The Government’s Protecting Your Super package
– announced in the 2018-19 Budget is new legislation that will come into effect
July 2019 and may affect your insurance coverage.
This legislation is a comprehensive package of regulatory reforms designed to protect Australians’ superannuation savings from undue erosion by fees and insurance premiums.
What are the changes?
- Insurance cover will be cancelled on all inactive accounts
- From 1 July 2019, insurance cover that is held within a superannuation account that has not received a contribution or rollover within the last 16 months will be cancelled regardless of the balance of the account.
- Inactive low balance accounts will be transferred to the Australian Taxation Office (ATO)
- From 1 July 2019, all superannuation accounts with a balance less than $6,000 which have been inactive for a period of 16 months will be transferred to the ATO.
- From 1 July 2019 Australian superannuation funds will no longer charge exit fees.
- Cap on administration and Investment fees for low balance accounts
From 1 July 2019, the maximum that can be charged
for admin and investment fees on a superannuation account with less than $6,000
will be capped at 3 percent.
What does this mean for you?
If you are maintaining a superannuation account with a minimal balance to fund your insurance premiums to retain your insurance cover, it is very important that actions are taken to ensure that your cover is not lost.
Actions to be taken
If you have accounts open for insurance purposes to which you are not making contributions (employer or personal), it is important to take action prior to June 30, to ensure this insurance cover is not lost. Please contact me on [email protected] to review your situation and find out your next steps.
If you have insurance inside a superannuation account to which you are making contributions (employer or personal) then no action is required.
If I have organised insurance for you with companies like TAL/BT/AIA/MLC/Clearview/AMP/OnePath which is funded by your superannuation, these insurers might write to you telling you about the changes but these accounts are considered active and you do not need to take action.
If you think you may be affected by this change, please contact me on [email protected] to review your situation and work out what are the best actions for you to take.
This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.