New Super Legislation Passed

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The Government’s ‘Putting Members’ Interests First’ Bill became law last week, in a move the Coalition says will protect the retirement savings of low-balance and young super members from ‘…inappropriate insurance.’

FSC CEO, Sally Loane …providing additional time for impacted super fund members to opt into insurance was a sensible change to the final legislation

The ‘Treasury Laws Amendment (Putting Members’ Interests First) Act 2019‘ will require insurance in superannuation for new members under 25 and members with low balance accounts to only be offered on an opt-in basis from a delayed implementation date of 1 April 2020.

Following passage of the legislation, a joint release from the Treasury and the Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume, noted this means “…the hard-earned retirement savings of millions of Australians will be protected from undue erosion through inappropriate insurance arrangements.”

The legislation included a targeted exemption that will allow trustees to elect to provide insurance on an opt-out basis to members employed in emergency services such as police, ambulance officers or firefighters, or other workers employed in the top 20 per cent riskiest occupations.

…low balance account holders and young members will still be able to opt in if they want to take out insurance

The joint release noted, “Importantly, these changes will not prevent anyone who wants insurance within superannuation from being able to obtain it: low balance account holders and young members will still be able to opt in if they want to take out insurance.”

In a release responding to the passage of the legislation, FSC CEO, Sally Loane, said amendments to provide additional time for impacted super fund members to opt into insurance were a sensible, consumer-focused change to the legislation:

“These changes will ensure that super funds have additional time to engage with their members about the changes, and that consumers will have time to make informed decisions about their insurance needs,” Ms Loane said.

Loane also urged consumers to act: “Checking your super has never been easier – pick up the phone to your fund and discuss your options, because for some under 25-year olds, like those in high risk occupations or with young families, life insurance is a vital safety net.”



1 COMMENT

  1. Having dealt with clients of all ages and from many walks of life, one thing is constant: most don’t know or care about insurance, at least until they have a better understanding of how it works. By providing insurance on an ‘opt in’ basis (with extremely limited or no advice), I strongly believe that many under 25’s will choose to ‘opt out’ of their insurance. Many under 25’s won’t see an adviser until later life – if at all – and hence will not have the exposure to education about the different types of risk cover available and how they work, which will allow them to make an informed choice about their insurance cover.

    As a result of this, we will see those who would have otherwise had some cover – even if the contract wording leaves much to be desired – with no cover at all.

    Moreover, with younger, healthier people subsidising the group risk book which covers older people as well, the flow on effect will see premiums go up for the remainder of the group risk cover holders as there are fewer people contributing to the pool. I’m struggling to see how this is putting fund members in a better position.

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