In the budget, the government announced a series of changes to how super funds operate. These could affect you – particularly if you’re under 25 or new to saving for retirement.
We’ve summarised the key changes below:
No more exit fees
Super funds will be prevented from charging an exit fee when you close your account. At the moment, the average super fund charges $68 when you change funds and under the government changes, this will be scrapped. This will make it easier for people to consolidate their super funds or change their super funds.
Insurance will no longer be default
Most super funds offer insurance and when you sign up to the super fund, you sign up for insurance unless you tell them that you don’t want it. The premium is then deducted from your super balance. The insurance types most super funds offer are:
- Life insurance – pays a benefit when you die to your next of kin
- Total and Permanent Disability (TPD) Insurance – pays you a benefit if you become injured or disabled and can’t work anymore
- Income Protection – pays you income for a specific period where you can’t work due to a temporary disability or illness
From July 2019, you have to actively opt-in to these insurances if you have a balance under $6,000, are under 25 or have an account that is considered inactive (ie. they haven’t received a super contribution in over 13 months).
The ATO will consolidate your super for you
The government has increased the power of the ATO to let them consolidate your super funds. If you have super funds that are inactive (ie. you haven’t paid into them in 13 months) and the account has less than $6,000 in it, then the ATO can proactively consolidate those funds into your active super account.
What does this mean for you?
While the government’s changes do help to protecting your retirement savings, you need to make sure that you’re in control of your finances.
If you have access to a financial adviser they’re usually the best source of information on super and will be able to walk you through the process of consolidation and changing super funds as well as guiding you on insurance.
Connect with one of our financial experts to learn how you can get the most out of your money
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