Is your superannuation safe? The little known changes starting from July 1
There are major changes coming to Australian superannuation from July 1, which were designed to stop super balances from being eaten up by insurance fees.
However, the new changes mean that thousands of Australians could be about to lose the only form of insurance they have and not be aware of it until they need it.
The new changes will involve “ghost accounts” being transferred to the Australian Taxation Office if they haven’t had any contributions in the past 16 months or have a balance of less than $6,000.
Financial counsellors spoke to the ABC about what these changes would mean to those who need it most, which include remote Australians.
The counsellors believe that people who don’t have a bigger account balance will no longer be covered by insurance policies attached to the funds, which includes life and total and permanent disability (TPD) cover.
Broome, WA, financial counsellor Alan Gray explained he had been “losing sleep” over the new changes coming July 1.
"We're talking about amounts of money that could be more than $100,000, in some cases more than $200,000 or even $300,000 in insurance payouts to some of the poorest people in Australia," he said.
"What really is making me lose sleep at the moment is that no-one in the cities who framed these laws realised that there are thousands upon thousands of Indigenous Australians who never got street delivery of mail," Mr Gray said.
"What will happen if they don't hear about these changes, then they will lose all of those benefits on July 1 and the insurance companies will no longer have to pay out any of those large amounts of money."
TPD and death benefits that are attached to super funds are massively important, especially for Indigenous communities where the life expectancy is lower and rates of illness are higher than the general population.
Broome resident Leah Dolby hasn’t been able to work since 2017 due to suffering health complications, including renal failure.
She has had five super accounts over the course of her life with four having active insurance policies.
She’s recently qualified to receive a disability support pension and planned to make a claim for TPD on her insurance policies.
Dolby has only recently received a letter outlining the changes and has a small window to contact her fund to keep the account alive.
"I didn't like the sound of the letter when I read it, and I think nah, this can't happen, I can't work and all this, I'm going to lose out on my super, so I need to do something about it," she told the ABC.
"It just made me feel a bit upset, for me to work that hard, and all this super I'm going to lose out on it.
"So, I thought I'm going to need to get some help to see what I can do about it."
She’s been encouraging others to contact their superannuation funds.
"I've been encouraging some people, but I think there's a big need out there for our people to get this help and have this discussion about their super," she said.
"Because in the end we might lose out, we might not, we might be lucky. But it'd be good to have that discussion and remind families about superannuation."
However, Nick Kirwan from the Financial Services Council, has said that the industry is “worried” about those with smaller balances that may be impacted.
"We're especially worried about some of those people, because their accounts are quite likely to be inactive, they may not get that communication," he said.
"If people are on parental leave, it might be the last thing they want to have their life insurance cancelled if they've got a new baby to think about, or people who are on long-term sick leave.
"Insurance companies want insurance customers, so they absolutely don't want people to have their insurance cancelled, if the person needs the insurance."
What can you do?
Find your super: You can try finding it yourself or go the easy way and sign onto your MyGov account to find your “lost super”.
Ask about your super: You can go online to see how much money your super is earning, as well as find out about fees and default payments for things like insurance. You can also check what kind of insurance cover you’ve got and make changes.
Consolidate your funds: Under the new changes, some funds will automatically be consolidated by the ATO. However, if you have active funds with more than $6,000, you can consolidate them yourself. You’re able to nominate a fund through a form from the ATO website. You need a MyGov account for this to work.