What is Protecting Your Super?
The Australian Government's Protecting Your Super (PYS) package of reforms came in to effect on 1 July 2019.
These reforms aim to reduce the impact of fees and insurance premiums on superannuation account balances so that Australians have more money in retirement.
There are three key elements of the legislation, they are :
1. Capping fees for super accounts with low balances
Most super accounts with balances below $6,000 will have certain fees and costs (generally, administration and investment related fees) capped at no more than 3% of the account balance for that year. Exit fees will no longer apply.
2. Life insurance cover ‘opt-in’ on inactive super accounts
A super account will be deemed ‘inactive’ if the fund hasn’t received any contributions into the account over a continuous 16-month period or they haven’t been advised that the member would like to keep their cover (opt-in).
3. Transferring low balance, inactive super accounts to the Australian Taxation Office (ATO)
Super funds will be required to transfer the balance of accounts that have been inactive for 16 continuous months and are below $6,000. The ATO will then attempt to find an active super account for the member where possible.
Your super fund will contact you to let you know if you how these changes impact your super account, including letting you know if you are at risk of having your insurance cancelled.
If you are concerned about the possible removal of your life insurance cover, MLC Life Insurance recommends you contact your superannuation fund as soon as possible to check your status and ensure they have your current contact details. More information can be found at timetocheck.com.au.
If your superannuation account is receiving regular contributions
The changes won’t impact you now – but it’s still a good idea to check your insurance arrangements are right for you
If you have returned a 'Keep My Insurance Cover' form to your super fund (opt-in)
- Your insurance in super will continue and the cost of insurance will continue to be deducted from your super account
- The election will remain in place indefinitely until you advise you super fund otherwise
If your super account has not received contributions for 16 consecutive months
If you want to keep your insurance, you need to contact your superannuation fund before your account has been deemed inactive and let them know that you want to keep your cover. You can either, make a contribution to your superannuation account or elect in writing to keep your insurance cover (opt-in)
Still not sure?
We all have different needs when it comes to life insurance, MLC Life Insurance encourages you to call us or speak to your Financial Adviser to ensure that you have the right insurance to protect what’s most important to you.
If you don’t have an adviser, you can use one of the following sites to find a financial adviser near you: