The $6.5 billion superannuation fund is "substantially" reducing premiums for younger members at the expense of members aged 50 and over.
LUCRF Super is changing death and TPD, and death insurance cover from July 1 as part of the new Protecting Your Super legislative reforms.
The changes will hit members aged 50 and over the hardest - death only cover will reduce while premiums will rise.
The fund is consequently offering affected members two options, which it states will allow them to keep their current level of fixed premium death-only cover after 1 July 2019 - without the need to answer health questions or be underwritten.
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The first option is to transfer the current level of cover to the closest available number of "fixed premium death only" units equal to or above the current level of cover under the new arrangements.
The second option is to move to the equivalent "fixed amount death only" cover under the new arrangements - which will increase premiums as members age while the amount covered remains fixed.
Conversely, the fund informed its younger cohort that it will "substantially reduce" their premiums.
With the new death and TPD cover, premiums for members aged 29 and under will be covered for less; 30 to 33 year olds will see a minor increase in premiums and a slightly lower level of cover; while 34 year olds and over will have a higher level of cover and a moderate premium increase.
For death only cover, members aged 26 and under will have a much lower level of cover and a reduction in premiums.
Those aged between 27 and 29 will pay less in premiums for a slightly higher level of death only cover. Thirty year olds and over will have a higher level of cover and a moderate increase in premiums.
Given that LUCRF provides members with death and TPD insurance by default, members who have not selected their occupation category are assigned to the light blue collar rates.
In light of this, a Rainmaker analysis shows actual default cost per week for default death and TPD has not increased that drastically.
"It's in fact $66 cheaper p.a. for 15-24 year olds but $64 more expensive p.a. for 35-64 year olds after July. While LUCRF halved costs for young people, their cover has dropped by more than half," Rainmaker said.
Because default cover is dropping by an even higher factor than default premiums, Rainmaker said the value of the death and TPD insurance decreases for most ages.
"Around 30% decrease for 15-24 year olds and also about 30% for 60-64 year olds. It's generally less of an effect for other ages but varies widely," it said.
"As a result of the changes, there is decreased reliance on young members subsidising older members, as young members are paying less and older members paying more."
As part of the PYSP changes, LUCRF advised members it will remove exit fees and place a 3% fee cap for account balance of $6000 or less.
"We've taken this one step further and introduced an upper cap as well, meaning no matter what your account balance is, you'll never pay more than $495 per annum in administration fees," the fund said.