The increased publicity around insurance within superannuation saw an upsurge in members opting out such arrangements, according to evidence provided to the Productivity Commission (PC) by Mercer.
The Mercer submission to the PC’s inquiry into Superannuation Industry Competitiveness and Efficiency revealed a surge in the numbers of members opting out, particularly 35 to 44-year-olds.
The Mercer submission strongly reinforced for the value of insurance within superannuation and noted the arguments which had been mounted against the arrangements, including suggestions that it be change to an “opt-in” arrangement.
The submission utilised membership data from the Mercer Super Trust and determined that about 12.3 per cent of members had either opted out of insurance within super representing 21,000 of the fund’s 170,312 eligible members.
Discussing the surge in opt-outs experienced in 2016, the submission said the significant number had been driven by media coverage relating to insurance within superannuation.
Members are just getting smart to the ‘The Great GL Ripoff’ and how these excessive premiums (which have increased numerous times over the past few years) are really eating into their final balances.
As an example, my wife who has mid level Death and TPD cover through superannuation and works 25 hours per week is losing 42% of her SG contributions to monthy GL premiums.
I strongly believe insurance cover should be totally removed from superannuation and really don’t believe the pundits who say that this is giving protection to those who would normally not have cover like low wage earners and the less educated. Those same people are the ones whom are less likely to be engaged in their super or even know that they are paying these premiums or make a know they can make a claim when the time arises.
If you want insurance cover pay for it outside of super.
Another beef I have regarding insurance cover in super is, how on earth can members be allowed to cover themselves for as much cover as they want (over a million dollars cover if you choose) and this is 100% payed for by employer SG contributions, if the member is not making personal contributions . I am sure it wasn’t Paul Keating’s vision when he created superannuation for a large portion of SG contributions to be going into the pockets of these large insurers the like of TAL, CommInsure ING etc etc, etc
The government should be deeply concerned about this fact or they will end up having to cough up billions more to fund pensions for those who simply don’t have enough in super.