Insurance key in super transfers
Superannuation funds which receive compulsory account transfers from the Australian Taxation Office (ATO) should be required to take positive steps to determine whether the member needs new or additional insurance coverage, according to the Association of Superannuation Funds of Australia (ASFA).
Responding to a Treasury discussion paper on lost and unclaimed superannuation, ASFA referred to the strategy to have inactive superannuation accounts compulsorily transferred to the ATO.
However, it said "one part of the strategy that may adversely impact retirement outcomes is the potential for a member to lose insurance coverage through the compulsory transfer of an account to the ATO".
"ASFA considers that the presence of an existing insurance arrangement should be part of the information provided to the ATO and to the fund to which the member's benefit is subsequently transferred, and that the recipient trustee should take positive steps to determine the member's need for new or additional insurance cover," the ASFA response said.
The response said that ASFA was broadly in favour of the initiatives put in place by the Government with respect to lost and unclaimed superannuation, but urged that the new regime be given time to work before a decision was made to pursue new courses of action.
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