From 1 July 2019, superannuation fund members with inactive accounts risk losing their insurance cover unless they actively opt-in to retain their cover.
Legislation to make this change effective received Royal Assent on 14 March 2019.
From 1 July 2019, trustees of a super fund are prohibited from providing insurance where:
The member’s account is inactive for a continuous period of 16 months or more, and
The member has not elected to obtain or maintain insurance in that fund.
An account will be considered inactive if no amount has been received by the trustee in respect of the member (such as contributions or rollovers) for a continuous period of 16 months.
Ares unaffected by the new rules can be summarised as follows:
Self-managed superannuation funds or small APRA funds
Members whose employer makes contributions to a fund on their behalf in addition to superannuation guarantee obligations, which cover the full costs of the member’s insurance premiums
Defined benefit members, or
Australian Defence Force (ADF) Super members (or a person who would have been an ADF Super member if they had not exercised choice).
What actions are needed ?
Members with inactive superannuation accounts who wish to retain their cover can either:
Contribute or rollover an amount to their superannuation fund prior to 1 July 2019 to make it active, or
Submit a valid election in writing to their superannuation fund prior to 1 July 2019 to maintain their insurance cover.