How the ‘Protect Your Super’ changes will affect you
A number of changes to superannuation will come into effect from 1 July 2019. The ‘Protect Your Superannuation’ Bill passed through Parliament in February and forms part of the Government’s package of reforms that were announced in the 2018-19 Federal Budget.
The new legislation is designed to protect Australians’ superannuation savings by ensuring that their super balance isn’t negatively affected by unnecessary fees on insurance policies. Changes that may affect you are;
For those who do not act before 1 July, your insurance may be deemed inactive. Under the Protect Your Superannuation Bill, super accounts that have been inactive for 16 months will have their automatic insurance cancelled. These inactive accounts will also be transferred to the ATO. Members will be able to ‘opt-in’ to protect their insurance cover and stop their account from being inactive, but this must be done before 30 June. Once the regime has commenced, trustees will need to ensure that they have ongoing arrangements in place to identify members who risk becoming inactive.
Ban on exit fees:
The new laws will remove the need to pay exit fees from all superannuation accounts. Trustees that are currently charging exit fees will need to review the current fee structure in order to implement any necessary disclosure and product changes. This will ensure that exit fees will not be charged on or after the 1 July 2019, the date these changes will commence.
While the policy changes are intended to protect consumers, there may be alarming consequences for those who may not realise their account is inactive and assume that their insurance cover will continue. All superannuation trustees and members will need to review these changes to ensure they are meeting all necessary obligations. If further help is needed about how the changes will impact you, consult your financial advisor.