Axa enhances employer super

Axa has tweaked its employer superannuation offering to enable members to hold group life insurance through its own superannuation vehicle.

The change will circumvent new eligible termination payment taxation legislation that comes into effect on July 1, 2007, meaning eligible beneficiaries will not be taxed at their top marginal tax rate on any benefits received after this date.

From the start of July this year, most insurance payments made under an employer owned non-superannuation group life policy will be subject to 46.5 per cent taxation for the portion of a death or total and permanent disability payout exceeding $140,000.

Axa found unless the nature of the payment qualified under new exemptions contained within the Tax Act, the new regulations would apply.

With around $7 million held within its employer superannuation portfolio, Axa expected about 100 employer clients would have been impacted by the new ETP tax liability.

According to Steven Rosengren, national group insurance solutions manager, the changes required “a tiny bit of spend” to implement, and were made quite quickly to ensure members in affected funds can transfer across to the new products easily.

All charges and fees remain the same, with Axa needing to close the old funds and roll members across into the new products incorporating the group life insurance product, but Rosengren emphasises this does not involve any additional costs for members.

Michael Rogers, Axa general manager financial protection, said: “We believe that superannuation is the most appropriate vehicle to own group life only plans because eligible beneficiaries are protected from losing a significant amount of their benefit payment in tax.”

He said Axa is “extremely pleased to announce a solution to the challenges imposed by the impending tax changes”.

The new group life offering is available immediately.