Did you get a letter recently from your super fund about protecting your super?
In February 2019, changes proposed in the 2018 budget became law, and if action isn’t taken then inactive superannuation accounts could lose their insurance. The changes are due to commence from 1 July 2019, however there are steps you may need to take now to ensure the best outcome for you.
Protecting your super reforms coming into effect 1 July 2019
These reforms are designed to protect Australians’ retirement savings by ensuring their super isn’t unnecessarily eroded by fees and premiums on insurance policies they may not need.
If you are to be impacted by these changes you should have received a letter from your super fund which we encourage you not to ignore, or if you think this may impact you please contact your super fund to check.
Why is it important?
Your insurance could be cancelled
Super providers need to cancel the insurance in any super account considered inactive. An inactive account is any account that hasn’t received any contributions into the account for more than 16 months (this includes accounts that have had no contributions since 8th May 2018).
Please read the options your super provider has offered in the letter if you wish to retain your insurance. Generally, you should be able to “opt-in” via online or a form provided, which will protect your insurance cover and stop your account from being inactive, however please seek advice from your super fund or ourselves if your balance is under $6,000 as this could potentially mean your insurance is still at risk.
You could also make an urgent contribution to your super account so it is no longer inactive however you will also need to repeat this at least once every 16 months to prevent the fund from again becoming inactive. Note also the cut-off dates for opting into your insurance as they vary across super providers and some will be well before 30 June 2019.
Inactive super accounts with low balances will be closed
Many inactive accounts with a balance of less than $6,000 will be closed, and the balance transferred to the Australian Tax Office. The ATO will then use data matching to connect these super accounts with an active account of the member where possible. If there is any insurance attached to these accounts, it will also be lost.
We’re here to assist you in your financial journey
If you have any questions about completing the form, or if you would like us to review the existing cover, and do an analysis of the cover, and your insurance needs, please contact us on 07 3840 4700.