The impact of superannuation fund consolidation on fund insurance was a key concern for the industry in the wake of changes to the government’s low-cost super product, MySuper, delegates at an industry conference heard yesterday.
Panel speakers at the AIA Australia Group Insurance Summit in Sydney highlighted a number of concerns, among them that although funds encouraged consolidation, it was unclear what impact it might have on an individual’s insurance in light of MySuper.
One conference delegate voiced their opinion that while funds actively pushed superannuation consolidation, and although the impact was often included in the fine print, some funds failed to highlight that it might result in lost insurance benefits.
In response to the delegate, panel speaker Chant West head of research Ian Fryer said: “Just encouraging someone to consolidate may actually mean they lose their benefit, which can be very valuable.”
REST Industry Super chief executive Damian Hill agreed the transition from several super funds to one super fund was “fraught with dangers”.
“For all out consolidation, I think that’s a bit of a sleeper here, that what that actually will mean for insurance and how many people will lose cover as a result,” Hill said.
Funds need to proactively communicate the benefits members would be entitled to under different schemes before transitioning them into or out of different accounts through auto-consolidation.
BT Financial Group head of superannuation and retail Melanie Evans said communication with consumers and members was key to understanding the MySuper changes.
“I think it is about making sure all of our staff who are working on behalf of funds are aware of this loss of benefit and that they’re actually acting in the best interest of the person on the other end of the phone and having that conversation,” Evans said.
“We know in many instances when that conversation happens, the person many actually keep their old fund open for the insurance benefits in the changes.”
