Superannuation Shake-Up: What You Need to Know
A couple of weeks ago, I received an email about the coming superannuation shake-up.
The subject line caught my attention because it used my full name …. Tricia-Anne.
(Yes, for some unknown reason, my parents decided that they would add to my already complicated Dutch surname by adding a little bonus hyphenated name, making me a very lengthy Tricia-Anne van Velthuizen.)
I have done my very best to ditch the hyphen, but official government paperwork always calls for it and normally alerts me that there’s something I need to pay attention to.
Superannuation is one of those things that I now pay closer attention to, as my late 40s are taking me all too quickly towards retirement age.
Admittedly, this was one of those pesky little super funds that I had almost forgotten about, from years and years ago.
But following on from “Tricia-Anne” came the words “your insurance cover is changing” and so I read on.
As it turns out, come 1 July 2019, me and a large number of other Australians (as many as 3 million) are going to lose insurances through their super funds, as a result of the superannuation shake-up.
And like me – you may be none the wiser.
So, here’s what you need to know in a nutshell:
The Australian Government has got its eye on Australians paying unnecessary fees and insurances through their super funds each year. Most superannuation accounts have life insurances attached to them. In fact, if you have multiple superannuation funds, the chances are pretty high that you could be paying for life insurances on each one of those funds.
When I looked into my superannuation account, it turns out that I have been paying roughly $400 from my account each year for a life and disability insurance policy I didn’t know about or even want. That is what the Australian Government wants to stop – having multiple insurance accounts we are paying for through our superannuation funds and seeing our money run out the door.
To stop this, you now have to opt in to insurance when you have an account that is inactive or at a low balance.
The superannuation shake-up may apply to you if you have:
- a superannuation account that has been inactive for 16 months which means an employer or you have not made contributions to it in that time. Like me, you may have an old account kicking around that you haven’t been actively using for sometime.
- a “low balance” superannuation account – that is, you have less than $6000 in your account.
What to do?
Now would be a good time to check in with any superannuation funds you have and establish what life insurance you are paying for under each fund. Ask them a few questions:
- What does the policy pay out?
- When does the policy pay out?
- How much is the policy costing you?
And then decide if this is going to meet your needs. It is always better to be in the driver’s seat when it comes to your own finances. Instead of running the risk, come July 1, of someone you love making a claim and finding out that the insurance you were counting on was cancelled on your behalf, without your knowledge.
Maybe like me you have a separate life insurance policy you are paying for. With four kids in the wing I have deemed it a necessary evil. Or maybe you are counting on an insurance policy that you have attached to a super fund. You may not realise that insurance companies have been double-dipping into your retirement funds, and giving you the royal treatment on the life insurance front.
I took the opportunity to roll my lost super into my current account and enjoyed a little smile of satisfaction to see my hard-earned dollars doing me some good again.
Speaking of getting a smile from dollars staying in your pocket, take advantage of our Free 7 Day Fast Track on any new RPL enrolments in June (a saving of $295). And you can also talk to your accountant about claiming the cost of qualifications as a self-education expense before EOFY!