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Gaius Whiffin discussing changes to your superannuation from 1 July

Gaius Whiffin providing Q & A on the 2GB Chris Smith Afternoon Show discussing changes to insurance associated with your superannuation that will come into effect on 1 July 2019

Tuesday, 18 June 2019 


CS– Chris Smith /Gaius Whiffin–   C1,2,3, etc – Callers 



CS       Now last time I was joined by Gaius Whiffin from Turner Freeman Lawyers in the studio, he told us about a little known change to superannuation and a change that will come into effect from 1 July which isn’t too far away. In short if a super account hasn’t had any contributions for 16 months or longer, the insurance attached to the account can be cancelled but as more details emerge about the changes it has also been revealed that the policy will impact accounts that have a balance of less than $6,000 so forget about the 16 months, that’s one threshold but there’s another monetary threshold now. Experts are raising serious concerns it will have an unfair impact on the most vulnerable people, especially those in remote areas and younger people. So if you have questions about super TPD today this is the time to call. Some free advice for you on 131873 and thanks to Turner Freeman Lawyers I have another $100 Westfield voucher to give away to one of our callers in the next 20 minutes or so. Turner Freeman Lawyers provide a range of specialised legal services including compensation and negligence law, asbestos litigation, superannuation and disability claims, family and employment law, wills and estate and property law. Their NSW offices are Sydney, Parramatta, Campbelltown, Penrith, Newcastle and Wollongong and their QLD offices are in Brisbane, Logan, North Lakes, Ipswich, Toowoomba, Gold Coast, Sunshine Coast and Cairns. Gaius Whiffin is a partner at Turner Freeman Sydney office and he joins us in the studio once again. Gaius thank you very much for coming in.

GW     Thanks Chris.

CS       Now when we last had you here discussing near abouts where we are going today, you informed us about the change to superannuation and at that point as far as we understood it the policy was aimed at superannuation accounts without any new contributions for at least 16 months but now there is another threshold that people need to take into consideration. Tell us about it.

GW     Well the test really is how active the account has been. The purpose of these changes which came from the Royal Commission last year is to make sure that small funds and inactive funds do not incur the sorts of fees that they used to because they were being eroded. You had a fund that had someone who was 20 years old and had a part time job and earned a bit of super in that and by the time they are 40 that fund has been eroded by fees, not just insurance premiums but also fees. So the fees have been set at a particular rate, I think it’s 3% and the insurance premiums are being disbanded. You are not going to be covered by insurance after the 1st of July on the smaller or inactive funds unless you go to your fund and make arrangements with them for the insurance to continue so it’s not something you can’t fix, you haven’t got a lot of time to fix it now because the 1st of July is less than two weeks away but if you want to keep your insurance that’s attached to your superannuation you have to contact your fund now to make arrangements which will generally mean that you will pay those ongoing premiums.

CS       Ok so you can’t literally sit and watch a super fund without having any contribution into it if you want to keep the connected insurance?

GW     You have to contact your fund to get the insurance to continue. The insurance will stop on the 1st of July.

CS       So you can do that if you inform them that you don’t want to make contributions or that you do and as long as you inform them before July 1st you still have that insurance clause connected to it.

GW     You’ll need to obviously pay the premiums associated with that on an ongoing basis but at this stage it’s a case where you ring the fund, superannuation fund and it should be ok. The real problem with this is Chris as you mentioned earlier, the people that are aware of this change, I mean there’s been some research that suggests only about half of the people that this is going to impact are aware of this change, and there has been research to suggest there is as many as 3 million funds rather that could be impacted by this change and the person that is affected doesn’t have any knowledge of that at this stage.

CS       So the message hasn’t got out and hasn’t been received.

GW     It’s a question of firstly has the message got out and secondly are people reading their mail, understanding their emails whatever they get.  Now to put this in more perspective, the other research is that the funds that this is going to affect, last year 500 million dollars were paid in relation to funds which this is now going to affect so a significant change.

CS       500 million!

GW     500 million is one of the figures that I’ve seen.

CS       Ok so we also know that it also impacts accounts with less than $6,000 in them. So if you have a student who may have done some part time work had $5,000-$6,000 in a superannuation fund but had moved onto another job, this impacts them as well.

GW     Well it impacts them, again the 16 months is the main threshold, that’s an inactive account that it’s going to affect, that’s exactly the sorts of accounts it’s going to affect. The small accounts are the main ones but they’ve got insurance associated with it which people later in life or depending upon what happens in a person’s life, may need to use.

