On July 1, new legislation will be introduced to reduce the multiple sets of fees and insurance premiums that many Australians pay each year by having multiple superannuation accounts.
The changes, called Protecting Your Super, are addressing an important problem. But a rushed rollout is leaving many Australians in the dark —and women are at particular risk of losing important insurances.
If you have taken a break from the paid workforce and aren’t receiving superannuation contributions, including if you are working in the home as an unpaid carer, you may lose some valuable benefits from July 1.
So, here’s what you need to know.
Why are these changes happening?
When you have multiple superannuation accounts you pay multiple sets of fees. And it has also been easy to end up paying multiple sets of insurance premiums, because many funds automatically opt you into insurance (at Verve we only give you insurance if you want it!).
At Verve, we know this is an issue because when women join our fund, we automatically find their other superannuation accounts in the process; most women who join us have more than one super account —we’ve had cases where women have rolled over 20 other funds into Verve.
It’s an important problem to solve.
What are the changes?
To tackle the issue, the Government has brought in new legislation known as the Protecting Your Super reform which will take effect on July 1.
There are two important changes to insurance premiums and low balance accounts that you need to be aware of:
Loss of insurance cover
If your superannuation account hasn’t received any contributions or rollovers for more than 16 months, your fund will consider your account inactive and cut off your insurance cover.
As a result, thousands of Australian’s could be left unwittingly without insurance. Another problem with losing insurance cover is that you may not be able to get the same cover after you have lost it. You will likely be asked medical questions and depending on your health, could lose automatic cover.
Women who have been at home caring (i.e. parenting) for more than 16 months are at particular risk of being affected by this change.
You have the option to retain your insurance cover even if you are not making regular super contributions.
If you think this will apply to you, go hunting for that letter from your fund now telling you what to do! If you haven’t received any communication from your super fund, and you think you might be affected, call the fund before July 1.
Closure of inactive super accounts
Your super account could be closed automatically if you have an inactive account with a balance of less than $6000.
The balance will be transferred to the tax office, which will then use data matching technology to combine the low balance amount with – if you have one – your active super account.
If you want to keep your low balance account, make a contribution or contact your superfund to learn about other ways to keep it active.
Not sure if this applies to you?
Watch this video, and if you are still unsure, contact your fund!
Why we’re calling on your support to help spread the word!
The super accounts of Verve members won’t be impacted, because our members have joined us in the past 8 months. But we’re concerned about the potential impact of this change on other women -and many other Australians.
Super funds are required to inform fund members that they are at risk of having their insurance cancelled. But these changes have been rushed through so quickly that funds have been struggling to follow up with the large number of members who have not responded to written communication.
It’s a scramble, and to put it bluntly, like many other funds, we are seriously worried about thousands of Australians losing insurances that they are depending on.
People who are most likely to be affected are: carers who are not in the paid workforce; people not working because of a disability; the long term unemployed; Aboriginal and Torres Strait Islander people; people living in remote or isolated communities; people working or travelling overseas; those experiencing homelessness; and young people.
So will you help us spread the word? This month, no envelope from a superfund should be left unopened.