The Treasury Laws Amendment (Protecting your Superannuation Package) Bill 2019 received the Royal Assent on 12 March 2019 and will come into effect from 1 July 2019.
This bill is a part of the Government’s package of reforms that were announced in the 2018-19 Federal Budget.
The new legislation is designed to protect Australians’ superannuation savings by ensuring that their super balance isn’t negatively affected by unnecessary fees on insurance policies. Individuals are encouraged to check their super balance before the reforms commence and familiarise themselves with the changes that may affect them.
For individuals who do not act before 1 July, their insurance may be deemed inactive. Under the Protecting Your Superannuation Bill, super accounts that have been inactive for 16 months will have their automatic insurance cancelled. These inactive accounts may also be transferred to the ATO. Members will be able to ‘opt-in’ to protect their insurance cover and stop their account from being inactive, but this must be done before 30 June. Once the regime has commenced, trustees will need to ensure that they have ongoing arrangements in place to identify members who risk becoming inactive.
Ban on exit fees:
The new laws will remove the need to pay exit fees from all superannuation accounts. Trustees that are currently charging exit fees will need to review the current fee structure in order to implement any necessary disclosure and product changes. This will ensure that exit fees will not be charged on or after the 1 July 2019, the date these changes will commence.
While the policy changes are intended to protect consumers, there may be alarming consequences for those who may not realise their account is inactive and assume that their insurance cover will continue. All superannuation trustees and members will need to review these changes to ensure they are meeting all necessary obligations. If further help is needed about how the changes will impact you, consult your financial advisor.
If you have any questions about the above information please contact the team at Abbotts and we will be happy to assist you. You can reach us by email (email@example.com) or telephone ((08 9321 2642).