The mandatory transfer of personal superannuation accounts to MySuper will result in thousands of people losing insurance entitlements attached to their superannuation, the Corporate Super Specialist Alliance (CSSA) has warned.
Legislation brought in under the Stronger Super regime requires that all super fund members in a default investment option must be transitioned to a MySuper fund by 1 July 2017. Super funds must notify members if their account will be transferred, but the transfer is automatic. Unless the member notifies their fund within a set time period that they do not wish to be transitioned, their account will be moved.
The CSSA has argued that the transfer could see fund members lose their existing insurance cover, because they fail to ‘opt-out’ of the transition.
“Not only will people lose the insurance cover attached to their previous super funds, they will also have no legal recourse to pursue for their loss,” said CSSA president, Douglas Latto. “This is because MySuper legislation contains immunity for the trustees. Consumers cannot sue the trustee because the trustee is protected by legislation passed by the previous Government.”
Mr Latto said the transfer of some funds had already begun, and stories were emerging of members who have lost benefits, and been unaware of the consequences.
The last thing we want to see is destitute families who have belatedly discovered that they have lost the insurance they expected to rely upon
“We have already heard some terrible stories,” Mr Latto said. “One person’s insurance was reduced from $1,673,000 to $60,000, others have had their cover cancelled completely. With most of the transition still to take place, the damage has only just begun.
“The last thing we want to see is destitute families who have belatedly discovered that they have lost the insurance they expected to rely upon following the death or disability of a family breadwinner.”
Association of Financial Advisers (AFA) CEO, Brad Fox, added his Association’s voice to the concerns:
“An ‘opt-out’ approach pre-supposes that the member understands the letter that is sent from their fund, and the consequences of the transfer,” Mr Fox said.
“Consumers just aren’t aware that this transfer is happening, and I think, sadly, that they will only understand that their benefits have been reduced after they’ve been transitioned, when it’s too late.”
Both the CSSA and AFA are lobbying Government to make the transition an ‘opt-in’ process, rather than ‘opt-out’.
“Super funds need to outline to members the benefits within the new MySuper account, as well as what they will forgo if they transfer,” Mr Fox said.
“At the moment, it is quite clear that the best interests of many super fund members are not being met and unless we make MySuper ‘opt-in’, we will have a serious problem when claims arise,” Mr Latto added.
So due to Labours and Bill Shortens short sightedness and been guided by the industry super fund movement, clients will be moved to My Super to save a very small amount of fees, lose any insurance benefits that they may have and end up on Federal government support as they are destitute. All this due to miss guidance by a body only thinking of themselves, their pay cheques and not the best interests of their members
Shorten could not care less…..they were warned of the “unintended consequences” and still pushed with the changes to satisfy their union mates.
“This is because MySuper legislation contains immunity for the trustees. Consumers cannot sue the trustee because the trustee is protected by legislation passed by the previous Government.”
They MUST have seen this coming!
Not only will many members lose what little cover they may have, or the cover they chose to retain as their health has changed and they cannot obtain suitable terms or would be declined, but at the end of the day they will have to rely on the public purse and live below the poverty line!
Yes another appalling policy with legacy issues that were foreseen!
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