The transition of personal superannuation accounts to MySuper products is already putting members’ insurance at risk, according to the Corporate Super Specialist Alliance (CSSA).
Under the new MySuper legislation, super fund members who were in a corporate plan but have been ‘flipped’ to a personal super plan must be transitioned to a MySuper product. The deadline for this transition is 1 July 2017, however, the CSSA has warned that some super funds have already begun transferring members, putting their valuable insurance cover at risk.
CSSA Treasurer, Gareth Hall, said he had spoken with one member of an APRA regulated fund, who had a superannuation balance of $126,000 and over $1.6 million in death and TPD insurance, who was due to be transitioned to a MySuper product where his current insurances would have been cancelled.
“He was about to go on extended leave overseas and would have missed the opportunity to opt in to retain his account,” Mr Hall said.
When made aware of the issue, Mr Hall said the member was outraged and elected to remain in his current fund.
“Imagine the disastrous outcome for his family if the cover had been cancelled and something went wrong. We believe many members are not aware of the problem and consequently are losing millions of dollars in insurance cover, cover which they may never be able to obtain again.”
We believe many members are not aware of the problem and consequently are losing millions of dollars in insurance cover
According to the CSSA, the MySuper legislation provides no recourse if investors lose a benefit as a result of the compulsory move to MySuper. “If these ex-corporate superannuation members do not state that they wish to keep their superannuation arrangements as is, they will all be transitioned. How can any Government legislate the removal of such important benefits from taxpayers, and offer them absolutely no avenue for compensation?” Mr Hall asked.
Mr Hall said before the introduction of MySuper legislation, the death, TPD and salary continuance insurance arrangements of members transferring from an employer plan remained intact within personal accounts, as did the members’ investment selection.
“Despite our having brought this issue to the attention of both the Labor and Liberal Governments on a number of occasions, the recommendations from the Senate Committee do not address the issue, nor do they address the conflicted remuneration dilemma that results from corporate superannuation specialists providing advice to their clients,” Mr Hall said.
“There are still flaws in the interaction of the Future of Financial Advice (FoFA) reforms and the MySuper legislation that are causing these problems. They need to be fixed – fast.”
How can any Government get away with the removal of benefits from citizens with no compensation? This is simply disgraceful.
I wonder how much suffering the nil advice transfers and rollovers that occurred due to compare the pair ads, caused members due to lost cover. I bet that there are many disabled members, widows and orphans who don’t know how much they could have had.
It’s about time someone reported on this aspect.
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