The impact of the Government’s policies on insurance cover within superannuation has been laid bare by the latest data from the Australian Prudential Regulation Authority (APRA).
The data, covering the 12 months to 30 June last year, revealed major reductions in the number of members covered by insurance – down over 30%.
The APRA data stated that the number of member accounts covered by life insurance decreased by 32.7% over the year to June 2020 from 15 million accounts to 10.1 million accounts.
It also revealed the number of member accounts covered by total and permanent disability (TPD) insurance decreased by 32.7% over the year to June 2020 from 13.2 million accounts to 8.9 million accounts.
What is more, the APRA analysis left no doubt as to the reasons for the insurance cover reductions, stating they were “primarily the result” of the Government’s Protecting Your Super (PYSP) legislative initiative and its Putting Members’ Interest First (PMIF) reforms.
The APRA data revealed the number of member accounts decreased by 11.7% over the year ended 30 June 2020, from 26.4 million to 23.3 million driven, to a significant extent, by sweeps of inactive low-balance accounts the ATO under the PYSP reforms.