Super Changes Worthy of Concern

26 June 2019, 12:17 pm

As valued readers/clients/friends we thought we’d better give you some warning of some recent changes to super that may severely affect you.

Particularly relevant to members with insurance in super they don’t contribute to, or have significant exit fees that you would have moved if they weren’t there. If it affects you, please take a moment to read the following recap of policy changes to the superannuation and insurance industry to see if the changes to these areas will affect you;

Protecting Your Super package

One change that’s coming into effect from 1 July 2019 is the Protecting Your Super (PYS) package. This package of reforms is designed to protect superannuation accounts from unnecessary erosion caused by insurance premiums and particular fees.

Here’s a snapshot of the PYS changes:

  • Super accounts with balances under $6,000 that are inactive – i.e. they have not received any contributions, rollovers or other transactions for 16 consecutive months – will be closed.  The funds will be sent to the Australian Taxation Office (ATO), to allow it to be consolidated with a member’s active account.
  • There will be an annual cap of 3% of the account balance on investment and administration fees, for all accounts with balances less than $6,000.
  • Exit fees will be banned, meaning super funds can no longer charge you a fee for moving all or part of your money to a different fund.
  • Super accounts with insurance that are inactive for 16 months will have their insurance cancelled.

Steps to consider taking

Super funds should notify customers who have inactive accounts before taking any action, so keep an eye out for communications from your fund.

If you have an inactive account with insurance, think about whether you want to keep it. For example, some people may want to maintain a small super balance to cover insurance premiums, while others may simply be paying for something they no longer want or didn’t realise they had. If you do want insurance as part of your super, then it’s important not to let it lapse, unless you have other insurance arrangements in place.

If you have an inactive account and want to keep things as they are (keep your insurance and/or keep your low-balance super account), you can:

  • Reactivate your super account, for example by paying money into it.
  • Notify your super fund that you want to opt in to keep your insurance, or opt out of consolidating your low-balance super account.

If you have any questions about the changes that are soon to be implemented, please contact us and we will be happy to answer any questions to make sure that these changes do not affect you.

We wish you a very prosperous year head and hope that your end of year is worth celebrating!