Default insurance changes an improvement – but young workers in dangerous jobs could be left exposed
Legislation that passed the Senate today will prevent young Australians' super balances being eroded by insurance premiums but could result in young workers in dangerous jobs losing essential default cover, Industry Super Australia (ISA) said today.
In a welcome move the Government has agreed to more realistic implementation dates and a mechanism to protect members in dangerous occupations, but funds may not be able to implement the requirements because it relies on members supplying detailed occupation information to retain default insurance.
This is not realistic and to work in practice funds will need to utilise a range of information to establish if a member is in a risky job.
To work effectively and efficiently the Government should allow funds to obtain occupation data held by the ATO and make use of contributing employers' business type. Guidance will be needed from APRA to make these provisions workable.
ISA Chief Executive Bernie Dean said while the changes are not perfect they will result in fee savings for many young members.
In its submission on the legislation, ISA argued in favour of amendments providing protections to workers in dangerous industries as well as occupations, to ensure that young workers and their families weren't left out in the cold should the worst happen at work.
ISA previously supported the Government's work to reduce multiple accounts and the associated duplicate fees and insurance premiums through the Protecting Your Super changes, but believes more needs to be done to truly eliminate multiple accounts from the superannuation system.
Independent modelling by KPMG found that the best way to deal with multiple accounts and lift performance across the system was through an automatic rollover model, where a workers' super automatically follows them from job to job.
KPMG analysis found that the industry fund endorsed automatic rollover would deliver up to $416 billion in performance dividends – the equivalent of close to $200,000 in extra super per worker over their working life.
ISA is continuing to work with the Government to progress plans to tackle multiple accounts and lift performance across the system.
