The new reforms, Protecting Your Super Package, take effect on 1 July this year. They involve:
- Insurance becoming opt-in for members whose accounts have been inactive for 16 months
- Fund members with balances under $6,000 whose accounts have been inactive for 16 months will have their accounts paid to the ATO, which will chase taxpayers to consolidate
- Fee caps will be imposed on certain fees for account balances under $6,000
- Exit fees will not be charged for moving money from a superannuation account
These changes are designed to prevent super balances being eroded through inappropriate fees and insurances.
The rules are also designed to prevent multiple, unintentional low-balance accounts.
“Most consumers are not aware of the fees and insurance premiums charged to their superannuation accounts or the steps they can take to avoid unnecessary reduction in their super balance,” said ASIC commissioner Danielle Press.
“The [Protecting Your Super] changes will encourage the consolidation of multiple low-balance superannuation accounts and help ensure members have insurance arrangements that are suitable for them without unnecessarily eroding their super balance,” she said.
The corporate regulator has told the superannuation industry about the severity of the new changes.
Ms Press said ASIC may take action where superannuation funds are misleading in their communication to members, current and prospective.
“ASIC expects superannuation trustees to implement the changes in a timely manner and communicate responsibly. Their communications need to help their members,” Ms Press said.
“It is not appropriate for trustees to encourage all members to maintain insurance. Many members with inactive accounts will be better off allowing the insurance to lapse.
“Similarly, trustees should not be urging all members with low-balance accounts to keep their account within the fund as this may not be in the best interests of members,” she said.