$560m in claims paid to low balance super accounts
The validity of the Government’s legislative moves to remove insurance from low-balance superannuation accounts has taken another hit, with confirmation that around $560 million worth of life and disability claims were paid to people with superannuation account balances with less than $6,000.
Major life insurer TAL has used a submission to the Senate Economics Legislation Committee inquiry into the Government’s legislation to state it had estimated that for the financial year ended 30 June 2017, $560 million was paid to members in life and disability claims with superannuation account balances less than $6,000.
The TAL submission argued that, on this basis, the removal of automatic life insurance cover for superannuation members with account balances below $6,000 should only apply to inactive member accounts.
“There should also be no minimum superannuation account balance requirement for active members to be automatically provided life insurance cover,” it said.
Like many other submissions to the Senate Committee, TAL argued that a combination of Australian Taxation Office account consolidation and opt-in measures for those aged under 25 would collectively address the policy issue of ensuring insurance did not inappropriately erode retirement incomes.
The big insurer also pointed to the fact that consumer-focused groups had supported a different approach and that the Productivity Commission had also not supported the approach being pursued by the Government.
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
