The numbers of people who have lost insurance coverage under the Government’s Protecting Your Superannuation (PYS) legislation is now running well into the hundreds of thousands.
A number of superannuation funds contacted by Money Management have confirmed that between 15 and 25 per cent of their low-balance or inactive account members had either deliberately or inadvertently failed to opt-in to insurance coverage.
The dimensions of the problem have been rammed home by confirmation that around 100,000 members of superannuation funds run by Commonwealth Bank subsidiary, Colonial First State were no longer covered by insurance because of the legislation which came into effect from 1 July, this year.
A spokesman for CFS made clear that the 100,000 member figure reflected the situation across all the company’s funds, rather than any one particular fund.
He later confirmed that the 100,000 member figure represented about 12 per cent of all people who were members of CFS superannuation funds.
This information has come at the same time as supplementary information provided by AMP Limited to the Senate Economics Legislation Committee confirmed not only the high number of members who had been impacted by the Protecting Your Superannuation legislation, but also the growing numbers who were seeking to have their insurance cover reinstated.
AMP’s original submission pointed to 440 customer requests for reinstatement of insurance and noted that three days later, on 18 July, that number had risen to 1,149.
“We expect this to continue to increase,” the AMP submission said.
Deloitte superannuation partner, Russell Mason said that while he had not gained a picture of the overall numbers involved, the 15 per cent to 25 per cent estimate seemed accurate, with some funds with higher numbers of young, lower-paid workers likely to be more seriously affected.
The impact of the PYS legislation has come at the same time as the Senate Economics Legislation Committee has largely dismissed industry calls for a 12 month delay to the implementation of the allied Treasury Laws Amendment (Putting Members’ Interests First) Bill.
Instead, the committee has recommended only a three month delay – something which the industry claims is not going to be long enough.