The Government has reintroduced its proposed changes to insurance in superannuation in a new Bill, after stripping the changes out of a Bill already in the Senate.
Last week the Government dropped most of proposed changes to make insurance opt-in, instead of opt-out, for some super fund members. These changes were contained in the Government’s ‘Protecting Your Super’ Bill, but were dropped in a deal with the Greens to get it through the Senate. Though Labor said it supported the Bill, while proposing amendments.
The Government has now reintroduced the measures to the House of Representatives in a new bill, the Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019.
The new Bill makes insurance opt-in for new super fund members under age 25, or accounts with balances under $6,000. Making insurance opt-in for inactive accounts, after a period of time, remained in the Protecting Your Super Bill.
Also, the start date of 1 July 2019 has been pushed back to 1 October 2019. This may be due to it being unlikely the Bill can pass before the upcoming Federal Election. While the Protecting Your Super Bill has already passed Parliament, the new Bill may not pass the House this week and there are only two Senate sitting days scheduled before the election – if it is called in May.
The cost of the Bill is “currently unquantified”, but it is expected to save the Budget under $407 million over the forward estimates, according to the explanatory materials to the Bill. The financial impact of delaying the start date will be included in the 2019/20 Budget.
The Government’s own proposed amendments to the Protecting Your Super Bill, keeping insurance opt-out for people in dangerous occupations, are not included in the new Bill. Assistant Treasurer Stuart Robert had announced the change in November last year. At the time he said the Government had heard from stakeholders that workers in dangerous occupations, “such as police officers, truck drivers, farmers or concreters” were likely to benefit from default insurance and could face barriers to finding insurance elsewhere.
A joint statement by Treasurer Frydenberg and Assistant Treasurer Robert said the changes in the new Bill would mean that “the hard-earned retirement savings of millions of Australians will be protected from undue erosion through inappropriate insurance arrangements”.
“Importantly, the Government’s reform will not prevent anyone who wants insurance in superannuation from being able to obtain it – members will still be able to opt in.”
“The Government is putting the interests of members, not insurers or funds, first.”
Current status of superannuation legislation
Status of current major superannuation Bills
- Treasury Laws Amendment (Your Future, Your Super) Bill 2021
- Assent 22/06/2021
- Various changes, including ‘stapling’ new employees to super funds, annual performance tests of MySuper products and other super products by APRA, and create best financial interests duty test.
- Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020
- Assent 22 June 2021
- Increase maximum number of SMSF members from 4 to 6
- Treasury Laws Amendment (More Flexible Superannuation) Bill 2020
- Assent 22 June 2021
- Allow people aged 65 or 66 to use the three-year non-concessional contributions bring-forward rule.
- Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020Assent 22 March 2021
- Transfer superannuation held by Eligible Rollover Funds (ERFs) to the ATO, and close ERFs by 30 June 2021.
Last updated: 23/06/2021