Posted on 12/08/2019
Over the past six months, the government has introduced a number of legislative changes which have widely impacted millions of Australians, and there could be more changes to come.
On 1 July 2019, the Protecting Your Super (PYS) legislation took effect, followed by the proposed Putting Members’ Interests First (PMIF) bill, which we anticipate will take effect later this year.
What has happened?
The first measure of the PYS legislation required superannuation funds to cancel the insurance cover held by a member if their account had been inactive* for a period of 16 months, and they had not elected in writing to keep this insurance. While the first round of insurance cancellations were made on 1 July, 2019, moving forward this legislation will continue to apply to all accounts that become ‘inactive’ for a period of 16 months.
What’s to come?
On 31 October 2019, funds will be required to send members’ super to the ATO if; their super account is deemed inactive for a continuous period of 16 months or more, and their account balance is under $6,000.**
Where possible, the ATO will then transfer these funds to an active superannuation account held by members, should they have one. If not, this super money will remain with the ATO as part of the growing pool of ‘unclaimed super’.
The government’s proposed new legislation, Putting Members’ Interests First, may see the default insurance held within superannuation accounts cancelled if a member has a balance under $6,000.
Should PMIF come into effect as proposed, all new fund members who have an account balance of less than $6,000 or are under 25 years of age may not be provided with automatic default insurance and may need to opt-in to receive cover.