Super legislation stranded as Parliament rises

The Parliament has risen for the Christmas/New Year break with a whole raft of key financial services bills yet to pass both houses including many of the Government’s most important superannuation changes.

The Assistant Treasurer, Stuart Robert last month outlined the Government’s superannuation agenda as including five bills, Protecting Your Superannuation Package, Improving Accountability and Member Outcomes in Superannuation Measures, the Superannuation Guarantee Compliance Measures, including the Superannuation Guarantee (SG) integrity package and the SG amnesty, and the Treasury Laws Amendment Bill No 4.

Of that legislation, only the SG compliance measures passed the Parliament, leaving the Protecting Your Superannuation package, which would significantly alter arrangements around insurance inside superannuation, still sitting on the notice paper.

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Of the legislation still yet to pass Parliament, the so-called Protecting Your Superannuation package was regarded as the most contentious because of the manner in which would have seen insurance inside superannuation made opt-in for those aged under 25 or with account balances less than $6,000.

Research undertaken by both KPMG and Rice Warner suggested the policy change would lead to significant increases in premium.

With Parliament due to resume in February, the Government in minority in both houses of Parliament and a Federal Election looming, there was currently no certainty about the priority the Government would attach to the financial services bills when the House of Representatives and Senate resume sitting.

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"Research undertaken by both KPMG and Rice Warner suggested the policy change [opt in for U25s or low balances] would lead to significant increases in premium."
So what is the problem?
Insurance is supposed to be priced on a community rating model -- every member of the "community" is as likely as every other member to make a claim. To date, premiums seem to have been based on making sure that a significant proportion of the "insured persons" have no right to make a claim because they are not in full time employment or are no longer employed by the organisation that made the SG payment. "Significant increases in premium" might more accurately be expressed as "removal of cross subidies"

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