In May 2018, the Federal Government announced changes to protect Superannuation balance of Australians.
In February this year the Protecting Your Superannuation Package was passed and them enacted in April 2019. Key measures introduce are:
- a cap on fees for accounts with a balance under $6,000
- a ban on exit fees
- the automatic consolidation of small balance inactive superannuation accounts
- a requirement for trustees to cancel insurance for inactive accounts, where no contributions or rollovers have been received for 16 months
In theory this all makes sense and is a positive step.
In practice point 4 could mean that insurance you plan to keep could be cancelled with little warning.
If you have received a letter from your superfund, please read it. As it could be informing you that they are going to cancel your insurance on July 1.
You can however opt in to keep this insurance by completing the form provided contacting the superfund or making a super contribution.
This legislation will affect you if you have insurance in a super account that has not received a contribution for 16 months. However, this year you will only get one letter to warn you before cancellation occurs.
What should you do?
- Open that letter from your superfund that you have been ignoring.
- Log in or create your MyGov account to check to see if you have any lost super – there may me some insurance in lost accounts you want to keep.
- Review your insurance needs, if you don’t need the insurance in your super then being cancelled isn’t an issue. But if you don’t know what you need and you lose insurance, you can’t get that insurance policy back. Sometimes keeping an old policy is more appropriate than obtaining a new policy, so take the time to review your needs and options.
Because the legislation was passed so recently with July as the date of cancellation there are some confusing communications out there. If you need a hand reviewing your correspondence or working out what you need, I’d be happy to help!
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