Advocacy group Women in Super is calling on the Federal Government to re-examine its policy to end life insurance for Australians with low superannuation balances or accounts with little activity, suggesting it could be detrimental to women with dependents.
While Women in Super agrees life insurance coverage should be on an opt-in basis for new members under age 25, and that insurance premiums can be a cause of balance erosion for inactive super account balances below $6000, it believes several amendments to the policy would improve member outcomes for women.
Among its eight recommendations to Parliament, the group calls for a provision to include a suitable timeframe for super funds to contact existing members to notify them of the withdrawal of insurance after 13 months of inactivity.
"WIS further recommends that the 13 month period be extended to 16 months to avoid penalising women on parental leave and that the period should commence from the date the legislation is introduced," the submission said.
It's also requesting protection for members who are on parental leave or returning from parental leave to "prevent accounts being automatically transferred to the ATO because the account balance is $6000 or less."
The advocacy group has also submitted its views on super fees.
The proposed policy would prevent super fund trustees from charging administration and investment fees exceeding 1.5% of the balance of accounts less than $6,000 for a six month period immediately following the date on which the balance is calculated.
It also prevents trustees from charging exit fees on all superannuation products, regardless of member's account balance, thereby removing a disincentive to account consolidation or rollovers by members, Women in Super notes.
It recommends the legislation be worded clearly to ensure the fee cap of 1.5% per six months "includes all fees (existing and future, investment, indirect, charges etc.) in any format that are deducted from a member's account." It also recommends the fee be calculated and charged on an annual basis.
The group noted one-third of women currently retire in poverty.