The diminished ‘Protecting Your Super’ Bill has passed the Parliament.
Last week the Government, in a deal with the Greens, stripped out the insurance changes from its Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018. The Bill, with other amendments, passed the Senate, and now the House has passed the amended version.
Under the stripped-out insurance changes insurance inside super would have become opt-in, instead of opt-out, for several types of accounts, including new accounts belonging to members under age 25.
The Government plans to reintroduce its proposed insurance changes in a new Bill.
The Bill still bans exit fees, caps fees for low balance accounts and increases consolidation of inactive super by the ATO.
Labor said it supported the Bill, though put forward amendments – including keeping insurance opt-out for people in dangerous occupations. Last year the Government announced it would also be making such an amendment, and it was tabled, but it was dropped along with the broader insurance change.
Dropping the insurance change, at least temporarily, has received mixed reactions from the superannuation industry.
Industry Super Australia deputy chief executive Matt Linden said that it was “disappointing” that the change to opt-in insurance was dropped from the final Bill.
Industry Super Australia’s position is that additional safeguards were “definitely” required, but that removing the entire measure was unnecessary.
Though Industry Super Australia was more favourable when it came to changes remaining in the Bill. Mr Linden said one of the most important changes in the legislation was the automatic consolidation of inactive accounts under $6,000.
“Although the technology to automatically consolidate accounts has been available for many years without requiring members to do the legwork legislators have dragged the chain,” Linden said.
“Coupled with fee caps for accounts under $6000 these measures will have to do the heavy lifting to prevent erosion of small account balances.”
The Association of Superannuation Funds of Australia (ASFA) is more wary of the return of the Government’s insurance changes.
“The carve out of young people from group insurance that was originally proposed would have had an impact across the board, but particularly on those in high risk occupations and for those young people with dependants,” says ASFA.
ASFA CEO Dr Martin Fahy said there was clear evidence that insurance in superannuation is one of the most cost effective ways to provide protection, “particularly” for younger people and people on low incomes.
“Many young people have dependants and financial commitments so in the instance of a tragic event occurring, particularly disablement early in life, having insurance in place is extremely valuable.”
“We will continue to work constructively with all sides of politics on these important policies going forward,”
But ASFA welcomed the “sensible” changes still in the Bill, in particular the requirement for the ATO to use it’s ‘best endeavours’ to reunite lost super with the member within 28 days.
“ASFA has consistently advocated for swift consolidation of superannuation held by the ATO into members’ active accounts. Consumers should be earning market returns in their own account rather than have their money sitting at the ATO earning CPI,” said Dr Fahy.
ASFA also welcomed the broader range of situations in which accounts won’t be treated as inactive – under the Greens amendment a super account isn’t an ‘inactive low-balance account’ if:
any of the following occurred in relation to the member in the last 16 months:
(i) the member changed the member’s investment options under the fund;
(ii) the member made changes in relation to the member’s insurance coverage under the fund;
(iii) the member made or amended a binding beneficiary nomination;
(iv) the member, by written notice given to the Commissioner, declared that the member was not a member of an inactive low-balance account;
(v) the superannuation provider was owed an amount in respect of the member.
Labor and the Greens had both moved amendments that increased the timeframe for making a super account inactive from 13 months to 16 months.
“Extending the timeframe appropriately recognises that people take time out of the workforce, such as for parental leave, which results in extended periods where they are not able to contribute to superannuation,” said Dr Fahy.
The Australian Institute of Superannuation Trustees (AIST) also welcomed the Green’s changes to the definition of inactive accounts
“These are common sense amendments that will ensure that workers who have a good reason for being ‘inactive’ are able to remain in their fund,” said AIST CEO Eva Scheerlinck.
Improving member outcomes Bill goes to House of Reps
The Government’s, amended, Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2019 has gone to the House of Representatives. The Bill was introduced first to the Senate, and so is going through the standard procedure for Bills being introduced to the House.
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