The Australian Institute of Superannuation Trustees (AIST) has continued its call for key amendments to the Protecting Your Super legislation, despite a Senate Economics committee backing the legislation this week.
The super trustee body said while it supports measures to protect members from having their account balances eroded, it remained concerned the legislation would see some members lose valuable benefits, particularly insurance.
The Treasury Laws Amendment (Protecting Your Super Package) Bill 2018, announced in the 2018-19 Budget, aims to protect super savings from erosion by fees and insurance premiums via:
• A cap on fees charged on accounts with balances of $6,000 or less at 3 per cent of the account balance,
• A ban on all exit fees,
• A requirement that funds only offer insurance on an opt-in basis for accounts that have balances below $6,000; of new members who are under 25 years old; or that have not received a contribution for 13 months or longer.
• The transfer of all accounts with balances less than $6,000 that have been inactive for two years to the Australian Taxation Office (ATO) and giving the ATO the power to reunite these accounts with a member’s active account without their consent.
The AIST said these measures will have a major impact on super fund members, removing insurance cover from large numbers of members and transferring millions of accounts to the ATO.
The AIST said it has sought key amendments to the legislation, including:
• Protections against the fee capping being “gamed,”
• Using the Insurance in Super Code as the primary vehicle for effecting insurance changes,
• Having default insurance only being opt-in for less than $6,000 balance inactive accounts,
• Auto-consolidation of accounts being directly between funds and facilitated by the ATO (without the requirement for funds to be sent to the ATO).
• Implementation being deferred from 1 July 2019 until 1 July 2020.
