Gaius Whiffin discussing Superannuation Law on 2GB

Tuesday, 7 August 2018 

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

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CS       Well while the superannuation industry is in the spotlight as they face the Royal Commission into financial institutions. One fund in particular has caught my attention. Sun Super. Now Sun Super is one of the country’s largest superannuation funds and they have recently changed their total and permanent disablement part of the policy so that they make payments in installments rather than the lump sum. Well they are now locked in a number of legal battles as customers say they are being unfairly treated and put through severe financial stress. You may know something about that and if you do, I’d love to hear from you, 131 873. Have you experienced something similar? Maybe not necessarily with Sun Super, but with another fund and whether policies like this will be closely examined by the Royal Commission, at this stage we don’t know, but I’m sure all will be revealed because we are smack bang in the middle of this testimony in Melbourne today. But that’s part of our focus in today’s Legal Matters segment. And thanks to Turner Freeman Lawyers, I’ve got a $100 Westfield voucher to give away to one of our callers. $100 to head out to Westfields and enjoy yourselves. And Turner Freeman Lawyers provide a range of specialised legal services as you know by now including compensation and negligence law, asbestos litigation, superannuation and disability claims, family and employment law, Wills and Estate and property law and their NSW offices are in Sydney, Parramatta, Campbelltown, Penrith, Newcastle and Wollongong and their Queensland offices 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 me in the studio right now. Gaius thank you very much for coming in.

GW     That’s alright Chris.

CS       Many Sun Super customers say they weren’t aware of this change in their payout policy that is moving from that lump sum into installments. Just explain for me why firstly they would do that and secondly would it be Sun Super’s responsibility to inform their policy holders of that?

GW     Oh certainly it’s their responsibility and they would have to – to get this changed through – they would have had to provide written notification to their customers – whether that’s enough to get them over the regulatory issues with making such a change is a matter that is going to be determined in the case  there’s a case that’s before the Courts as I understand is in relation to this issue at the moment, so whether that actual – whatever notice that might have been is enough, is again a real question…….

CS       So what would be the motivation? Basically to hold back what they need to pay.

GW     It is. As I understand it, what they do is they now get paid these lump sums in 6 installments – up to 6 installments …….

CS       It’s so cheeky.

GW     Yes – and each time they pay an installment as I understand it, the person has to go through the same kind of procedure to make sure that they are still totally disabled because that’s a test for these policies.  If you are totally and permanently disabled for work, for the work that you were doing – not for any work in total – for the work that you were doing – then you are entitled to that lump sum if you’ve got the insurance behind your superannuation and they say, well we are going to pay it in installments. Every year for up to 6 years and ……

CS       So do the fund holders or the recipients of the installments have to undergo tests?

GW     As I understand, yes.

CS       So regular tests to prove that they can’t work?

GW     Yes I think – I’m not 100% but I think it’s at least on that yearly basis when you get the installment, you have to undergo the medical tests.

CS       So they would argue that this is a way to ensure claims are being paid out to those who truly need it.

GW     They actually argue that it’s in the interest of the injured person in this case because it helps them – they look at rehabilitation options and all sorts of other things. That’s their argument to this particular claim that’s being made.

CS       Okay – I want to crunch down further into some of the aspects that have emerged from that case in just a short moment, but if you would like to speak with Gaius, 131 873, maybe there’s an issue you would like to take up with Turner Freeman or an issue that you’ve been through and is a good test case for other listeners to hear about. Ross – go right ahead. Gaius is listening.

Caller 1 – Ross

Ross    How are you doing Chris and Gaius?

GW     Hi.

Ross    I just wanted to bring attention to the fact that unless you constantly monitor the life component attached to your superannuation, you could end up thinking that you have a significant amount of insurance there and you don’t because as you get older, if you don’t increase the premium as it expands, you’re going to lose the sum insured and in my personal case, I thought I was covered for about $100,000, luckily I haven’t died, but at the end of the day, it was only about $7,500.

CS       Because as you get older it decreases right?

Ross    Yes.

GW     Yes – it’s just like any sort of insurance and it’s really important for superannuation you check your yearly statements and so forth. It’s absolutely essential and it is important that you check all policy disclosures and so forth that you get through from the insurer because it is a very complicated area and the insurers are in a much stronger position in most cases.

CS       Well I had that discussion with the Wealth Editor at The Australian a lot earlier today and he was saying it suits those who provide you with these policies to have things as confusing as possible. Now we wouldn’t ever think that they would make it confusing Gaius but it bloody well is.

GW     It is.   It’s very confusing and you’ll find – just in terms of what’s happening in the Commission at the moment and they’re the aspects that will come out – they’re the aspects – especially – the next two weeks, they’re aspects that will come out. The confusing aspects to the fund members.

CS       And even the Commissioner is having problems understanding after a couple of questions yesterday about “I don’t understand it – explain that to me again”. John – go right ahead.

Caller 2 –         John

John   Chris – how are you?

CS       Good thank you.

