savings grows larger over time thanks to funds reinvesting returns.

“If your money is invested in something for the long term, it doesn’t make sense [to take it out],” Thomas said.

“Present you might have a need, but future you also has needs too, and that’s what superannuation is for.”

Huge tax implications

There are also severe tax implications for accessing super early, with Thomas saying that Australians must fork over up to 22 per cent of the money they plan to withdraw in tax, which could be thousands.

“That’s a hefty amount of tax,” Thomas explained.

Thomas said there are legitimate reasons for early super withdrawal, particularly in cases where Australians face life-threatening medical emergencies or financial situations that could make them worse off if they couldn’t access their super early.

But the inappropriate use of compassionate grounds is likely to make it harder for these people, she said, because the government will respond by making it harder to access it.

The tax office manages that application process and the rules around the release of superannuation and has done so since July 2018.

“Accessing super on compassionate grounds is only available in limited circumstances where individuals are unable to pay for eligible expenses using other means,” a spokesman said.

“Accessing superannuation is not ‘free money’, as it will reduce the amount available in retirement.

“Accordingly, as with any major expense item, it is often useful to get a second opinion or quote.”

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