- Yes (70%)
- No (19%)
- Not sure (11%)
The lack of any reference to life insurance in the Government’s ‘objective of superannuation’ consultation paper gives rise to our latest poll question.
Already widely reported and discussed since its release earlier this week, the 14-page document makes no direct reference to insurance, life insurance or protection, while the only mention of risk is within the context of helping manage financial risks in retirement.
Indirect reference to life insurance and/or protection could potentially be interpreted in this statement in the consultation paper, which refers to the secondary objectives of superannuation which it says will not be taken into account:
A secondary, or subsidiary, set of objectives or principles in legislation is not proposed. This seeks to ensure the focus remains on a single, comprehensive objective – both in drafting and once legislated. It also reduces the risk that secondary objectives, many of which may in fact be benefits of the system, become contradictory with each other, or counter the clarity of the primary objective.
…Australia’s economy and member outcomes are best served when superannuation is underpinned by life insurance
Following the release of the consultation paper, the still-fledgling Council of Australian Life Insurers clearly felt a need to issue a statement reminding the Government and the broader financial services sector that it believes Australia’s economy and member outcomes are best served when superannuation is underpinned by life insurance (see: Insurance in Super Critical to a Dignified Retirement…).
CALI’s statement adds that insurance in superannuation “…is critical to ensuring Australia’s superannuation system is equitable and sustainable.”
Should CALI and other stakeholders be concerned at the lack of reference in the consultation paper to the role played by life insurance in Australia’s superannuation sector – or might this eventually emerge only as a storm in a tea cup?
Tell us what you think and we’ll report back next week…
As we all know, advisers can now recommend death, TPD and IP be placed in super and that the premiums be paid by annual rollover from an existing accumulations super fund, somewhere else. Usually that means an ISN fund.
It’s very popular with some advisers because they believe it provides security of the business. One particular insurer has at least 85% of retail risk in super where the premiums are paid by rollover. That’s an amazing figure!
You don’t have to be a genius to know that the ISN funds hate this provision. It costs them administration expense, they can’t extract a fee other than a small buy-sell when redeeming units for real dollars, and of course it’s reducing FUM, and it’s cream.
Real politik tells us the ISN funds, and associated entities, are some of the biggest if not the biggest contributors to the Labor Party’s political coffers. And of course on the other side the banks and various other funds contributed to the Liberals, so it’s all fair in love and war.
I’ve been predicting since the election that the ISN funds will pressure Jim Chalmers to remove the facility to pay for retail life risk premiums by rolling over out of a super fund. In my view it’s just a question of time. Stand by to repel boarders!
The absence of any reference to life risk in super in Chalmers release makes me think that very shortly there will be a detailed announcement which will include either the total cessation of the rollover facility OR declaration that there will be no more rollovers.
Some insurers might be feeling a little uneasy!
On a somewhat related matter I noticed that ASIC have taken to court a business called National Advice Solutions Pty Ltd for a breach of the anti hawking provisions. They were found to have made unsolicited calls to consumers encouraging them to roll over their superannuation into different ” superannuation products”. In their usual obtuse style, ASIC provided no details but I wondered if it involved soliciting clients who may have suffered rapidly increasing premiums in their risk products and were being marketed for the opportunity to have those premiums partly paid by rollover. I have no basis for that comment, but I really do wonder, because, if true, it could have involved incentive for product replacement and commission, funded by rollover.
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