On 1 July, new laws come into effect with the aim of protecting individuals’ retirement savings from erosion by fees and insurance charges.

When women are retiring with on average half the superannuation of men, Women in Super is certainly supportive of measures to protect women’s account balances from erosion. However, we believe hurried implementation due to the short timeframe for the introduction of these changes (the legislation for ‘Protecting Your Super’ was only passed in February) may see many lose insurance cover that they have held through their super account where this is not in their best interests.

Funds have tried to contact all affected members by multiple communication channels however reported response rates of around 6 per cent indicate that many may not have read or understood that their insurance is at risk. Funds have no time to implement follow up communication strategies and high levels of member calls within a very short timeframe has, at times, challenged the capacity of some fund call centres.

A member who loses their insurance cover may not be able to replicate that cover in the future.

Whilst WIS was pleased that the Government extended to sixteen months the timeframe that defines ‘inactivity’ and broadened the number of account activities that contribute to an account being deemed ‘active’, we are still very concerned that many women may be detrimentally affected.

There is a myriad of reasons why a member might not register any activity for 16 months or longer. Women (and men) on extended parental leave are an obvious example.  Super is not paid on the government paid parental leave scheme and not all employers pay their employees super while they are on parental leave. So, any parent taking extended leave should be concerned if they do not receive super and do not pay themselves super by way of a voluntary contribution or by receiving a super co-contribution payment from a working partner. Concerned because if their super account is deemed to be inactive for 16 months, they will automatically have their insurance cover (if held through super) cancelled.

Importantly, if the member fails to respond to fund communications, as mentioned earlier, the account is automatically transferred to the ATO and/or insurance coverage is automatically ceased.

Women’s caring responsibilities and time out of the workforce mean that they are more likely to be affected by the legislation and have periods where they are uninsured. for longer periods than men and any interruptions in earnings could see them fall in and out of coverage.

WIS has long called for gender analysis of the impact of superannuation policy changes. Unfortunately without this type of analysis and a good lead time for implementation we are somewhat in the dark regarding unintended consequences of the legislation.

WIS as the organiser of the Mother’s Day Classic, an annual fun walk/run to raise funds for breast cancer awareness, is acutely aware that cancer, like all other diseases, does not discriminate. Unfortunately, many young women fall prey to breast cancer and many of these have young families.

It would be a travesty if these women lost the ability to access life insurance due to a period of inactivity and failure to respond to fund correspondence and so lost insurance coverage. Perhaps because they were out of the workforce for periods of illness and treatment and were too overwhelmed to deal with paperwork.

The Protecting Your Super Package caps fees for members with low balances to 3 per cent. It also prevents trustees from charging exit fees on all superannuation products, regardless of a member’s account balance thereby removing a disincentive to account consolidation or rollovers by members.

These measures are welcome and WIS believes that as a matter of principle all superannuation fees, within MySuper and Choice products, should have an appropriate costing rationale and should be based on a cost recovery principle.

We would have liked to see the legislation extended to include fees associated with provision of account information in this cap. For example, fees can be charged by funds in divorce proceedings when a non-member spouse submits a request for superannuation information, as well as when a fund complies with a superannuation splitting order.

As part of its report, Small Claims, Large Battles – Achieving economic equality in the family law court system,Women’s Legal Services Victoria sought information from the top 42 of the largest APRA regulated superannuation funds according to the number of member accounts.

The average fee charged for processing requests for information was $52 and ranged from no fee to $187. The average fee for complying with super splitting orders was $64 and ranged from no fee to $492.

These fees can be substantial to low income earners and as superannuation is becoming the largest asset in many divorce proceedings, such fees act as a deterrent to spouses to pursue superannuation when the account balance is low or unknown.

So, what should members with an inactive account do?

Members should ensure they read any correspondence received from their superannuation fund and take action or seek advice.

Ideally, members would ensure that they consolidate accounts where multiple accounts are held but no longer required and/or take action to ‘top up’ their accounts.

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