What is Protecting Your Super?
Protecting Your Super (PYS) comes into effect on July 1 and means changes for insurance inside superannuation.
Basically, if you haven’t made a contribution to a superannuation account in 16 months, insurances such as Total and Permanent Disablement (TPD), life insurance, and income protection, will likely be switched off. If you want to keep the insurance attached to these accounts, you just need to let your fund know. Or you can add to your account with a contribution or rollover.
Why is this happening?
Many people don’t realise that when you join a super fund, often through an employer, you’re automatically given a default amount of insurance, usually TPD, and life. Premiums are taken out of your superannuation to pay for this insurance. The government is trying to stop these premiums eroding people’s accounts so that they have more to retire on.
Who’s likely to be affected?
You may have inactive accounts if you have:
- taken parental or carers leave
- worked overseas for several years
- changed jobs regularly
- multiple superannuation accounts.
What should I do if I’m impacted?
Find all your super accounts. This is easy and free to do online, through your fund, or the ATO website. You can close any accounts that no longer want and transfer the money to your current super account. Some accounts may have been transferred to the ATO, you can claim this money back but it’s easier to check in on your super now, and save yourself the trouble of getting it back from the ATO later.
Then, contact your super fund to find out what insurance cover you have, and let them know if you want to keep it.
You can get further information about the simple steps you can take at timetocheck.com.au. This website was established by industry to help members understand these changes.
What benefits should I consider when reviewing my insurance?
Check what level of insurance cover you currently have. Then take the time to decide what your needs are and contact your super fund to put the right amount of protection in place. Alternatively, if you need help please speak with your financial adviser. You may have access to a financial planner through your fund. Remember, nobody wants to have to claim on insurance, but being adequately protected gives you peace of mind for you and your family.
How will I know if I’m impacted?
If you’ve received an email or a letter from your super fund, take the time to read it. Work out in your own mind, particularly for anyone with dependants, ’Am I going to be okay if something happens?’ Having a conversation with your super fund about your insurance is not as difficult as it might seem.
