Superannuation is a must check before 1 July due to coming changes
Changes coming to superannuation in Australia are flying under the radar, despite its likely impact on a vast number of people.
If there is one thing you must do before 1 July, it is to quickly check your superannuation.
It has escaped a lot of notice but there is quite a dramatic superannuation change coming in on 1 July and it has the capacity to severely disadvantage a lot of people – particularly those taking a break from work, people with a neglected superannuation account or those who are working overseas.
The reason for the change is new laws which will cancel default life insurance cover within inactive default superannuation accounts unless the holders opt in to the insurance by contacting their fund or by re-activating their account.
Valuable insurance could be lost – plus past claims
That can include a range of insurance including life, total and permanent disability and income protection cover.
For many people with dormant accounts the change could be beneficial because it will slow down the draining away of their superannuation – particularly if they have insurance through another super fund.
However, for many others the loss of insurance could be a real blow – even more so if they have a potential claim that could be lost along with the insurance that they may have been paying premiums on for decades.
Inactive accounts may be transferred to the Tax Office
Superannuation account holders also face the possibility that their super account will be transferred to the Australian Taxation Office if they haven’t made any contributions for 16 months, or have a balance of less than $6,000.
Australians who live in remote areas with poor postal contact from their fund or those who have changed address and can’t be reached are also in danger of losing their insurance, which is often the cheapest and most accessible form of life insurance due to bulk buying by the super funds and the ability to take out the insurance without a medical check.
Indigenous Australians could be hit hard
Indigenous Australians are among those likely to lose insurance which can be a lifeline given the lower life expectancy and higher rates of illness within indigenous communities.
Most super funds have been sending letters and emails to their members that might be about to lose insurance but this may not reach everyone.
Those who are concerned about the issue should contact their funds to ensure they have the latest contact details and check the level of their insurance cover and whether it is appropriate.
Superannuation accounts can also be consolidated by the member or by checking for lost super through a MyGov account.