Superannuation fund members will only have to opt back into insurance inside superannuation once, under simplification measures to be legislated by the Government and outlined by the Australian Prudential Regulation Authority (APRA).
APRA has written to superannuation fund trustees suggesting that the Government will look to amend the Superannuation Industry (Supervision) Act to iron out some of the contradictions which have arisen out of its two tranches of legislation impacting insurance inside superannuation.
It said the Government amendments would be implemented on the basis of areas which had been raised by the industry.
The APRA explanation stated:
“APRA understands the Government will seek to amend the SIS Act to provide that:
a) the legislative requirements allow for the aggregation of a member’s interest in one or more products held within a superannuation account;
b) the rights of members under fixed term insurance cover are not affected, so that this type of insurance cover is not removed. Legacy products providing fixed term insurance cover that do not receive ongoing contributions are not intended to be subject to these reforms. This may affect conventional products where the switching off of cover would have a demonstrable adverse financial effect on the member, such as products that are already fully paid up or non-premium paying, whole of life and endowment products; and
c) a member’s election to maintain insurance cover under the PYSP reforms is considered to be a valid election under the PMIF reforms, and vice versa.”
The APRA letter also clarified the manner in which superannuation funds could apply to make insurance inside superannuation “opt-out” for members employed in dangerous occupations.
In doing so, the regulator has provided superannuation funds with a template in which they will need to nominate the occupations they deem to be dangerous for particular members and the products involved.