Cancellation of superannuation fund insurances

IN CERTAIN circumstances your employer must contribute to your superannuation.

Whether you are currently employed, previously employed or soon to be employed, you need to understand superannuation and what fund or funds you have.

Some people have multiple funds due to, for example, changes in employer and electing a new employer’s default fund.

The Federal Government announced regulatory reforms in the 2018-2019 budget aimed at mitigating the loss of superannuation balances resulting from the payment of insurance premiums for policies automatically provided under some funds.

Total and Permanent Disability insurance is a common example of such a policy.

As part of the regulatory reforms, the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 was passed.

The Bill introduced section 68AAA into the Superannuation Industry (Supervision) Act 1993 (Cth).

The practical effect is that certain insurances held within inactive superannuation accounts will be cancelled on July 1, this year unless the member expressly requests otherwise.

An account will be considered “inactive” if no contributions have been made to it for a continuous period of 16 months.

Funds are expected to communicate with you during May and June so you may have already received a letter advising of the intended cancellation if section 68AAA applies to you.

Do not panic – simply inform yourself as to whether retention of the policy is right in your circumstances and either elect to retain the policy or allow it to lapse.

Seek financial advice early if you are unsure.

Until next week – keep it legal.

Katie Caldow

*The legal information in this article is of a general nature only and not intended to be legal advice to rely upon.

Walker PenderCancellation of superannuation fund insurances