Putting Members' Interests First Bill reintroduced

Legislation that prevents trustees from providing opt-out insurance to new members under 25 and low balance account holders was reintroduced in Parliament overnight.

The Treasury Laws Amendment (Putting Members' Interests First) Bill 2019, which was put on hold in April, is now being set in motion with a proposed commencement date of 1 October 2019.

The Bill aims to prevent trustees from providing opt-out insurance to new members aged under 25, and those with balances below $6000 unless a member has directed the super fund to do so otherwise.

"This will better target default insurance cover and prevent inappropriate erosion of retirement savings caused by insurance premiums," the explanatory memorandum reads.

Currently, the superannuation regulatory framework provides no special protection for the erosion of retirement savings of low balances through fees and premiums for default insurance, it said.

"Given the importance of superannuation to Australians, the Government is seeking to ensure that people's hard earned savings are not unnecessarily eroded by inappropriate insurance arrangements."

The new measures originally formed part of the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018, which recently came into effect.

The Australian Institute of Superannuation Trustees head of advocacy Ailsa Goodwin said: "We support the intent of this legislation to protect some members - such as young people - for paying for insurance they may not need."

However, the legislation is "too blunt and the timeframe is too short", she said, adding that younger people in risky occupations do get injured and make claims.

"The legislation needs to contain exemptions for super funds with members in this category."

Read more: SuperannuationAilsa GoodwinAustralian Institute of Superannuation Trustees
Link to something FsZG3vrd