Aussies Urged To Check Super Before July 1 Shake-Up
New super reforms will come in on July 1, but many people know nothing about it -- or how it will affect them.
Anyone who has been out of the workforce -- like a parent on maternity leave -- or who otherwise hasn't made contributions to their superannuation in 16 months could be at risk of losing their life insurance.
Super accounts which have been inactive for 16 months will have their default life cover switched off unless members opt-in to retain their insurance or reactivate their account, under the government's new 'protecting your super' package.
The changes were introduced to protect those without dependants or with fewer financial responsibilities -- meant to help save money for these people, instead of their super balance being eroded through paying premiums and fees they don't need.
It's common for Australians to have multiple super accounts, as many opt for the fund used by their employer when starting a new job. This results in Australians having many accounts, leaving them paying multiple lots of attached fees, unless they roll their accounts together.
The changes aim to reduce the multiple sets of fees and insurance premiums for consumers.
"The PYSP changes will encourage the consolidation of multiple low-balance superannuation accounts and help ensure members have insurance arrangements that are suitable for them without unnecessarily eroding their super balance," Australian Securities and Investments Commission (ASIC) Commissioner, Danielle Press said.
"Most consumers are not aware of the fees and insurance premiums charged to their superannuation accounts or the steps they can take to avoid an unnecessary reduction in their super balance," she said.
ASIC has warned superannuation bodies to communicate these changes to their customers in a clear and non-misleading way.
"ASIC expects superannuation trustees to implement the changes in a timely manner and communicate responsibly -- their communications need to help their members," Press said.
Ahead of the current changes, Aussies are being urged to check the status and conditions of their fund. The Association of Superannuation Funds of Australia (ASFA) said it is concerned for Australians who might not realise they are affected by the changes.
ASFA is encouraging workers to contact their super funds and make a clear decision about the insurances they have in place.
“This legislation has been introduced for very good reasons, however, the timeframe for implementation has meant it’s been challenging for superannuation funds to engage their members with the impact of the changes in just a few short months," ASFA CEO, Martin Fahy said.
“Our primary concern is for those Australians who have and need insurance through superannuation, and may not realise they will be impacted by these changes on 1 July, potentially finding themselves without insurance cover when they go to claim as a result.”
Fahy said Australians' knowledge about superannuation is notoriously low, which adds to concerns about the lack of understanding surrounding the changes that will be enforced in just a few weeks time.
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