Life insurance inside superannuation must help build income in retirement while not unduly eroding balances through premiums, according to the Minister for Revenue and Financial Services, Kelly O’Dwyer.
Speaking at the Association of Superannuation Funds of Australia (ASFA) Conference 2016 on the Gold Coast recently O’Dwyer said the Federal Government would legislate to enshrine the law the objective in superannuation as ‘to provide income in retirement that substitutes or supplements the Age Pension’.
As a result of this move, life insurance inside superannuation should not work against that objective with O’Dwyer calling on trustees to adopt policies that did provided adequate insurance without eroding member balances.
“Trustees have an obligation to balance the offering of insurance inside superannuation with the potential erosion of member’s balances,” O’Dwyer said.
“However, I understand from APRA that some funds have been slow to adequately tackle this through the implementation of appropriate policies and changes to insurance arrangements.”
The Minister stated that life insurance in superannuation was being raised as in issue by members of the public and in Parliament with some unclear as to how the two financial services were supposed to work together.
“This is an area about which I receive many letters from my own constituents and from my colleagues in the Parliament. It is fair to say there is a lot of confusion about how this part of the industry works. Especially amongst younger people who find their balance has been eroded by insurance premiums that they didn’t realise they were paying,” O’Dwyer said.
The Minister called on ASFA and cross industry working groups to provide information and recommendations to the current Productivity Commission inquiry into superannuation stating “it is critical that this important part of the system is consistent with the overall objective of superannuation and is fit for the future”.
All these complaints and overpriced insurance wouldn’t be industry funds, would it minister? I hope THIS time you actually look at this properly and stop tarring all funds and insurances with the same brush. Unfortunately, you have recently shown, the lobbyists know their mark.
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