Retirement
Ouch: Super insurance fees could surge 26 per cent
Touted as a way to protect against balance erosion, an opt-in approach to insurance in super could instead see insurance premiums rise 26 per cent, new modelling suggests.
Ouch: Super insurance fees could surge 26 per cent
Touted as a way to protect against balance erosion, an opt-in approach to insurance in super could instead see insurance premiums rise 26 per cent, new modelling suggests.
According to modelling by big four accounting firm KPMG, the shift to make insurance in super an opt-in question for those younger than 25, those with inactive accounts and those with balances of less than $6,000 could see other savers stung with a potential premium hike of 26 per cent.
KPMG said the proposal, outlined in the 2018-19 budget, would see a 50 per cent fall in the levels of group life insurance cover and a 42 per cent fall in insurance premiums collections. The firm said this would have an “adverse impact” on premiums, with the shortfall prompting a hike in premiums.
Noting that the outcome at retirement is subject to future changes, KPMG said there were two potential outcomes. The first, in which premiums aren’t increased, would see fee-led balance erosion fall from 6.2 per cent to 5.8 per cent.
However, if premiums were to increase by the anticipated 26 per cent, the average erosion would rise to 7.3 per cent.
“The most heavily impacted categories of erosion of benefits due to default insurance cover are females and low income earners,” KPMG warned.
“For example, considering an increase in insurance premiums of 26 per cent, we estimate the average erosion of account balances for females will increase from 7.6 per cent to 9.0 per cent and low income earners (<$18,200) to increase from 15.8 per cent to 17.6 per cent.”
The firm said the changes would have both intended and unintended “material impacts”, and would leave women and low income earners “worse off”.
RELATED ARTICLES
Superannuation
Rest posts healthy returns following a positive end to 2025
Rest, one of Australia's largest profit-to-member superannuation funds, has reported impressive returns in its flagship MySuper Growth investment option for the year 2025. The fund is optimistic about ...Read more
Superannuation
Rest marks milestone with first private equity co-investment exit
In a significant development for Rest, one of Australia’s largest profit-to-member superannuation funds, the organisation has announced the successful completion of its first private equity ...Read more
Superannuation
Expanding super for under-18s could help close the gender super gap, says Rest
In a push to address the gender disparity in superannuation savings, Rest, one of Australia's largest profit-to-member superannuation funds, has called for a significant policy change that would allow ...Read more
Superannuation
Employment Hero pioneers real-time super payments with HeroClear integration
In a significant leap forward for Australia's payroll and superannuation systems, Employment Hero, in collaboration with Zepto and OZEDI, has successfully processed the country's first ...Read more
Superannuation
Rest launches Rest Pay to streamline superannuation payments and boost member outcomes
In a significant move aimed at enhancing compliance with upcoming superannuation regulations, Rest, one of Australia’s largest profit-to-member superannuation funds, has unveiled an innovative ...Read more
Superannuation
Rest appoints experienced governance expert to bolster superannuation fund
Rest, one of Australia's largest profit-to-member superannuation funds, has announced the appointment of Ed Waters as the new Company Secretary. Waters, who brings with him over 15 years of extensive ...Read more
Superannuation
Small businesses brace for cash flow challenges as Payday Super becomes law
With the new Payday Super legislation now enacted, small businesses across Australia are preparing for a significant shift in how they manage superannuation contributions. The law, which mandates a ...Read more
Superannuation
Rest launches Innovate RAP to support fairer super outcomes for First Nations members
In a significant move towards reconciliation and inclusivity, Rest, one of Australia's largest profit-to-member superannuation funds, has unveiled its Innovate Reconciliation Action Plan (RAP)Read more
Superannuation
Rest posts healthy returns following a positive end to 2025
Rest, one of Australia's largest profit-to-member superannuation funds, has reported impressive returns in its flagship MySuper Growth investment option for the year 2025. The fund is optimistic about ...Read more
Superannuation
Rest marks milestone with first private equity co-investment exit
In a significant development for Rest, one of Australia’s largest profit-to-member superannuation funds, the organisation has announced the successful completion of its first private equity ...Read more
Superannuation
Expanding super for under-18s could help close the gender super gap, says Rest
In a push to address the gender disparity in superannuation savings, Rest, one of Australia's largest profit-to-member superannuation funds, has called for a significant policy change that would allow ...Read more
Superannuation
Employment Hero pioneers real-time super payments with HeroClear integration
In a significant leap forward for Australia's payroll and superannuation systems, Employment Hero, in collaboration with Zepto and OZEDI, has successfully processed the country's first ...Read more
Superannuation
Rest launches Rest Pay to streamline superannuation payments and boost member outcomes
In a significant move aimed at enhancing compliance with upcoming superannuation regulations, Rest, one of Australia’s largest profit-to-member superannuation funds, has unveiled an innovative ...Read more
Superannuation
Rest appoints experienced governance expert to bolster superannuation fund
Rest, one of Australia's largest profit-to-member superannuation funds, has announced the appointment of Ed Waters as the new Company Secretary. Waters, who brings with him over 15 years of extensive ...Read more
Superannuation
Small businesses brace for cash flow challenges as Payday Super becomes law
With the new Payday Super legislation now enacted, small businesses across Australia are preparing for a significant shift in how they manage superannuation contributions. The law, which mandates a ...Read more
Superannuation
Rest launches Innovate RAP to support fairer super outcomes for First Nations members
In a significant move towards reconciliation and inclusivity, Rest, one of Australia's largest profit-to-member superannuation funds, has unveiled its Innovate Reconciliation Action Plan (RAP)Read more
