Superannuation insurance is going to change on 1 July and Legal Aid Queensland is warning consumers who have multiple superannuation funds to consider which fund offers best value for money.
Legal Aid Queensland’s Senior Lawyer (Consumer Advocate) Paul Holmes said these changes follow a Productivity Commission Superannuation Inquiry, which made a number of recommendations to prevent insurance fees or premiums from greatly reducing people’s super.
“After the changes on 1 July, inactive super accounts with low balances will be closed and either rolled into other accounts, or potentially the government-operated fund,” Mr Holmes said.
“Therefore, the problem is the fund with the lowest balance might have the best insurance cover, which people risk losing if they don’t consider their options carefully as insurance policies under super funds can vary greatly.”
Mr Holmes said while super fund operators are endeavouring to contact their customers, remote and regional Queenslanders including Aboriginal and Torres Strait Islanders may not receive their mail with enough time to be able to properly consider their options.
“We’re encouraging people to get on the front foot and check what super they have through ATO’s online services,” he said.
“We also encourage people to seek financial advice to consider whether they should keep any insurance they might have in their existing superannuation account.”
Mr Holmes said the changes may also affect people who have default insurance included in their superannuation which provides them with income protection insurance and for Total and Permanent Disability (TPD).
“If people have this kind of insurance under their superannuation and the account has been inactive for 16 months, the policy will be cancelled, regardless of the account balance,” he said.
“If consumers decide they want the insurance they will have to ensure they contribute to the account within the required time, or contact their super fund and opt in to the default insurance.”
Mr Holmes said the changes on 1 July may bring some positives for consumers, such as the removal of exit fees if people want to change their super fund, and a cap of 3 percent fees charged on any account with less than $6000 in it, but consumers must keep up-to-date with the changes affecting their super account.