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‘Smoker’ status the default for 7 super funds

  • August 07 2020
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Invest

‘Smoker’ status the default for 7 super funds

By Grace Ormsby
August 07 2020

The corporate regulator has revealed a number of superannuation trustees that have been classifying new members as “smokers” by default – charging them higher life insurance as a result.

‘Smoker’ status the default for 7 super funds

‘Smoker’ status the default for 7 super funds

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  • August 07 2020
  • Share

The corporate regulator has revealed a number of superannuation trustees that have been classifying new members as “smokers” by default – charging them higher life insurance as a result.

‘Smoker’ status the default for 7 super funds

The Australian Securities and Investments Commission (ASIC) has said it engaged with seven superannuation businesses – or nine trustees – between 2017 and 2020 that had been either at the time or historically assigning “smoker” status to members in products unless the member took active steps to opt out.

Those super funds were named as: AMO, Colonial First State, Equity Trustees, IOOF (inc OnePath), Intrust, Netwealth and Suncorp.

Since ASIC raised the issue, all businesses have stopped charging new members life insurance premiums at smoker rates by default.

According to the statement from the regulator, all seven businesses have moved, or are in the process of moving, existing members paying premiums at “smoker” rates onto non-smoker or blended rates.

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Four businesses have also refunded, or agreed to refund, members for extra premiums paid.

Commenting on the issue, ASIC commissioner Danielle Press highlighted how “generally, insurance premiums for smokers are substantially higher than for non-smokers”.

“Given the low prevalence of smoking among Australian adults, classifying members as ‘smokers’ for insurance offered through superannuation unless the member takes active steps to confirm non-smoking status is contrary to community expectations.”

She added that “insurance in super is complex”, with many Australians not realising that default classifications can impact the price of their cover and therefore reduce their retirement benefits.

“In light of the low smoking rate, merely providing disclosure and putting the onus on members to act is not enough to support good member outcomes.”

‘Smoker’ status the default for 7 super funds
‘Smoker’ status the default for 7 super funds
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About the author

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Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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