We see it often – multiple super funds being eroded away by fees and unnecessary insurances. The reason it happens so often is because super is viewed as complicated and difficult therefore it tends to get placed at the bottom of the to do list.
To address this, the Government is introducing the Protecting Your Super package which will regulate the way the industry protects your super savings. The move is set to reunite three million Australians with lost super and increase their active accounts by an average of $2,000 each1.
It addresses the following three areas from 1 July 2019:
Superannuation funds will no longer be able to provide insurance for certain members (this includes any insurance for Death, Total and Permanent Disablement and Income Protection) whose
account has been ‘inactive’ for a period of 16 consecutive months or longer and who do not elect to keep their insurance cover.
If you have an inactive account and would like to keep your cover, then you can activate your account by simply contributing into your super. You can do this as a contribution or rollover and it doesn’t matter how much the amount is, or who pays it, as long as your account receives it before the cut-off of 1 July 2019 for many members. Alternatively, you can provide us with an election in writing to keep your cover.
If you are an inactive member, we will be in contact with you through the post in the coming weeks if we haven’t already.
To allow for the consolidation of multiple super accounts that a member may hold across several super funds, superannuation funds are required to transfer "inactive low balance accounts" to the Australian Tax Office (ATO). Your account may be transferred to the ATO if:
- your account is less than $6,000;
- we have not received an amount (such as a rollover from another fund or a contribution) to your account within the last 16 months;
- we are not owed an amount in respect of your account;
- you have no insurance cover;
- you have not changed your investment options in the last 16 months,
- you have not made or amended a binding death benefit nomination in the last 16 months; and
- you haven’t made an election in writing to the Commissioner (ATO).
If you have more than one account, the ATO will attempt to match your inactive super account into an active account (within 28 days of matching), where the reunited balance exceeds $6,000.
For members who have less than $6,000 in their Vision Super accounts, there will be a 3% cap on the amount of administration fees, investment fees and certain costs that can be charged. The cap aims to slow the rate of super being eaten away in fees on low balances.
There will also be a ban on exit fees which may make it easier for people to make the decision to consolidate funds into other super accounts. If you’ve been waiting for this ban so you can move your money into Vision Super, you will no longer be penalised by exit fees to do so.
What does that mean for me?
It is important for Vision Super members to be aware that if you have a low balance or inactive account, your insurance is at risk of being cancelled and/or your account being transferred to the ATO. If you’re not sure if you’ll be affected, call us and we can confirm whether you’re at risk of losing your insurance or being transferred. We can also give you all the relevant banking details necessary to make a payment into your account.