CS       Keith has phoned through. We will continue talking about this but I want to get to as many callers as I can. 131873. Keith go ahead.

C1       Gday Chris and Gaius. I’ve got an issue with my wife’s super. We were self-employed for many years and contributing to hers and mine. She no longer works and because of a medical condition can’t work. She’s only going to be 54 next birthday much too young to cash in on anything as in cash in the super but there is nothing being contributed to it and her life insurance is attached that policy. Where do we stand with that? It’s just getting eaten up by fees and obviously the premiums are going to come out of it but there’s nothing going into it.

GW     Well if it’s been inactive for 16 months, sorry Chris is it?

CS       It’s Keith.

GW     Sorry Keith. Keith if it has been inactive for 16 months, if there has been no contributions then the insurance which will include the life insurance associated with it will lapse on the 1st of July, so the first thing you need to do before you do anything else, your wife needs to call the fund because it certainly seems that she needs the insurance cover to make sure…

C1       It’s not a health issue that is debilitating other than…it’s not going to shorten her life or anything like that, she is looking forward to a long life but we still need the insurance obviously and it’s something we’ve always had.

GW     Well you need the insurance, you need to contact the insurer to get it kept. The other issue that you should consider is that there is probably, if you’ve got life insurance associated with that, you’ve probably also got TPD insurance and depending upon the nature of your wife’s situation, you may be able to make a claim for that at this stage.

C1       I don’t think we’ve got TPD associated with it, I’m pretty sure it’s just life insurance but I’ll look into it for sure.

GW     That would be unusual Keith so certainly look into that, it should be up on your wife’s statements as to the value of life insurance and TPD but as I said that’s probably a secondary issue at the moment because you’ve only got under two weeks to make sure that the insurance continues.

C1       Righto, I’ll get onto that.

CS       Good on you Keith. Thank you very much. Jen go right ahead.

C2       Hello how are you? I’m ringing on behalf of my 42 year old son. He took out a superannuation, he was working full time until about September last year and has had a recurrence of a condition called myeloma which is a bone marrow cancer. He had to go off work indefinitely and the diagnosis has not been good. Now he was, can I name the super company? He was with AustSafe Super. We had previously during the year last year looked online at his account etc. It said that he had around $145,000 TPD cover and so we ended up going to a local solicitor in the country town where we live to say are we able to access this because he looks as though this illness is probably is less than 12 months to live and anyway after several months we discovered AustSafe Super had sold that to Suncorp Super and they have contacted my son to say you shouldn’t have had TPD insurance so you are no longer covered but we cannot access any of his old AustSafe Super statements or details online now.

CS       Ok alright I have a feeling this is a big issue and you need help with this Jen. Why don’t I get Gaius or one of his staff to contact you and try and sort something out maybe even a meeting with your 42 year old son so we can sort it out because it seems to be an in depth issue that you need help with. Stay there Jen, don’t move. Let’s go to caller Jenny, Gaius is listening Jenny go ahead.

C3       Hi Chris and Hi Gaius. I had a letter from NGS Superannuation informing me about this situation so I phoned them and they would not accept over the phone me asking to continue my insurance.

CS       Let me guess, you had to go online Jenny?

C3       Yes, I had to….

CS       Gee that’s annoying.

C3       What I’m saying to them is I’ve phoned you I want to deal with this right now, I don’t want to go on line and not have the right password and not all this jazz and no absolutely not, I have to go online or it doesn’t happen.

GW     It is an important issue and I think there is certainly a complaint you can make about that but look the most important thing is not necessarily online, go and send them a letter, just keep a copy of something that you’ve told them that you want your premiums to continue. Just have a record yourself, if you can’t go online send them a letter. Go back to the old days, if they are not willing to take your call I mean it’s a fairly ridiculous situation and I would suggest it’s an area where the fund needs to get its act together.

CS       It happens all over the place, not just in this insurance area. Jenny I’ve got a $100 Westfield voucher for you.

C3       Oh my goodness that would be lovely.

CS       Perfect, stay there Jenny and in the middle of writing that letter to that particular superannuation company you can also use the $100 Westfield voucher, well done. Thank you Jenny, stay right there. It’s interesting, I could whinge about this forever but so many so called customer relations sections get you to write, get online and write emails, it’s a pain in the guts. Hate it. Thank you Gaius, much appreciated.

GW     Thank you Chris.

CS       From Turner Freeman.