Senator Jane Hume has hit out at superannuation firms who have to be “dragged, kicking and screaming” to sort out problems in the industry such as automatic insurance cover for young members.
The minister for superannuation, financial services and financial technology said the government was committed to cracking down on balance erosion from unnecessary insurance premiums.
Speaking at the Financial Services Council Summit 2019, Hume said the measures would prohibit trustees from automatically imposing insurance on new members who were under 25 and to those who had account balances below $6,000, unless the member opted in.
“We believe young workers under 25 deserve a fair go, if they want insurance then they should be free to choose. But in many cases the arguments for automatic cover is weak.”
She said some funds such as AustralianSuper already recognised this but other funds had been slow to act.
“Why isn’t the industry itself taking action on these long-standing problems which we know are there instead of being dragged, kicked and screaming by the government towards the right solution over issues such as curbing unnecessary insurance in super,” she said.
“If workers are required to put one in every $10 into superannuation then the system must do better and has to earn that trust, it has to earn that right.
“We need to reframe the superannuation system so it works for all members. Superannuation is not perfect and we know that. It has grown exponentially but not efficiently as for too long it has relied on opacity and complexity and disengagement. If trustees want to meet their members’ expectation they will be at the forefront of these changes and not dragged kicking and screaming.”