AMP Chief Client Officer, Ant Dureau
In recent weeks, AMP has been communicating with our customers to inform them about changes to insurance in their superannuation account.
New rules, called the Protecting Your Superannuation (PYS) package which will take effect from 1 July, have been introduced by the Federal Government.
AMP is supportive of the changes, which are designed to make sure members are not paying for insurance cover they don’t know about, or premiums that inappropriately diminish their retirement savings.
In summary, the changes will see low balance inactive superannuation accounts transferred to the Australian Tax Office, fee caps on certain balances under $6,000, the banning of exit fees and, require insurance cover to be switched off if a customer’s super account has been inactive for 16 months, unless they decide to retain it.
This last change could potentially have serious implications for some customers.
For those that no longer require the insurance cover, you may be better off letting your cover lapse through this change and will no longer pay a premium from this superannuation account.
However, if you have a pre-existing medical condition or are aged 60 or over, you may not be able to get insurance again without health checks.
In addition, by no longer having insurance inside this super account, your estate and/or beneficiaries will not receive the sum of insurance inside this account as at the date of your death
There may be some people, such as those who’ve taken time out of the workforce for a career gap, parental leave or are no longer working due to illness, who may not realise their cover has been turned off until they need to claim.
As an industry, we need to do all we can to ensure our customers are aware of the changes and can make informed decisions about their insurance cover and also whether to keep their low superannuation account balances active.
Many will decide they don’t need the insurance cover and it will be switched off – this is a good outcome as it will help maximise retirement savings for those customers.
But for others, it may result in unintended loss of valuable insurance cover.
AMP is informing customers of the changes and working with industry bodies, ASFA and the FSC to develop an industry wide public awareness campaign.
If you are an AMP customer impacted by the PYS package, AMP will have sent you a letter or email or give you a call regarding the PYS package and how it will impact you.
It is important that you take the time to read these communications and consider the impacts these changes will have on your personal situation.
For more information on the Protecting Your Superannuation Package check ASIC’s MoneySmart website.