If a superannuation member has made an informed and deliberate choice to leave an account balance open of below $6000 for the specific purpose of funding the premium cost of insurance cover that was implemented on an automatic acceptance basis when they joined the fund and they now are no longer insurable due to health status and cannot access alternative insurance cover and this account is automatically transferred to the ATO....how does the Govt compensate this individual and/or their family, for the loss of financial protection when the insurance is automatically cancelled when the account is transferred to the ATO ?This individual may have a mortgage of $200,000 and the insurance cover is being deliberately retained for the purpose of ensuring this debt is cleared in the event of death or permanent disablement thereby allowing their family to retain the house and not to lose their largest asset.This individual has made an informed decision to allocate contributions to an alternative superannuation fund and so the sub $6000 account is no longer receiving any contributions and there has been a calculation completed that will allow the insurance premiums to be funded from this account for the next 10 years.This member is NOT disengaged as they have DELIBERATELY made an informed decision IN THEIR BEST INTEREST !For the Govt to even be allowed to automatically assume this member is disengaged is blatantly negligent.The Govt do not know this person's circumstances, have not completed a fact finding analysis of what their objectives or priorities are. If an adviser were to recommend a transfer of superannuation funds without first knowing the client's circumstances and the result was a complete loss of insurance cover when the client was unable to access any further cover they would be entirely negligent and deemed to have not acted in the client's best interest.These sweeping thought bubbles that seem to be always wholeheartedly supported by consumer groups and the plethora of "expert" commentators" who like to tag along for the warm fuzzy ride for the purpose of self promotion are highly dangerous and unacceptable.Yes, there are small superannuation accounts that need to be consolidated, but if it is done on a mass basis , the impact to individuals or families in regard to the immediate loss of valuable insurance cover could be significant with no recourse for these individuals for compensation for the loss.So, if every adviser is strictly bound to the best interest duty, the Govt had better have a good hard think about the process they are really going to employ so they do not leave people significantly worse off.
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