Over half of Australians are unaware of changes which could mean they lose insurance cover they have in their super fund from 1 July.
A study conducted for the Association of Superannuation Funds of Australia (ASFA) found that 53% of those surveyed were unaware of the changes to insurance in superannuation coming into effect on 1 July 2019.
As part of the Government’s ‘Protecting Your Super’ package of laws, insurance cover will be stopped for superannuation accounts which are classified as ‘inactive’ because they haven’t received contributions for 16 months or more.
The Protecting Your Super package is aimed at reducing erosion of superannuation balances though unwanted insurance, though it also has a net boost to the Federal Budget bottom-line. There has also been concern from industry about the short deadlines involved.
ASFA says the change could impact over 3 million Australians. The survey found that 38% said they had a super account that hadn’t received any contributions in the last 16 months, including both people with a single account and people with multiple accounts.
While 47% of those surveyed said they were aware of the changes, only 19% thought they had a good understanding, while 28% said they had heard of the changes but didn’t know any details.
Super funds have been trying to contact members, but the research found that 34% of respondents rarely or never open communications from their super fund. This rises to 52% for Australians aged 18 to 34.
When informed about the changes, 63% said they were likely to seek out more information. The superannuation industry has launched a website to provide information about the channges: timetocheck.com.au.
ASFA CEO Dr Martin Fahy said the research echoed industry concerns about the impact of the changes.
“This legislation has been introduced for very good reasons, however the timeframe for implementation has meant it has been challenging for superannuation funds to engage their members to ensure they understand the consequences of the changes in just a few short months.”
“We already know Australians are not highly engaged with their superannuation – from the balance to the insurance products they hold – however this study demonstrates that the problem only becomes more acute when looking at those Australians most likely to be impacted by the changes.”
The research was conducted by YouGov Galaxy, based on a “nationally representative sample of 1,026 Australians aged 18 years and older,” according to ASFA.