How will the new superannuation laws affect your death and disability insurance?

On 1 July 2019, the Federal Government’s Protecting Your Super Package Act comes into effect. This follows on from the banking Royal Commission which showed that many bank-owned super funds were deducting excessive fees from account balances, despite providing substandard services. The Package is designed to protect account holders from this happening again.

The Package has two main changes that may affect you. The first change is that members of choice super products and MySuper funds will lose their automatic death and disability insurance if their account is inactive (meaning no contribution was received) for more than 16 months.

The second change is that members with balances under $6,000 whose accounts have been inactive for more than 16 months will have their accounts paid to the Australian Tax Office (ATO), who will then try to transfer it to an active super fund in your name.

So, why are these changes important? You may not know that Australian workers are provided with automatic death and disability lump sum insurance through their default super funds, which are called MySuper accounts.

Automatic insurance in super, particularly total and permanent disability (TPD) insurance has been very successful in providing millions of Australians with cover when they would otherwise have none. At Maurice Blackburn, we have helped hundreds of union members access their TPD insurance entitlements through their super accounts when they have had to stop work due to illness or injury.