More deductibility sought on own occupation TPD
Superannuation funds want the Federal Government to accept higher levels of deductibility with respect to Total and Permanent Disability (TPD) insurance provided through superannuation.
In a submission filed with the Federal Treasury, the Association of Superannuation Funds of Australia (ASFA) has supported a government proposal to enable superannuation funds to claim deductions for a portion of the cost of certain TPD policies, but argues those deductions should be higher.
"We are supportive of the removal of the requirement for funds to obtain an actuarial certificate, whilst still giving funds the option of doing so where they are of the view the prescribed percentages do not appropriately reflect their particular circumstances," the submission said.
However, it said it believed the 67 per cent applied to "own occupation" was too low.
"Discussions ASFA has had with insurers indicate that for most TPD-only policies the loading for an own occupation definition is between 25 per cent and 40 per cent, with the actual figure depending on the occupations of the members covered by the policy," the submission said.
"This suggests that an appropriate deductible portion of the premium for a TPD own occupation policy should be somewhere in the range of 70 per cent to 80 per cent," it said.
"That said, we do not support the creation of a range of occupationally based percentages, as this would run counter to the aims of the measure, being simplicity and ease of administration, particularly as the industry consolidates and the range of occupations of fund managers within a single fund increases," the ASFA submission said.
AUTHOR
Mike Taylor
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