Thursday, 15 November 2018
One of Australia’s largest superannuation funds, Rest, today released its data showing that proposed laws to remove automatic default insurance from some members’ superannuation accounts would have a disproportionate effect on young people in regional New South Wales.
According to Rest, a not-for-profit fund with more than 1.9 million members and over $51 billion in funds under management, the proposed changes could see 880,000 of its members lose access to automatic Death, Total and Permanent Disability (TPD) and Income Protection (IP) insurance.
A disproportionately high number of members losing insurance would be women and people aged under 25 living in regional and rural areas, with those living in NSW set to be the among hardest hit.
The changes are set out in legislation currently before the Parliament.
The proposed laws would remove automatic (opt-out) Death, TPD and IP cover for members aged under 25, with balances of less than $6,000, or with inactive accounts (that is, super funds have not received an amount for this member for a continuous period of 13 months). Instead, members in these categories would be required to opt in to the insurance.
Of the 1.5 million Rest members nationwide who have insurance as part of their superannuation accounts, 32% are aged under 25. In the last two years, Rest has paid $36.5 million dollars in Death claims, $9.2 million in IP and $2.8 million in TPD payments to members under 25.
Rest provides insurance to 49% of all working people aged 20-24 outside major capital cities and 54% of people in this age bracket in regional NSW.
Rest CEO Vicki Doyle said that the proposed changes ignored the fact that young people in regional areas have a higher rate of insurance claims than those in cities.
“Removing life insurance for under 25s will have unintended consequences – it will leave young people in regional areas who suffer fatal or crippling accidents and illnesses dangerously exposed,” Ms Doyle said.
“Many of these young people have children and mortgages and their financial responsibilities do not simply vanish if they die or become permanently disabled,” she said.
“It’s likely that without the insurance they get from Rest, many of these young people would have no cover at all.
“It is not too late for our Parliament to factor the needs of young people in regional areas into their considerations,” Ms Doyle said.
Rest also provides insurance to around one in five working women across Australia, with these female members more likely to make claims than their male counterparts.
Rest is recommending that in the legislation under consideration, the age threshold of 25 years for opt-out insurance be removed so that young members can continue to receive valuable cover.
In December 2017, the fund introduced a refreshed insurance design which removes insurance cover for under 18s and reduced the cost in cover for those under the age of 35.
Members can contact Rest to check their insurance cover to help ensure it continues to meet their needs.
For further information, please contact:
t: (02) 8920 0700 m: 0420 219 963
Corporate Communications Manager
t: (02) 9086 6348 m: 0458 815 252
Rest is one of Australia’s largest super funds by membership with over $51 billion in funds under management as at 30 June 2018 and more than 1.9 million members. Rest was awarded Best Fund Innovation 2017 at the Chant West 2017 Super Funds Awards and also recently won the Rainmaker SelectingSuper Innovation Award 2017 for Millennial Superannuation*.
This information doesn’t take into account your circumstances. So, before acting on it, you should consider whether it is appropriate for you. Before making a decision about your super, please read the relevant Product Disclosure Statement (PDS) available at www.rest.com.au or call 1300 300 778. This information is provided by the issuer, Retail Employees Superannuation Pty Limited, ABN 39 001 987 739 as trustee of REST (Retail Employees Superannuation Trust ABN 62 653 671 394).