The Federal Government’s move make insurance inside superannuation “opt-in” for under 25s is too broad and could leave millions of Australians excluded from default insurance, according to Industry Super Australia.
In a submission filed with the Senate Economics Legislation Commission review of the Government’s legislation, the ISA said it supported the intention of protecting members’ superannuation balances but believed the Government’s approach was too broad.
“… this initiative is too broad in its application,” it said. “Poorly targeted changes will result in more than 3.7 million Australians being excluded from default insurance, many of whom have a particular need for insurance.”
The ISA submission said the reasons for this happening included having a mortgage, working in a high-risk occupation, or supporting dependants.
“For example, an estimated 850,000 inactive members with balances above $30,000 and supporting 770,000 dependent children would lose cost effective insurance cover through these reforms,” it said. “As a result, the reforms have the potential to harm the members they seek to protect.”
In doing so, the ISA submission argued that many of the Government’s outcomes could be achieved through the consolidation of member accounts.
Couldn’t agree more. Some positive iniatives in this poorly executed and resulting in cover being cancelled for loads of members who may be on mat leave etc, but still have huge super balances.