From July 1, more than three million Aussies could be affected when default insurance is switched off for superannuation accounts that have been inactive for 16 months.
A newly released study has found more than half of Australians surveyed were unaware of the incoming changes to their superannuation’s life insurance cover, which will be part of the Protecting Your Super package. Only 15 per cent of Australians have even heard of Protecting Your Super.
The package is aimed at preventing unnecessary or unwanted erosion of your superannuation account balances by life insurance premiums, switching off cover for accounts deemed ‘inactive’ – i.e. accounts that haven’t received super contributions for 16 months or more.
The study also found that while 47 per cent of those surveyed were aware that there are changes coming into effect, only one in five felt they had a good understanding of how those changes would impact them. 28 per cent didn’t know any details at all.
Even more confusing, one third of Australians surveyed say they rarely or never open communications from their superannuation fund, with this number rising to 52 per cent in the 18 to 34 age group. As a result, one in four of us have no idea what our balance is, and 44 per cent don’t know what insurance they currently have in place through their superannuation.
“We already know Australians are not highly engaged with their superannuation; however, this study demonstrates that the problem only becomes more acute when looking at those Australians most likely to be impacted by the changes,” says Dr Martin Fahy, CEO of Association of Superannuation Funds of Australia.
Once they were made aware of the upcoming changes to superannuation, nearly 63 per cent of people with super said they were likely to go online or contact their superannuation fund to find out more.
Sally Loane, CEO of the Financial Services Council, says many Australians only hold life insurance through their superannuation, which provides an important safety net for individuals and their families if the worst should happen.
“The easiest way to know if you’re affected is to open and read any letters, emails or SMS messages you receive from your super fund, but if you’re not receiving those it’s important you identify the fund and make contact,” Sally says.
“This legislation has been introduced for very good reasons, however the timeframe for implementation has meant it has been challenging for superannuation funds to engage their members to ensure they understand the consequences of the changes in just a few short months,” adds Martin.
The industry has developed an informative website, www.timetocheck.com.au, to help you learn how to check whether you’ll be affected when the changes come into place on July 1.