The new choice of superannuation fund regime will need to be handled carefully because of the risk of employees losing valuable benefits, including insurance, if they switch funds, according to MLC.
MLC’s general manager, Protection Solutions Greg Einfeld has told the ASFA national conference in Adelaide that there was also a risk that switching funds could increase the cost of insurance to employees.
He said the implementation of the new choice of fund regime would provide insurers with an opportunity to provide advice and solutions to clients but that it would not be without its challenges.
Einfeld suggested that an alignment of benefits between funds offered by employers would ensure switching did not impact on insurance arrangements.
“With the introduction of choice in July 2005 employers can introduce education and advice programs to help ensure their employees choose a suitable fund and have adequate protection and retirement savings in place,” he said. “Employers should educate their employees about insurance and provide access to planners for their employees to seek financial advice specific to their individual needs,” he said.
Einfeld said employers needed to ensure the process of applying for cover was transparent for employees.
