TPD flaw may create retirement conundrum
The Australian insurance and superannuation industries badly need to review Total and Permanent Disablement (TPD) cover because it has become badly flawed and is acting as an inhibitor to people returning to work.
That is the bottom line of a roundtable conducted by Money Management's sister publication Super Review, with insurance industry executives, superannuation fund executives and the former Superannuation Complaints Tribunal chairperson, Jocelyn Furlan, agreeing that TPD cover had become a badly flawed product.
Comminsure executive, Robert Nunez, told the roundtable that he believed there was a structural flaw with TPD, while Furlan suggested that it was actually acting as an inhibitor to people returning to work.
However Equipsuper chief executive, Daneille Press, expressed concern that if the Government pushed out the retirement age and the age at which people could access their superannuation, super fund members might seek to use TPD insurance claims as a retirement income vehicle.
"Where I get concerned, particularly in the TPD space, is if we see a position where the retirement age moves out, and we see access to super moving out, what is that going to mean for us as funds when we try and administer this," Press said.
"Because I think you'll find a lot of older workers starting to say, ‘I'm actually total and permanently disabled. I'm not able to get back into the workplace…. that's the only source of income I'm going to be able to get my hands on'," she said.
Press said she believed such a possibility was a real concern for her as she sought to determine what the market might look like.
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