AIA backs KPMG report

27 June 2018

AIA Australia has welcomed a KPMG report showing that there will be significant financial impacts and unintended consequences from the Federal Budget’s proposed changes to insurance inside superannuation, saying young people still have insurance needs.

The report found that the adoption of the reforms could potentially halve insurance inside super held and lead to a 26 per cent raise in insurance premiums for those members retaining it. It also warned that retirement outcomes could worsen.

Furthermore, AIA said that members with active but low balance accounts or those under 25 still may need insurance. The firm paid out $75 million in claims made by low balance account holders last year and had paid $84 million on 1,200 claims for members under 25 since 2015.

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“We share the Federal Government’s intention to reduce the unnecessary erosion of retirement balances, but research conducted into this issue is demonstrating that the Australian public will be financially worse off under the proposed reforms,” AIA Australia and New Zealand chief executive, Damien Mu, said.

“This is not an acceptable outcome even before we consider the serious health risks of being uninsured.

“The government should not remove appropriate levels of protection or coverage for active, working Australians, nor should they distinguish between active members due to age or account balances, as these individuals are at risk, and they do have insurance needs as with other member cohorts.

“Instead, they should be focused on new measures for inactive accounts, which would achieve two-thirds of their targeted cost savings for members, while addressing the important issue of duplicate accounts.”

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At least these super members might get something for their insurance premiums.

Why don't they look into fund managers charging fees such at 1.5% of the total balance for pretty much nothing. How can they justify these high fees when others can do exactly the same for fees as low as 0.2% and get the same returns. These crazy high fees are just stealing the wealth of Australians and giving them to overseas fund managers with no benefit going to the consumer.

When you look at independent advisers running their own MDA's they can do it for as little as 1% and dont have the economies of scale like these big international investment companies.

But of course. Banks and international fund managers are untouchable as ASIC and government employees want to go sit on their boards in the future years and get paid for doing even less than they do now.

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