Changes to superannuation insurance won’t jack up rates – but if anything they don’t go far enough

The life and disability insurance offered by superannuation accounts can be the best possible deal for members. But the experience is often bitter for younger people, who are “opted in” to insurance they won’t need until they have dependants, face administrative hurdles to opt out, and are often charged fees and premiums through multiple super accounts. Many see their small balances disappear entirely.

The latest federal budget proposes to turn this system around by making superannuation insurance opt-in for people younger than 25, and on accounts that are inactive or have a balance of less than A$6,000. However, the changes don’t address a more pernicious type of superannuation insurance – total and permanent disability (TPD) insurance. Read more...

Superannuation ‘objective’ likely to be captured by industry

superannuation, The Conversation, Nudges, legislative objective of superannuation

As the government moves closer to enshrining the objective of superannuation in legislation, it’s worth considering the unintended consequences that could come from such a move.

Based on recommendations of the Financial Systems Inquiry (FSI), chaired by former Commonwealth Bank chief David Murray, the change to legislation is open to “intellectual capture” by industry participants. The background of most of the people involved means, as John Kay says, that they may see things “through the eyes of market participants rather than the end users they exist to serve”. My research with Sue Taylor suggests that such capture is visible in the Australian superannuation system more widely. Read more...