(07) 5456 1355

Summary

We are writing to you to let you know that you may receive a letter from your superannuation fund trustee. We ask that you please do not ignore this letter.

Content

We are writing to you to let you know that you may receive a letter from your superannuation fund trustee. We ask that you please do not ignore this letter.

Under the Protecting Your Superannuation package1, which was announced in the 2018 Federal Budget and which was designed to protect Australians’ superannuation savings from undue erosion by fees and insurance premiums, superannuation fund trustees are able to cancel your life insurance from 1 July 2019 in certain circumstances.

In a nutshell, the bill contained measures to;

  • prevent trustees of superannuation funds from charging certain fees and costs exceeding 3 per cent of the balance of a MySuper or choice product annually where the balance of the account is below $6,000;
  • prevent trustees from providing opt out insurance to new members aged under 25 years, members with balances below $6,000 and members with inactive MySuper or choice accounts, unless a member has directed otherwise;
  • require the transfer of all superannuation savings with a balance below $6,000 to the Commissioner of Taxation if an account related to a MySuper or choice product has been inactive for a continuous period of 13 months; and
  • enable the commissioner to consolidate amounts that have been paid as unclaimed money, inactive low-balance accounts and lost member accounts into an active superannuation account where the reunited balance would be greater than $6,000

Important

The intent of the measure was supposed to be about protecting the super balances of young and inactive members with low balances who the Government felt would not benefit from small levels of life insurance which would potentially erode their small amount of accumulated superannuation with life risk premiums.

However, we have seen evidence that superfund trustees are sending opt-in letters to many clients like yourselves, including those with high balances and high levels of insured cover who (under the second point above) may have been inactive (meaning you or your employer may not have contributed to your superannuation fund account), for a period of at least 16 months. However, it has been reported that even active clients have been receiving these letters from their superfund.

We strongly recommend you to read this opt-in letter and complete it and return it to your superannuation fund trustee in order to retain your level of life cover within the fund (which may include life, TPD and income protection insurance).

We also recommend you retain a copy of this opt-in notification and send our team a copy to retain on your file in the unlikely evet that the superannuation fund makes a mistakes and inadvertently cancels your cover. 

We are concerned that if a superannuation fund trustee, after making attempts to notify the member that their account has been inactive for 9, 12 and 15 months then cancels that cover after 16 months of inactivity, they can show they have made reasonable attempt to notify the member, even if you wanted to retain your cover and are under no obligation to reinstate it.

However, if you return your opt-in letter giving your direction to retain your cover in place, the Regulations place obligations on the trustee to acknowledge a member’s direction to maintain insurance cover (even though the member’s account may be considered inactive) and will then provide annual reminders to the member.

It is important to make sure you review your insurance and make sure you complete the superfund opt-in letter if you receive one. We strongly recommend you retain a copy for yourself (and for us as your Financial Adviser) and then submit it to the superfund.

Please do not ignore the letter.

If you have any other questions please give our office a call.