More warnings of unintended insurance consequences
New entrants to high-risk industries could be working without appropriate insurance cover for the first 14 months of their working lives if the Government’s legislation removing all insurance cover from superannuation balances below $6,000 goes ahead.
That is the analysis of major building and construction industry fund, Cbus, which has told the Senate Economics Legislation Committee that the Government’s proposed Budget changes to insurance within superannuation will have adverse unintended consequences on its members because they work in a hazardous and physically demanding working environment.
The superannuation fund has warned that the legislative changes currently before the Senate would remove insurance cover for around 250,000 Cbus members.
“The removal of default cover from workers under 25 will impact Cbus members who often assume financial responsibilities for their families at a younger age than their contemporaries, and who will be unable to access cover on an opt-in basis, or at all,” the superannuation fund said.
“Likewise, the removal of cover from all accounts with balances below $6,000 will mean new entrants to high-risk industries will be working without insurance for the first 14 months of their working lives.”
The Cbus submission said the fund was also concerned that inactive members would be severely disadvantaged by the measures outlined in the Bill.
“Inactive Cbus members typically do not have another superannuation account – their account is not receiving [superannuation guarantee] SG contributions because they have shifted into self- employment or are working in a contracting capacity or are between jobs (which is very common in the industry),” it said.
“Our inactive members retain their Cbus membership for the benefits it offers them, including our insurance cover.”
The Cbus submission urged amendments to the Government legislation including the insertion of a mechanism that would grant relief to funds such as Cbus which offer default insurance cover to higher-risk member profiles “who need, rely and claim against their cover”.
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