Significant government changes have come into place during 2019/20. The most significant of these is a fundamental change to superannuation access rules in light of the world pandemic.
Early access to super
Early access to super formed part of the Government’s stimulus package to protect Australians financially impacted by Coronavirus. It allowed people to access up to $10,000 of their super in the first period to 30 June 2020, with a further $10,000 possible up to 31 December 2020, if from 1 January 2020 they were:
- Unemployed.
- Made redundant.
- Receiving certain government payments.
- Had hours of work or income reduced by 20% or more.
- Had their business suspended or turnover reduced by 20% or more.
This change is a temporary measure only with final applications closing 31 December 2020.
Putting Members' Interest First
From 1 April 2020, new legislation comes into effect which may impact you.
- The new laws will remove life insurance cover from your superannuation where your superannuation
balance has not been $6,000 or more from on or after 1 November 2019. For low account balances, this
means REI Super will be required to turn off your insurance cover on 1 April 2020 unless you elect to
keep the cover.
- For new members joining REI Super their insurance cover will not commence until they are over the age
of 25 and have a balance of $6,000 or more (subject to the rules of the fund), unless they specially elect
to opt-in in writing to have cover.
How do you know if it impacts you?
We will be contacting members between late November to early December 2019 to let them know if they’re impacted by the changes and ask them to consider if their insurance cover is right for them. We will also write to new members who joined REI Super between November 2019 and March 2020. Our letter will advise those members that we are obliged to ‘turn off’ of their insurance as at 1 April 2020.
Why this is happening?
In September 2019 the Federal Government passed legislation to support the "Putting Members' Interest First" reforms. These reforms follow on from the Protecting your Super reforms which came into effect on 1 July 2019.
These new reforms will come into effect on 1 April 2020 and aim to ensure that members' superannuation balances are not unnecessarily eroded by insurance premiums by requiring superannuation trustees to only provide insurance on an "opt-in" basis.
Benefits of life insurance through your super
The benefits of life insurance cover through your super, include:
- we work with our group life insurer to negotiate discounted bulk insurance rates for our members;
- your insurance premiums are deducted from your super account each month, so payments are hassle free.
The risks of having life insurance through your super
Having life insurance through your super is a risk in the following ways:
- the cost of insurance premiums are deducted from your super balance, reducing the money available for your retirement.
- you should check that the insurance is not dependent on a work test or condition that you are unable to satisfy. You can view the Insurance Guide for more information.
- if you have multiple super accounts, you may have other insurance, which not only means multiple fees eroding your superannuation balances but also may impact on your insurance cover. You should consider consolidating all of your super into once account to benefit from one set of fees.
Somethings to consider
- do you have a partner or dependents who rely on your income?
- do you need to pay your mortgage or any other debts such as child care, education and living expenses?
How to work out your insurance needs?
- Insurance calculator: You can work out how much you need using this handy insurance needs calculator from MetLife, REI Super’s Group Life Insurer.
- Seek financial advice: If you do, you may wish to seek financial advice if you are unsure whether to keep your cover.
- Useful resources: The ASIC's MoneySmart website has good independent information that may help you determine if and how much insurance you should have.
- Call us: If you have questions we are here to help - 1300 13 44 33
SUPER TIP: Make sure your contact details, such as your address and email are up to date. We will contact you if you are impacted by these new rules. You can update online or by calling us.
How to keep your cover?
There are two ways you can retain your cover if you wish to do so.
- Increase your super balance to $6000 or more by 31 March 2020. See the different ways you can increase your balance.
- Opt-in and elect to keep your insurance cover.
We are able to maintain your life insurance cover should you wish. In our letter to impacted members we will provide a link with their own unique code to opt-in online. If you cant find the code, please complete the ‘Elect to keep your insurance - form' and return to us via email to admin@reisuper.com.au or via mail to GPO Box 4303 Melbourne VIC 3001. Unfortunately requests to keep insurance cover can’t be taken over the phone as we are required by law to have your instructions in writing.
(PDF - 190 KB)
What happens if I do not take action?
If you take no action, and your account balance hasn’t reached $6,000 at any time between 1 November 2019 and 31 March 2020, your default cover you hold with REI Super will be cancelled on 1 April 2020. Your default cover will restart automatically once you have a minimum balance of $6,000 and you are at least 25 yeas of age (subject to the rules of the fund).
For more information about our insurance, including premiums, when cover will start and stop, eligibility conditions, limited cover and exclusions refer to the Insurance Guide.
Your life insurance cover continues and premiums will continue to be deducted from your super account until it is turned off.
Your rights to be covered by insurance remain unaffected until the end of the period for which premiums have been charged or the expiry date of the term of your insurance contract except where you are impacted by the Protecting Your Super legislation whereby your account balance is less than $6000 and your account is inactive.
Protecting Your Super
Changes announced last year in the Protecting Your Super legislation came into effect as of 1 July 2019 and included:
- Inactive accounts (accounts that have not had a contribution or member activity for 16 months) with less than $6,000 automatically transfer to the ATO and their insurance cover ends.
- Fees capped at 3% for account balances of $6,000 or less.
- A ban on charging exit fees for super accounts.
- Insurance for members under 25 became ‘opt in’ rather than ‘opt out’ as of September 2019, except for people working in dangerous occupations. Funds had to apply for the exemption.
Got questions?
If you need more information on any of these changes, simply call us on 1300 13 44 33.