Do you ever study the letters that you get from your Superannuation fund at the end of the financial year? Or from all the many Super funds that you may have money invested with? You might just look at the total balance as it’s in big bold numbers! While it’s good to see contributions increasing your balance, there are two main items that actually reduce the balances of your fund each year – fees and insurances.
Yes, insurances. It is most likely that when you opened an account with a Super fund you were automatically given all, or a combination of, life insurance, total and permanent disability (TPD) insurance and income protection insurance as part of your Super. These were most likely set up automatically for you whether you asked for them or not. It’s currently an op-out system. You may not have noticed them as they are not paid from your pocket, rather from the balance that is held in your Super fund. So it’s a a bit out of sight out of mind 🙂
For some of you, they are a nice security to have in case the worst should happen. For others they are just a drain on your overall balance. Especially if you are paying for insurances in more than one Super fund. That means you could be paying for the exact same thing twice without realising.
From 1 July 2019, new laws begin that require that these insurances be cancelled for you if your Super account is considered to have been ‘inactive’ for at least 16 continuous months. Inactive means that no contributions have been put into your fund by yourself or your employer during this time.
Who is affected the most?
I thought about who of you would most likely be put into this category and the most obvious to me are those of you who are taking extended time off work to care for children and no employer is making contributions for you.
Also those of you who are self-employed and not making regular contributions yourself into your Super fund. Does this sound like you?
Your Super fund should actually have contacted you to tell you that you are impacted by these changes, but very few people seem to be aware that this is happening.
What do you need to do?
1.If you want your insurance policies to remain and you want your Super fund to continue to make payments towards this, you will need to contact your fund them and tell them this. Especially if they have not contacted you.
2. If you are happy for your insurance policies to end, you can choose to do nothing with your inactive Super accounts. Your insurances will just be automatically cancelled if they have reach 16 months of inactivity after 1 July 2019.
If you don’t know what fund you have Super balances with, log into your myGov account. Select
- Fund Details
You will then see a list of all your open funds. When you click the arrow beside each fund it will tell you if you have made a recent contribution and if your have insurance for that fund. It will also give you a link to the contact details of each fund so that you let them know if you want your inactive accounts to continue to pay for insurance.
This will also tell you how much you have in total in Super – nice to know even though you may not use it for a long time!
This isn’t financial advice!
I am not writing this to give your any advice as to whether or not your should keep your insurances attached to your Super. It is just meant to make sure that you are aware that this may impact you and allow you to do something about it by 1 July 2019 if insurance within Super is important to you.
For any specific information it is best to speak to your Super fund or any finance professional that you ordinarily use. For more information, a good website to review is timetocheck.com.au