John   I’ve got income protection with AMP My policy – the premium has been going up to $3,000 a year and I complained to FOS and got them to Subpoena the rate book on how they calculate the premiums and I found out AMP was charging me way way over than my current age and all my other criteria work and AMP said back – we don’t have to follow the rate book, we can charge you whatever we want.  Should they follow a rate book if that’s what it was created for by the actuaries?

CS       Good question.

GW     Well I mean – again that’s a difficult one to answer because at the end of day if insurance is like most areas if the premiums are too high in one with one insurer you would often go to another insurer and so forth, but again that’s an issue which I think will be under investigation too in terms of maybe not in terms of this part of the Royal Commission but certainly insurers a part of the Commission.

CS       But John you would have thought the way I thought when you explained that to me there how by getting 1 year older could you possibly have to pay $3,000 more for income protection policy insurance.

John   Not only that. I’ve re-rang up AMP as a completely independent person and asked to get a quote on an apples for apple policy and it was $6,000 cheaper and then I had to jump and go – well hang on, I’m with you guys – why am I paying $16,500 for the same criteria?

CS       That’s ridge.

GW     Yes. That’s sounds like a complaint to the authority – to the Regulatory Authority too I think. I’d be – that’s what I’d be doing at this stage.

John   Yes – Well I’ve sent it all in to the Royal Commission and I’m going to re-send it in to FOS again.

CS       Yes – we should point that out to listeners that it’s not just the Royal Commission that you can go to now, this is only a short Royal Commission time, but there is a regulatory body you can go to if something like what has happened to John happens to you.

GW     You can go to APRA – which is the Australian Protection Regulatory Authority about these issues. They will – they are a regulatory authority, so they won’t necessary get your premiums down but they’ll look into it.

CS       Yes – John – you’ve got the $100 Westfield voucher.

John   Oh…. well thank you…..

CS       No – you hit the nail right on the head and as far as the stories concerned, I bet it pertains to a lot of people. Well done. $100 from Turner Freeman to head off to Westfield. Well done mate.

John   Thank you.

CS       Stay right there. John from the Central Coast gets our $100 Westfield voucher. 131 873 is the telephone number. Just getting back to Sun Super. One particular customer is suing Sun Super is a woman by the name of Rose Bazini. Injured at work in 2016. Didn’t apply for her TPD payout until 2017 when her savings ran dry. Couldn’t she have applied for the payout like immediately? Or can you only apply when you have absolutely nothing left in your savings?

GW     Oh no – you can apply as long as you meet the definition – the total and permanent disability definition. So, you know sometimes it does take a while to meet that definition because you might recover to a certain degree – so you have to give yourself a chance to rehabilitate yourself obviously. But if you have a particular type of injury that is clear that you are never going to be able to do that work again, you know you might be a butcher and you lose your hand or something horrific like that, well you can apply for it pretty much immediately and you probably should apply as soon as possible because some of these funds take forever to determine.

CS       Yeah

GW     You know – just to determine your entitlement let alone they should pay it.

CS       And there’s another reason why the system is built to favour those who should be paying out customers. 131 873 is the telephone number. We have other callers who have questions for Gaius. I’ll take a break and take those callers. Our Legal Matters segment courtesy of Turner Freeman.

We can squeeze in some more callers. Got a little bit more time with Gaius Whiffin from Turner Freeman – our Legal Matters segment and we’re talking about superannuation once again today but in particular TPD payouts and insurance. I’ve got a question from James which I think is really interesting. Go ahead James.

Caller 3 –         James

James              Oh – G’day Chris. How are you mate?

CS       I’m good thank you.

James              So look – my question is back in 2014 I lodged two claims for TPD. I subsequently – I had both of them paid but what puzzles me about the 2 super accounts that I had is that one of the accounts, there was income protection was like a standard feature and on the other one it only had TPD with no provision for income protection and what I couldn’t understand is why is it when I was put into this default thing for the one without the income protection, why was I not- you know – I was never asked about that as an option?

CS       Gaius.

GW     Yes – when you set up a superannuation fund, it’s generally obviously through your employer and so forth, you’re given certain options – some are default – some are non-default, but if you want to have the insurance to cover you for TPD or any other things, you need to make sure that’s in the options that you are given at the time. Because it’s not – each fund can be different – each policies and each trust is actually quite different and as I said, it depends upon what you are actually given at the time, it’s not a common set – certain circumstances.

CS       And then people need to be aware of that I guess. Good on you James – thank you very much for very much for your call. Now if you want to get in touch with Turner Freeman Lawyers, if you are in Queensland – call 13 43 63 – 13 43 63 and if you are NSW, you can call 1300 231 112 – I’ll repeat that number – 1300 231 112 and we’ll be speaking with Turner Freeman experts again next Tuesday on the programme. Thank you Gaius Whiffin – Thank you very much for coming in.

GW     Thanks Chris.

CS       Very interesting and of course timely with the Royal Commission into the financial sector, specialising now in superannuation at the moment going on in Melbourne.