A Bill to make insurance opt-in for younger people is unlikely to pass before the proposed start date for the measure of 1 October 2019, as it has been sent to a Senate Committee.
The Government has introduced the Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019, which is substantially the same Bill that was introduced in February 2019 and lapsed with the dissolution of Parliament ahead of the election. Of all the Government’s superannuation Bills that lapsed with the election, this was the only one introduced in the first July sitting week of Parliament.
Update: The reporting date for the inquiry has since been brought forward- to 23 July 2019.
The Bill would change insurance in superannuation from opt-out to opt-in for new members under age 25 and for members with balances under $6,000 unless they have directed otherwise.
The proposed start date for these changes – if the Bill passes – is 1 October 2019. But the Bill is unlikely to pass before this date, with it being referred to a Senate Committee for an inquiry, the report of which is due by 18 October 2019. Submissions to the Committee on the Bill close on 15 July 2019 – allowing less than two weeks for submissions (submissions to the inquiry were originally to close on 5 August 2019).
The Government hasn’t changed the start date from when the original Bill was first introduced back in February 2019. This was after the measure was stripped from another Bill, in a deal between the Government and the Greens. Originally the insurance changes were announced as part of the ‘Protecting Your Super’ package of reforms in the 2018/19 Budget.
Assistant Treasurer Michael Sukkar, introducing the new Bill, said: “The government has delayed the start date of these elements by three months from the announced commencement of the package to provide additional time for funds to take action and notify members prior to the changes taking effect on 1 October.” This is almost exactly what then Assistant Treasurer Stuart Robert said when introducing the first Putting Members’ Interests First in February.
The reasons for referring the Bill to committee, according to Hansard, are: “To understand the impact of the level of insurance taken out by affected superannuation members. To examine the interaction between this Bill and the recommendation of the Royal Commission to establish universal terms and conditions for insurance through default superannuation and the proposed Productivity Commission inquiry into insurance through default superannuation.”
The former Assistant Treasurer Stuart Robert said last year the Government would allow an exemption to the opt-in changes for prescribed dangerous occupations – but these amendments haven’t emerged in the new Bill. The implications of making insurance opt-in for young people were concerning to a number of groups making submissions to the previous Senate Committee inquiry.
The February version of the Putting Members’ Interests First didn’t have an inquiry, though the measure was considered as part of the inquiry into the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018, before the opt-in change was removed from the Bill.
That inquiry report – the Committee of which was Chaired by now Assistant Minister for Superannuation, Financial Services and Financial Technology Jane Hume – recommended the Bill be passed. The Labor Senators on the Committee made additional comments, but didn’t recommend blocking the Bill or making any amendments.
One change from the February version of the Bill is that the July version doesn’t include contingent amendments related to increasing the SMSF member cap from 4 to 6. This is despite the Government taking the policy to increase the maximum number of SMSF members to 6 to the election. Though that measure will need to be reintroduced to Parliament and the amendments could be included in another Bill.