Hundreds of thousands lose super insurance cover

The number of people who have lost insurance coverage under the Government's Protecting your Superannuation (PYS) legislation is now running well into the hundreds of thousands. 

The Federal Government's Protecting your Super Package Act came into effect on 1 July 2019. This package is designed to protect Australians' super savings from unnecessary erosion by feeds and insurance costs. The legislation includes changes to fees, the transfer of inactive low-balance accounts to the Australia Taxation Office (ATO), and stopping insurance for inactive members. 

A number of superannuation funds contacted by Money Management have confirmed that between 15 and 25 per cent of their low-balance or inactive account members has either deliberately or inadvertently failed to opt-in to insurance coverage. The dimensions of the problem have been rammed home by confirmation that around 100,000 members of superannuation funds run by Commonwealth Bank subsidiary, Colonial First State, were no longer covered by insurance because of the legislation which came into effect on July 1. 

A spokesman for CFS made clear that the 100,000 member figure reflected the situation across all the company's funds, rather than just one in particular. Also, confirming that the 100,00 member figure represented approximately 12 per cent of CFS superannuation funds. 

The impact of the PYS legislation has come at the same time as the Senate Economics Legislation Committee has largely dismissed industry calls for a 12 month delay to the implementation of the allied Treasury Laws Amendment (Putting Members' Interests First) Bill. 

Instead, the committee has recommended only a three month delay - something which the industry claims is not going to be long enough.

If you are requiring more information please contact The Money Edge or visit www.moneymanagement.com.au/news/superannuation

The Money Edge  | Bundaberg