A series of superannuation measures, designed to protect members with low balances or inactive accounts, will take effect on July 1. For some there will be a catch: they will lose their life insurance cover.
The new law introduces a cap of 3 per cent on fees charged by super funds on accounts with balances below $6000. Exit fees on all super funds will be banned.
All inactive accounts, with no activity for 16 months, will be transferred to the Australian Taxation Office. The ATO will expand its data matching process and reunite inactive accounts with the members’ active account, where possible.
All superannuation funds must stop providing insurance cover to inactive accounts, from 1 July. This means that members who have been inactive for a continuous period of 16 months will no longer have insurance cover attached to their super product unless the member instructs the fund in writing to maintain the insurance.
Slater and Gordon superannuation principal lawyer Annemarie Gambera says all super fund members need to be aware of the changes and action soon to notify their fund if they want to maintain their insurance.
Gambera says: “We are advising clients to be aware of the upcoming changes and to ensure they understand that the insurance policies in each of their accounts might offer different benefits.
“It’s best to check what qualifications and criteria they’ll need to have access to the cover.”
Members with inactive accounts should receive correspondence from their fund this month or next advising them of the changes and asking them if they want to keep their insurance policy going.