Keep insurance for low super accounts urges consumer groups

18 July 2019
| By Laura Dew |
image
image image
expand image

The Consumer Action Law Centre and Financial Rights Legal Centre have reacted to the Treasury Law Amendment (Putting Members’ Interests First) Bill 2019 by stating those who are financially vulnerable should still be able to access insurance in their superannuation.

The groups said they supported the objective of preventing unnecessary insurance premiums from eroding people’s super account balances, but were worried about those with low income or low super balances.

It said it did not support the removal of default insurance on active superannuation accounts with balances under $6,000.

In a submission to the Senate Economics Legislation Committee, the two groups said: “While we acknowledge the significant impact of balance erosion on low-balance accounts, it does not follow that people do not need insurance simply because they have less than $6,000 in superannuation.

“A successful insurance claim can have a life-changing effect for families struck by injury, illness or death. The beneficial impact of topping up retirement income when a person’s working life is unexpectedly cut short is arguably much greater for a person with a low superannuation balance than to someone with a substantial balance.”

The changes would particularly affect those who had recently returned to work after a period of absence, those who were new to Australia and those with an employer who had not paid employer contributions, they said.

Two alternative recommendations were put forward by the groups; to keep default insurance in low-balance superannuation accounts or that low-balance account reforms were delayed until the impact of the Protecting Your Super Act reforms on account erosion was known.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

1 year 8 months ago
Kevin Gorman

Super director remuneration ...

1 year 8 months ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

1 year 8 months ago

The industry fund has called on ASX 300 companies to strengthen priorities around resilience, climate, and gender, while itself facing criticism over fossil fuels....

16 hours ago

Industry fund HESTA has filed an appeal against an ATO decision on tax offsets from franking credits, with the Australian Retirement Trust set to file a similar claim soo...

16 hours ago

The latest superannuation performance test results have shown improvements, but four in 10 trustee-directed products continue to exhibit “significant investment underperf...

3 days 15 hours ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
74.26 3 y p.a(%)
3