Young Australians are being "ripped-off" by the current superannuation life and total and permanent disability (TPD) insurance arrangements, according to Good Super chief executive, Andrew MacLeod.
Speaking at the start of the Financial Year, MacLeod called on Assistant Treasurer, Josh Frydenberg, to adjust the rules surrounding TPD insurance, so that Australians with multiple super accounts do not end up paying numerous TPD policies.
"We have suggested that a Tax File Number be associated with every Life Insurance and TPD policy and that no duplicate policy may be issued without specific opt-in of multiple products. This is in contrast to the opt-out model that Australia now has," he said.
"Many Australians have more than one superannuation account. In fact according to the recent Murray Financial System Inquiry, there are nearly three superannuation accounts for every employee in Australia. Each might be deducting premiums for the same product costing that person thousands.
"Assuming a hypothetical 20-year-old white collar non-smoking male has three superannuation accounts and a default level of insurance bundled with each account his super, he may potentially erode up to $108,000 worth of retirement savings over a 45 year period just by paying these additional premiums and administration fees."
MacLeod said that while there was a focus on "unnecessary fees from multiple superannuation accounts", he stressed "unnecessary insurance" was "the far bigger destroyer of wealth".