From July 1, major changes to superannuation will take effect designed to stop super balances being eaten up by insurance fees.
Recently, the Federal Government introduced the Protecting Your Super package. This includes new laws designed to make sure members are not paying for insurance cover they do not know about or premiums that inadvertently diminish their retirement savings.
How this affects you
If your superannuation account has not received any contributions or rollovers for some time, it is considered inactive. And, if your account remains inactive, your super will cease to provide your insurance benefit when your account reaches 16 months of continuous inactivity on 1 July 2019. If the insurance premiums for your account have been paid in advance, you will continue to be covered until the date those premiums have been paid up to.
To ensure that you keep any insurance inside your super account in the future, you need to act by contacting your superannuation provider before July 1.
It is also important to understand the insurance in your super account, including the level and type of cover you have, and the amount you’re paying.
If you made a contribution or rollover before your account reaches 16 months of continuous inactivity, your insurance will not be cancelled unless your account becomes inactive again. The eligibility rules for making contributions still apply.
What you should do
Find your super
Track your super by signing up or logging onto your MyGov account to find your “lost” super.
Ask about your super
If your superannuation providers have sent you a letter or an email, details of your insurance should be made available to you. You can also go online to find out how much money your super is earning, fees being charged, and administrative charges and automatic default payments like insurance.
You can also make changes if you decide to keep your insurance.
Consolidate your funds:
Under the new changes, some funds with a balance of $6,000 will be automatically consolidated by the ATO. If you have active funds with more than $6,000 you can consolidate them yourself.
You can nominate a fund by completing an online form from the ATO website. You also need a MyGov account for this to work.
If you don’t want to keep the insurance inside your super account
You don’t need to do anything if you decide you no longer want this insurance. If your account remains inactive, your super provider will cease to provide your insurance benefit when your account reaches 16 months of continuous inactivity on 1 July 2019.
Some things to consider before deciding
- By doing nothing, you will lose your insurance cover inside your super and any ability to make a claim against such insurance cover.
- You will no longer pay insurance premiums from this super account if your insurance is cancelled.
- By no longer having life insurance (also known as death cover), your dependents or other beneficiaries will not receive the insurance benefit inside this account if you die (as covered by your policy).
- If you currently have disability insurance, you will not receive any benefit if you become disabled due to illness or injury (as covered by your policy).
- It can be complicated for certain people to get insurance cover. For example, if you have a pre-existing medical condition, by cancelling your existing policy you may not be able to reinstate this cover (to the same benefit level) or get insurance elsewhere at the same premium.
- When considering the insurance that’s right for your circumstances, please check your most recent statement, product disclosure statement or speak to your financial adviser.
For more information on the upcoming changes, visit Time to Check.
